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Lichfield financial expert claims new rules are confusing for solicitors

A Lichfield-based independent financial advisor has claimed new rules are causing confusion for solicitors.

The Solicitors Regulation Authority (SRA) has recently reiterated that solicitors should only refer clients to truly independent financial advisers and not to those who are limited to the products which they can advise on.

Kevin Jenkins

Kevin Jenkins

Kevin Jenkins of Key Financial Management, which is a trading name of 2plan Limited, believes that this rule is causing confusion for solicitors on two counts.

He explained:

“Solicitors often refer clients to financial advisers for matters which they cannot assist with, such as investment and tax advice.  Referrals for non-investment advice, such as for inheritance tax, can still be made to tied advisers.  I believe this is the first source of confusion as the type of advice required will dictate whether a solicitor can or cannot refer a client to a tied adviser.

“Secondly the status of a financial adviser isn’t as clear cut as it may first seem as in addition to ‘independent’ and ‘tied’ there are also ‘multi-tied’ advisers.”

The SRA view an independent adviser as a firm which can advise on products from across the whole of the market and offers the client the option of paying a fee instead of a commission.

The ruling has come into effect because the SRA state that law firms must always act in the best interests of their clients and referring a client to a tied or multi-tied adviser for investment advice does not constitute as acting in the best interests of the client.

Mr Jenkins added:

“Even if non-investment work is being referred, I would recommend for solicitors steer clear of any form of tied adviser and high street bank or building society, as their options are limited and their costs can be higher.

“I would also recommend for solicitors to carry out due diligence on all of the financial advisers which they currently work with to ensure they are all truly independent.”

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