Hudson condemns financial advice rule

Des Hudson, chief executive of the Law Society, has told solicitors to ignore a new rule approved by the SRA’s board last week which would end the traditional requirement that clients wanting financial advice are transferred to ‘independent intermediaries’

Hudson warned that solicitors could “get tangled up in mis-selling scandals” if they advised clients to use advisers tied to particular products.

“The provision of independent advice has historically been one of the fundamental tenets of the profession,” Hudson said. “As such we would advise solicitors to disregard the liberalisation of the handbook in this area and continue to only recommend IFAs”.

The rule change was triggered by the FSA’s decision to change its definition of ‘independent advice’ at the end of this year.

To qualify as ‘independent’, the FSA wants firms to consider a broader range of products, not just ‘packaged products’ but structured investment products, all investment trusts and unregulated collective investment schemes.

A consultation on the issue by the SRA closed in September, with the regulator maintaining its original position on the best way forward.

Anieszka Scott, director of policy at the SRA, said the chosen option would reflect the possibility that under the new FSA regime, many firms currently described as independent advisers may no longer be able to describe their advice as independent.