Who is on your experts list?......... An Update!

Who is on your experts list?......... An Update!

You may recall our article entitled ‘Who is on your experts list’ that appeared in the August 2012 issue of the D&DLS Bulletin, which detailed the Solicitors Regulation Authority consideration of allowing Solicitors to refer their clients to any Financial Adviser, rather than to an Independent Financial Adviser (IFA) as had previously been the case. 

At the time, we had been encouraged to see the Law Society Gazette publish a statement by John Hyde on Thursday 5 July that said in part: ‘In what possible regard will it be to the client’s advantage to be referred to an adviser with an ulterior motive? An adviser, lest we forget, who benefits from wilfully ignoring any product that does not line their own pocket. That’s not freedom that’s a legitimised cartel!’

Despite this and many similar responses being submitted to the SRA during the consultation period, the SRA have now remarkably declared that Solicitors are not required to refer clients to Independent Financial Advisers, who by definition will act on the behalf of their client (rather than to suit their own interests). 

What is the Law Society’s view of this decision? The Law Society is recommending that you ignore the SRA and is urging Solicitors to only recommend clients to IFAs. The Law Society’s statement issued on 29 November 2012 states;

‘The Law Society has taken the unprecedented step of urging the Profession not to follow the SRA’s new rules on recommending financial advisers to clients’. It also warns that ‘solicitors could get tangled up in mis-selling scandals if they advise clients to use financial advisers who may benefit from selling particular products’ and they go on to urge Solicitors to ‘only recommend Independent Financial Advisers to clients’.

SIFA’s change of name

As a result of the SRA’s decision, which SIFA lobbied vehemently against, they are changing what SIFA stands for from ‘Solicitors Independent Financial Advice’ to ‘Supporting Impartial Financial Advice’. For any Financial Advice firm to be able to qualify to be included on the SIFA Professional Directory of IFAs, which is endorsed by the Law Society, they have to prove their impartiality and freedom from third party influence. The directory can be viewed at www.sifa-directory.info/index.html

SIFA’s suggestion for all Law Firms is to ensure that the first question all Solicitors and fee earners ask when approached by a Financial Adviser is ‘Are you or the company that you represent contracted to sell the products of one or more product providers?’ For the avoidance of doubt most of the High Street Banks and Firms such as St James’ Place fail this test.

How does this affect you?

Will this change really have an impact on you? My prediction is that you will see two big impacts as a result of this rule change;

  • Prior to this legislation change both we and SIFA heard of numerous reports of tied Financial Advisers, particularly St James’ Place bombarding Lawyers and Law Firms with requests for referrals. If that was when they knew Solicitors were not allowed to refer to them, what will it be like now?
  • The new outcome 6.3 in the SRA Code of Conduct requires Solicitors to ensure that ‘Clients are in a position to make informed decisions’, and the SRA stated in the Board paper accompanying its decision that ‘this would involve the client in the decision-making process and the client would need to be given sufficient information about the status of the Financial Adviser, and all other pertinent information, to be able to confirm their consent’. SIFA’s view of this is that referrals are now a serious compliance matter and we will explore this issue further in the next bulletin.

If you are the owner or senior manager of a Law Firm, do you know how much due diligence is done before a Financial Advice firm or Adviser is added to your experts list, which Financial Advisers your fee earners are using and why they selected them? 

Is Professional Financial Centre (East Midlands) Ltd on your experts list?

If you would like to discuss with us the benefits of including us on your experts list then please do not hesitate to contact us. Professional Financial Centre (East Midlands) Ltd has helped many clients to put a sensible financial plan into place for the rest of their lives. As changes happen, we review our clients’ plans, adjusting them to meet changing economic circumstances and family needs. Why not challenge us to do the same for you or your clients?

As a member of the Derby Law Society, by quoting code LS1 you and / or your clients will receive a 5% reduction in our costs.

Richard Shanks (Managing Director and Chartered Financial Planner)

Professional Financial Centre (East Midlands) Limited

Wesley House, St Michael’s Lane



01332 341406


Authorised and regulated by the Financial Services Authority. This article is not a recommendation and you should obtain appropriate advice before acting on any of the information provided.