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ICAEW says its referral rules will not change

While the Financial Services Authority’s Retail Distribution Review has changed the game for many, according to the Institute of Chartered Accountants in England and Wales, there is no need to change its referral rules, as accountants already have the ability to send non-independent advisers clients.

The ICAEW stated recently that while it does indeed intend to update its terminology in order to take the new way the RDR defines independent and restricted advice, this is to be interpreted as nothing more of a current rule extension and not an attempt to broaden its referral criteria. With the ICAEW code of ethics currently calling for members refer clients to advisers that offer wide-ranging and ‘objective’ advice, the industry body says that ICAEW accountants are already bound to make sure that clients are referred to multi-tied advisers that can meet the client’s needs.

What this means is that accountants already bear a responsibility to make assessments that the adviser they are referring their client to have demonstrated an ability to cover a wide range of providers and products the market has currently available. These products and providers must also bear relevance to the needs of the client being referred, according to ICAEW guidelines.

The new FSA definition of an independent adviser, according to the ICAEW, are just as eligible to offer objective advice to referred clients, but restricted advisers would still need to demonstrate they can offer independent advice to accountants they refer clients – which is essentially identical to how things were before the RDR.

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