The Solicitors Regulation Authority Board are contemplating a consultation on the rules which dictate how Solicitors and Financial Advisers work together.
Financial Services Authority (FSA) regulations for Financial Advisers are set to be altered at the end of this year but as Solicitors refer clients to Advisers for financial services it is believed that the SRA code also requires amendment.
The consultation would look at amending “the duties expressed as outcomes in chapter 6”. The SRA will need to look specifically at the phrase “independent intermediary” and also “packaged products”, as these are not “in line with changes brought about by the FSA’s Retail Distribution Review, nor the SRA’s move to outcomes focused regulation”.
Agnieszka Scott, SRA Financial Regulation Policy Manager, commented:
"Our Code of Conduct has been commented upon in relation to financial advisers on two fronts. The first is that the Code effectively prescribes how the outcomes that need to come about should be achieved, as it appears to pre-empt the solicitor’s judgement.
Secondly, the language is out-of-date, as the FSA’s Retail Distribution Review has clarified the distinction between independent and restricted advisers and made it easier for clients to make a choice on the products available. For that reason, we’re consulting on three options available to us, and we’d like as many people as possible to provide their views to us”.
The options available are:
– Keep Outcome (6.3) but alter the language to remove reference to "independent intermediary” and replace it with wording to reflect the terminology contained in the FSA’s Retail Distribution Review
– Remove Outcome (6.3) from the SRA Code of Conduct
– Replace Outcome (6.3) with wording which requires clients to be in a position to make informed decisions about referrals in respect of investment advice
The Board met yesterday (Wednesday 4 July) and will decide, after looking at the proposed consultation, if stakeholders should be asked for their opinions on the key issues. If the Board agree to the consultation, they will be seeking views throughout July and August.
The SRA’s preferred option would be option 3. What would yours be?
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