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Setting the standard

  • By alex.sullivan@cliftonmedialab.com

Michelle Hoskin of Standards International looks at the importance of quality standards in financial planning and how they can be of particular help to financial planners looking to work with solicitors?


The creation of quality standards is always demand-led; either by consumer groups, sector-specific panels or professional/industry bodies.

Some standards are created to prevent further issues within an area of current concern. Others have a huge amount of foresight and are designed to support a sector and the possible ‘future’ challenges that it may face. I am proud to say that the standards of excellence which exist within our magical profession of financial services were designed and launched at a time when in truth, the market could never appreciate their value. Why was this? The answer is that it was because those working within the sector were simply not ready for them. We live in a time when the standards which I am so passionate about are simply too much for most of those operating in the sector to understand or to handle.

I am proud to say that the standards of excellence which exist within our magical profession of financial services were designed and launched at a time when in truth, the market could never appreciate their value

Whilst many planners and firms continue to focus on the need for accumulating academic qualifications and quite simply getting through each day in one piece, there is a special group of individuals and firms which also holds the foresight and is driven by a view of the profession that is yet to come.

It is my belief that it is this advanced approach to ‘doing business’ which will finally turn our industry into a true profession. What is even more promising to see is that in the professional services sector this special group of people are not alone.

Changes in the legal profession

Let’s take a look at an example from another profession here. For some time the legal sector has embraced the framework and benefits of Lexcel.

‘Lexcel’ is the Legal Practice Quality Mark and sits positively alongside BS 8577 Framework for the provision of financial advice and planning services. Through a full understanding and effective adherence, these standards put those accredited legal practices and those certified financial services firms side by side in their professional approach and commitment to quality.

This can only be a good thing for these sectors as a whole, to the consumers that depend on their services, and on the level of excellence to which they commit. The achievement of Lexcel has now become common place in the legal sector, and designed as the Law Society’s legal practice quality mark for practice management and client care. Lexcel sets the required standard in seven different areas: structure and strategy, financial management, information management, people management, risk management, client care, file and case management. Once again, this is a positive step to increase the quality and standards of excellence.

With this ‘business as usual’ approach to quality, ‘The Solicitors Regulation Authority’ (SRA) – as part of the ‘Looking to the Future Reform Programme’ proposed a number of changes to the SRA’s principles and codes. Reviewed by the Legal Services Board (LSB) these have now been given the green light and are likely to pose several issues for the financial services sector, whilst at the same time providing opportunities for those who have the foresight to see what potential lies ahead.

The code includes 7 key principles for practice; these principles comprise the fundamental tenets of ethical behaviour that are expected from all those who they regulate. This includes all individuals they authorise to provide legal services (solicitors, RELs and RFLs), as well as authorised firms, their managers and employees.

‘The Solicitors Regulation Authority ’ (SRA) – as part of the ‘Looking to the Future Reform Programme’ proposed a number of changes to the SRA’s principles and codes. Reviewed by the Legal Services Board (LSB) these have now been given the green light and are likely to pose several issues for the financial services sector, whilst at the same time providing opportunities for those who have the foresight to see what potential lies ahead

The Principles are as follows:

You [the legal practitioner] act:

  1. In a way that upholds the constitutional principle of the rule of law, and the proper administration of justice
  2. In a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons
  3. With independence
  4. With honesty
  5. With integrity
  6. In a way that encourages equality, diversity and inclusion
  7. In the best interests of each client

Now, given our understanding of codes of conduct and ethical principles, these don’t seem too onerous, out of the ordinary or too much to ask from a professional practitioner. However, what is important is how can professional practitioners ensure that they continue to meet these principles if and when they refer one of their clients to another professional or business? The question is, should they even care?

Some would say that it is not their problem, and once their client has been referred over to another business – the service standards that they receive from that source are out of their control. Some may agree. However, the new codes expect, and want, more to be done. The new code of conduct includes many positive suggestions, guides and recommendations; but in particular
I’d like to draw your attention to the details below in relation to the subject of making referrals and introductions:

5.1 In respect of any referral of a client by you [the legal practitioner] to another person, or of any third party who introduces business to you or with whom you share your fees, you ensure that:

  1. Clients are informed of any financial or other interest which you or your business or employer has in referring the client to another person or which an introducer has in referring the client to you;
  2. Clients are informed of any fee sharing arrangement that is relevant to their matter;
  3. The agreement is in writing;
  4. You do not receive payments relating to a referral or make payments to an introducer in respect of clients who are the subject of criminal proceedings; and
  5. Any client referred by an introducer has not been acquired in a way which would breach the SRA’s regulatory arrangements if the person acquiring the client were regulated by the SRA.

So, if the legal practitioner wants to prove that they act in line with the new codes and the 7 principles, then maybe it’s time to move away from a ‘Gentleman’s agreement’ style of business.
This is important. An authorised firm or individual practising in the legal sector will now be held responsible for carrying out suitable due diligence on any 3rd party services to which they might refer their clients.

This due diligence is recommended regardless of whether any money – in the forms of introducers’ fees, referrals or fee/revenue splits – is involved. It is all to do with the individual or firm acting in the best interests of their clients. Unsurprisingly, many planners to whom I have spoken about this seem dismissive of the new rules, explaining that it is unlikely that anything will change. It is felt that the solicitors who have historically introduced clients to financial planning professionals will continue to make these introductions, but without carrying out the necessary due diligence. Well, I wouldn’t be so sure about that!

Therefore, unless the legal practitioner can provide evidence of due diligence checks when asked why a particular third party has been recommended, then I am not sure that the principles are being met, nor the code being adhered to.

What about Financial Planning?

So, the doubters can continue to doubt, but our financial services clients who are already been certified to either BS 8577, ISO 2222 (or both) will take poll position.

Why? It’s quite simply because the due diligence has already been evidenced, and the standards of quality will have already been demonstrated as a result of these certifications. Therefore, those financial planning firms with the foresight to comply with BS 8577 and ISO 22222 are reaping the benefits of their true quality, which becomes their trump card in an ever-evolving profession based on care, due diligence and integrity. These firms will be rewarded handsomely for their efforts.

For more information on how to work with solicitors you can view Michelle’s video on what you can do to help embrace the opportunity


About Michelle Hoskin

Michelle Hoskin (aka Little Miss WOWW!) is well known for her endless enthusiasm and energy, infectious personality and unique outlook on what she describes as a “magical profession”.

With over 20 years’ experience working alongside some of the world’s most successful financial services organisations, Michelle is an internationally recognised author, speaker, coach and leading expert in the design and implementation of international frameworkbased best practice standards.

Michelle is pioneering a drive towards increased professionalism and operational excellence through her continued work at Standards International – the UK’s premier certification body for British and international financial services standards – of which she is the founder. She also most recently led a sector committee whose objective was to develop and launch an exciting new international standard for professional paraplanners.

Relentless in her pursuit of a global movement of change within financial services, Michelle is fully committed to supporting financial professionals worldwide to achieve things they only dreamed were possible, and to working with them so that they become the best possible version of themselves.

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