The Solicitors Regulation Authority (SRA) have announced new rule changes effective of January 2013 which sees a difference in the way that Financial Services are regulated in the areas of conduct and compensation. Some of these changes are likely to affect the way that your practice operates, so here is a summary of a few key changes that the new Handbook (version 6!) will be including:
SRA Code of Conduct 2013
Parts 6.2 and 6.3 have been amended to the previous version, which include changes to required outcomes and indicative behaviours. These alterations mean that regulated individuals will no longer be obliged to refer clients who need investment advice to an independent financial adviser. Instead, in the case of referrals such as these, regulated individuals will assess the best interests of the client in terms of how to pursue a matter, whether it is investment advice or making referrals.
SRA Compensation Fund Rules 2011
In previous editions of the Handbook, the Compensation Fund has been limited by the Legal Services Act, to not allow the SRA to collect contributions from licensed bodies (ABSs), or make payments from the fund to clients of ABSs.
There was a temporary measure in place which allowed the SRA to collect contributions to and make payments from the fund to clients, known as the 2011 Order. This was replaced in December 2012 with a clause which meant that in the absence of a further Order, the relevant provisions would expire on that date and the SRA would no longer be able to collect contributions or make payments from the Fund. Since this date, a further order has been made, seeing the removal of this provision.
Rules 1 and 2 have been amended to ensure that SRA Compensation Fund Rules 2011 apply to licensed bodies indefinitely.
SRA Financial Services (Scope and Conduct of Business) Rules 2001
The wording with regard to referencing of a “packaged product” has been replaced. Rules 5.1 and 5.3, and in rules 8.1 to 13.1 the reference has been replaced with references to “retail investment product”.
There are also a few changes to the Glossary, relating to wording. The definition of “independent intermediary” has been replaced with the definition of “independent financial adviser”. This is in addition to the definition of “packaged product”, as outlined previously, which came about as a response to the changes flowing from the FSA’s Retail Distribution Review, providing compatibility between the SRA Handbook and the FSA Handbook.
Wilkins Kennedy hold regular seminars to help solicitors understand more about the SRA Accounts Rules changes as well as other topical areas relevant to those operating within the legal profession.