The Solicitors Regulation Authority (SRA) will have 'no choice' but to soften its guidelines for referrals to intermediaries, according to Ian Muirhead managing director of SIFA.
The SRA has until now only allowed referrals to 'independent' intermediaries.
Muirhead's comments follow the release of an SRA consultation document yesterday which suggested amending referral guidelines to allow solicitors to recommend restricted advisers, as long as the status of the adviser is explained to the client.
Muirhead argued that the SRA has "no choice" but to make the changes because the FSA's most recent definition of 'independent' and 'restricted' makes a "nonsense" of the dictionary and legal definitions of the terms.
He said: "The legal and dictionary definition of ‘independence' means ‘avoiding a conflict of interest and not having your arm twisted by a third party'.
"However advisers that are independent in this traditional sense but offer specialised advice will be considered 'restricted'."
Muirhead explained that this new definition means many advisers that would normally be considered independent will "fall through the cracks" and be categorised as restricted.
He criticised the FSA's most recent definition of independence as 'contrived' and 'unlikely to be understood by the client'.
The SRA's current code of conduct states solicitors can only refer clients requiring investment advice to independent intermediaries who can advise on investment products from across the whole of the market.
SIFA is an organisation that helps IFAs develop relationships with solicitors.
