SIFA Professional

In the new SRA Standards and Regulations, the majority of third-party referrals will be governed by the ‘Principle of always acting in the client’s best interests. However, if a solicitor is referring to a ‘Separate’ business (where there is a financial interest), the individual Code of Conduct 5.1 required that the individual be informed of the financial interest and gains the client’s informed consent to the referral. This means that firms must conduct and record due diligence on referees, and SRA Principle 8 and Chapter 7 of the Code require systems and controls to ensure that management decisions are implemented throughout the firm.

For a solicitor and crucially the firm’s management and Compliance officer for Legal Practice (COLP) to be satisfied that all referrals made by the firm and individuals within it, are in the client’s best interests, a thorough research and due diligence process into referees is strongly recommended. However, given the ‘Principle’ of acting with independence, it is likely that a firm might wish to work with a preferred list of financial planning partners selected by impartiality, qualifications, matching specialisms required and reputation.