SRA Handbook

You and your client

Back to version 21

Version 16 of the Handbook was published on 01/04/2016. For more information, please click 'History' Above

1st Section: You and your client

Chapter 1: Client care

This chapter is about providing a proper standard of service, which takes into account the individual needs and circumstances of each client. This includes providing clients with the information they need to make informed decisions about the services they need, how these will be delivered and how much they will cost. This will enable you and your client to understand each other's expectations and responsibilities. This chapter is also about ensuring that if clients are not happy with the service they have received they know how to make a complaint and that all complaints are dealt with promptly and fairly.

Your relationship with your client is a contractual one which carries with it legal, as well as conduct, obligations. This chapter focuses on your obligations in conduct.

You are generally free to decide whether or not to accept instructions in any matter, provided you do not discriminate unlawfully (see Chapter 2).

The outcomes in this chapter show how the Principles apply in the context of client care.

Outcomes

You must achieve these outcomes:

O(1.1)

you treat your clients fairly;

O(1.2)

you provide services to your clients in a manner which protects their interests in their matter, subject to the proper administration of justice;

O(1.3)

when deciding whether to act, or terminate your instructions, you comply with the law and the Code;

O(1.4)

you have the resources, skills and procedures to carry out your clients' instructions;

O(1.5)

the service you provide to clients is competent, delivered in a timely manner and takes account of your clients' needs and circumstances;

O(1.6)

you only enter into fee agreements with your clients that are legal, and which you consider are suitable for the client's needs and take account of the client's best interests;

O(1.7)

you inform clients whether and how the services you provide are regulated and how this affects the protections available to the client;

O(1.8)

clients have the benefit of your compulsory professional indemnity insurance and you do not exclude or attempt to exclude liability below the minimum level of cover required by the SRA Indemnity Insurance Rules;

O(1.9)

clients are informed in writing at the outset of their matter of their right to complain and how complaints can be made;

O(1.10)

clients are informed in writing, both at the time of engagement and at the conclusion of your complaints procedure, of their right to complain to the Legal Ombudsman, the time frame for doing so and full details of how to contact the Legal Ombudsman;

O(1.11)

clients'  complaints are dealt with promptly, fairly, openly and effectively;

O(1.12)

clients are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them;

O(1.13)

clients receive the best possible information, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of their matter;

O(1.14)

clients are informed of their right to challenge or complain about your bill and the circumstances in which they may be liable to pay interest on an unpaid bill;

O(1.15)

you properly account to clients for any financial benefit you receive as a result of your instructions;

O(1.16)

you inform current clients if you discover any act or omission which could give rise to a claim by them against you.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

Dealing with the client's matter

IB(1.1)

agreeing an appropriate level of service with your client, for example the type and frequency of communications;

IB(1.2)

explaining your responsibilities and those of the client;

IB(1.3)

ensuring that the client is told, in writing, the name and status of the person(s) dealing with the matter and the name and status of the person responsible for its overall supervision;

IB(1.4)

explaining any arrangements, such as fee sharing or referral arrangements, which are relevant to the client's instructions;

IB(1.5)

explaining any limitations or conditions on what you can do for the client, for example, because of the way the client's matter is funded;

IB(1.6)

in taking instructions and during the course of the retainer, having proper regard to your client's mental capacity or other vulnerability, such as incapacity or duress;

IB(1.7)

considering whether you should decline to act or cease to act because you cannot act in the client's best interests;

IB(1.8)

if you seek to limit your liability to your client to a level above the minimum required by the SRA Indemnity Insurance Rules, ensuring that this limitation is in writing and is brought to the client's attention;

IB(1.9)

refusing to act where your client proposes to make a gift of significant value to you or a member of your family, or a member of your firm or their family, unless the client takes independent legal advice;

IB(1.10)

if you have to cease acting for a client, explaining to the client their possible options for pursuing their matter;

IB(1.11)

you inform clients if they are not entitled to the protections of the SRA Compensation Fund;

IB(1.12)

considering whether a conflict of interests has arisen or whether the client should be advised to obtain independent advice where the client notifies you of their intention to make a claim or if you discover an act or omission which might give rise to a claim;

Fee arrangements with your client

IB(1.13)

discussing whether the potential outcomes of the client's matter are likely to justify the expense or risk involved, including any risk of having to pay someone else's legal fees;

IB(1.14)

clearly explaining your fees and if and when they are likely to change;

IB(1.15)

warning about any other payments for which the client may be responsible;

IB(1.16)

discussing how the client will pay, including whether public funding may be available, whether the client has insurance that might cover the fees, and whether the fees may be paid by someone else such as a trade union;

IB(1.17)

where you are acting for a client under a fee arrangement governed by statute, such as a conditional fee agreement, giving the client all relevant information relating to that arrangement;

IB(1.18)

where you are acting for a publicly funded client, explaining how their publicly funded status affects the costs;

IB(1.19)

providing the information in a clear and accessible form which is appropriate to the needs and circumstances of the client;

IB(1.20)

where you receive a financial benefit as a result of acting for a client, either:

(a)

paying it to the client;

(b)

offsetting it against your fees; or

(c)

keeping it only where you can justify keeping it, you have told the client the amount of the benefit (or an approximation if you do not know the exact amount) and the client has agreed that you can keep it;

IB(1.21)

ensuring that disbursements included in your bill reflect the actual amount spent or to be spent on behalf of the client;

Complaints handling

IB(1.22)

having a written complaints procedure which:

(a)

is brought to clients' attention at the outset of the matter;

(b)

is easy for clients to use and understand, allowing for complaints to be made by any reasonable means;

(c)

is responsive to the needs of individual clients, especially those who are vulnerable;

(d)

enables complaints to be dealt with promptly and fairly, with decisions based on a sufficient investigation of the circumstances;

(e)

provides for appropriate remedies; and

(f)

does not involve any charges to clients for handling their complaints;

IB(1.23)

providing the client with a copy of the firm's complaints procedure on request;

IB(1.24)

in the event that a client makes a complaint, providing them with all necessary information concerning the handling of the complaint.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

Accepting and refusing instructions

IB(1.25)

acting for a client when instructions are given by someone else, or by only one client when you act jointly for others unless you are satisfied that the person providing the instructions has the authority to do so on behalf of all of the clients;

IB(1.26)

ceasing to act for a client without good reason and without providing reasonable notice;

IB(1.27)

entering into unlawful fee arrangements such as an unlawful contingency fee;

IB(1.28)

acting for a client when there are reasonable grounds for believing that the instructions are affected by duress or undue influence without satisfying yourself that they represent the client's wishes.

In-house practice

Outcomes 1.1 to 1.5, 1.7, 1.15 and 1.16 apply to your in-house practice.

Outcomes 1.6 and 1.9 to 1.14 apply to your in-house practice where you act for someone other than your employer unless it is clear that the outcome is not relevant to your particular circumstances.

IHP(1.1)

Instead of Outcome 1.8 you comply with the SRA Practice Framework Rules in relation to professional indemnity insurance.

Notes

(i)

The information you give to clients will vary according to the needs and circumstances of the individual client and the type of work you are doing for them, for example an individual instructing you on a conveyancing matter is unlikely to need the same information as a sophisticated commercial client who instructs you on a regular basis.

(ii)

Information about the Legal Ombudsman, including the scheme rules, contact details and time limits, can be found at www.legalombudsman.org.uk.

Chapter 2: Equality and diversity

This chapter is about encouraging equality of opportunity and respect for diversity, and preventing unlawful discrimination, in your relationship with your clients and others. The requirements apply in relation to age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.

Everyone needs to contribute to compliance with these requirements, for example by treating each other, and clients, fairly and with respect, by embedding such values in the workplace and by challenging inappropriate behaviour and processes. Your role in embedding these values will vary depending on your role.

As a matter of general law you must comply with requirements set out in legislation - including the Equality Act 2010 - as well as the conduct duties contained in this chapter.

The outcomes in this chapter show how the Principles apply in the context of equality and diversity.

Outcomes

You must achieve these outcomes:

O(2.1)

you do not discriminate unlawfully, or victimise or harass anyone, in the course of your professional dealings;

O(2.2)

you provide services to clients in a way that respects diversity;

O(2.3)

you make reasonable adjustments to ensure that disabled clients, employees or managers are not placed at a substantial disadvantage compared to those who are not disabled, and you do not pass on the costs of these adjustments to these disabled clients, employees or managers;

O(2.4)

your approach to recruitment and employment encourages equality of opportunity and respect for diversity;

O(2.5)

complaints of discrimination are dealt with promptly, fairly, openly, and effectively;

O(2.6)

you have appropriate arrangements in place to ensure that you monitor, report and, where appropriate, publish workforce diversity data.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(2.1)

having a written equality and diversity policy (which may be contained within one or more documents, including one or more policy documents, as appropriate) which is appropriate to the size and nature of the firm and includes the following features:

(a)

a commitment to the principles of equality and diversity and legislative requirements;

(b)

a requirement that all employees and managers comply with the outcomes;

(c)

provisions to encompass your recruitment and interview processes;

(d)

details of how the firm will implement, monitor, evaluate and update the policy;

(e)

details of how the firm will ensure equality in relation to the treatment of employees, managers, clients and third parties instructed in connection with client matters;

(f)

details of how complaints and disciplinary issues are to be dealt with;

(g)

details of the firm's arrangements for workforce diversity monitoring; and

(h)

details of how the firm will communicate the policy to employees, managers and clients;

IB(2.2)

providing employees and managers with training and information about complying with equality and diversity requirements;

IB(2.3)

monitoring and responding to issues identified by your policy and reviewing and updating your policy.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

IB(2.4)

being subject to any decision of a court or tribunal of the UK , that you have committed, or are to be treated as having committed, an unlawful act of discrimination;

IB(2.5)

discriminating unlawfully when accepting or refusing instructions to act for a client.

In-house practice

Outcomes 2.1 and 2.2 apply to all in-house practice.

Instead of outcomes 2.3 to 2.5 you must achieve the following outcome:

IHP(2.1)

if you have management responsibilities you take all reasonable steps to encourage equality of opportunity and respect for diversity in your workplace.

Notes

(i)

The obligations in this chapter closely mirror your legal obligations. You can obtain further information from the Equality and Human Rights Commission, www.equalityhumanrights.com.

(ii)

See also Chapter 1 (Client care) for the handling of client complaints.

(iii)

See also Chapter 7 (Management of your business) for your obligation to have in place appropriate systems and controls for complying with the outcomes in this chapter.

(iv)

For more information on collecting, reporting and publishing diversity data, including compliance with data protection legislation, please see guidance.

Chapter 3: Conflicts of interests

This chapter deals with the proper handling of conflicts of interests, which is a critical public protection. It is important to have in place systems that enable you to identify and deal with potential conflicts.

Conflicts of interests can arise between:

1. you and current clients ("own interest conflict"); and
2. two or more current clients ("client conflict").

You can never act where there is a conflict, or a significant risk of conflict, between you and your client.

If there is a conflict, or a significant risk of a conflict, between two or more current clients, you must not act for all or both of them unless the matter falls within the scope of the limited exceptions set out at Outcomes 3.6 or 3.7. In deciding whether to act in these limited circumstances, the overriding consideration will be the best interests of each of the clients concerned and, in particular, whether the benefits to the clients of you acting for all or both of the clients outweigh the risks.

You should also bear in mind that conflicts of interests may affect your duties of confidentiality and disclosure which are dealt with in Chapter 4.

The outcomes in this chapter show how the Principles apply in the context of conflicts of interests.

Outcomes

You must achieve these outcomes:

Systems

O(3.1)

you have effective systems and controls in place to enable you to identify and assess potential conflicts of interests;

O(3.2)

your systems and controls for identifying own interest conflicts are appropriate to the size and complexity of the firm and the nature of the work undertaken, and enable you to assess all the relevant circumstances, including whether your ability as an individual, or that of anyone within your firm, to act in the best interests of the client(s), is impaired by:

(a)

any financial interest;

(b)

a personal relationship;

(c)

the appointment of you, or a member of your firm or family, to public office;

(d)

commercial relationships; or

(e)

your employment;

O(3.3)

your systems and controls for identifying client conflicts are appropriate to the size and complexity of the firm and the nature of the work undertaken, and enable you to assess all relevant circumstances, including whether:

(a)

the clients' interests are different;

(b)

your ability to give independent advice to the clients may be fettered;

(c)

there is a need to negotiate between the clients;

(d)

there is an imbalance in bargaining power between the clients; or

(e)

any client is vulnerable;

Prohibition on acting in conflict situations

O(3.4)

you do not act if there is an own interest conflict or a significant risk of an own interest conflict;

O(3.5)

you do not act if there is a client conflict, or a significant risk of a client conflict, unless the circumstances set out in Outcomes 3.6 or 3.7 apply;

Exceptions where you may act, with appropriate safeguards, where there is a client conflict

O(3.6)

where there is a client conflict and the clients have a substantially common interest in relation to a matter or a particular aspect of it, you only act if:

(a)

you have explained the relevant issues and risks to the clients and you have a reasonable belief that they understand those issues and risks;

(b)

all the clients have given informed consent in writing to you acting;

(c)

you are satisfied that it is reasonable for you to act for all the clients and that it is in their best interests; and

(d)

you are satisfied that the benefits to the clients of you doing so outweigh the risks;

O(3.7)

where there is a client conflict and the clients are competing for the same objective, you only act if:

(a)

you have explained the relevant issues and risks to the clients and you have a reasonable belief that they understand those issues and risks;

(b)

the clients have confirmed in writing that they want you to act, in the knowledge that you act, or may act, for one or more other clients who are competing for the same objective;

(c)

there is no other client conflict in relation to that matter;

(d)

unless the clients specifically agree, no individual acts for, or is responsible for the supervision of work done for, more than one of the clients in that matter; and

(e)

you are satisfied that it is reasonable for you to act for all the clients and that the benefits to the clients of you doing so outweigh the risks.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(3.1)

training employees and managers to identify and assess potential conflicts of interests;

IB(3.2)

declining to act for clients whose interests are in direct conflict, for example claimant and defendant in litigation;

IB(3.3)

declining to act for clients where you may need to negotiate on matters of substance on their behalf, for example negotiating on price between a buyer and seller of a property;

IB(3.4)

declining to act where there is unequal bargaining power between the clients, for example acting for a seller and buyer where a builder is selling to a non-commercial client;

IB(3.5)

declining to act for clients under Outcome 3.6 (substantially common interest) or Outcome 3.7 (competing for the same objective) where the clients cannot be represented even-handedly, or will be prejudiced by lack of separate representation;

IB(3.6)

acting for clients under Outcome 3.7 (competing for the same objective) only where the clients are sophisticated users of legal services;

IB(3.7)

acting for clients who are the lender and borrower on the grant of a mortgage of land only where:

(a)

the mortgage is a standard mortgage (i.e. one provided in the normal course of the lender's activities, where a significant part of the lender's activities consists of lending and the mortgage is on standard terms) of property to be used as the borrower's private residence;

(b)

you are satisfied that it is reasonable and in the clients' best interests for you to act; and

(c)

the certificate of title required by the lender is in the form approved by the Society and the Council of Mortgage Lenders.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

IB(3.8)

in a personal capacity, selling to or buying from, lending to or borrowing from a client, unless the client has obtained independent legal advice;

IB(3.9)

advising a client to invest in a business, in which you have an interest which affects your ability to provide impartial advice;

IB(3.10)

where you hold a power of attorney for a client, using that power to gain a benefit for yourself which in your professional capacity you would not have been prepared to allow to a third party;

IB(3.11)

acting for two or more clients in a conflict of interests under Outcome 3.6 (substantially common interest) where the clients' interests in the end result are not the same, for example one partner buying out the interest of the other partner in their joint business or a seller transferring a property to a buyer;

IB(3.12)

acting for two or more clients in a conflict of interests under Outcome 3.6 (substantially common interest) where it is unreasonable to act because there is unequal bargaining power;

IB(3.13)

acting for two buyers where there is a conflict of interests under Outcome 3.7 (competing for the same objective), for example where two buyers are competing for a residential property;

IB(3.14)

acting for a buyer (including a lessee) and seller (including a lessor) in a transaction relating to the transfer of land for value, the grant or assignment of a lease or some other interest in land for value.

In-house practice

Outcomes 3.4 to 3.7 apply to your in-house practice.

Outcomes 3.1 to 3.3 apply if you have management responsibilities.

Chapter 4: Confidentiality and disclosure

This chapter is about the protection of clients' confidential information and the disclosure of material information to clients.

Protection of confidential information is a fundamental feature of your relationship with clients. It exists as a concept both as a matter of law and as a matter of conduct. This duty continues despite the end of the retainer and even after the death of the client.

It is important to distinguish the conduct duties from the concept of law known as legal professional privilege.

Bear in mind that all members of the firm or in-house practice, including support staff, consultants and locums, owe a duty of confidentiality to your clients.

The duty of confidentiality to all clients must be reconciled with the duty of disclosure to clients. This duty of disclosure is limited to information of which you are aware which is material to your client's matter. Where you cannot reconcile these two duties, then the protection of confidential information is paramount. You should not continue to act for a client for whom you cannot disclose material information, except in very limited circumstances, where safeguards are in place. Such situations often also give rise to a conflict of interests which is discussed in Chapter 3.

The outcomes in this chapter show how the Principles apply in the context of confidentiality and disclosure.

Outcomes

You must achieve these outcomes:

O(4.1)

you keep the affairs of clients confidential unless disclosure is required or permitted by law or the client consents;

O(4.2)

any individual who is advising a client makes that client aware of all information material to that retainer of which the individual has personal knowledge;

O(4.3)

you ensure that where your duty of confidentiality to one client comes into conflict with your duty of disclosure to another client, your duty of confidentiality takes precedence;

O(4.4)

you do not act for A in a matter where A has an interest adverse to B, and B is a client for whom you hold confidential information which is material to A in that matter, unless the confidential information can be protected by the use of safeguards, and:

(a)

you reasonably believe that A is aware of, and understands, the relevant issues and gives informed consent;

(b)

either:

(i)

B gives informed consent and you agree with B the safeguards to protect B's information; or

(ii)

where this is not possible, you put in place effective safeguards including information barriers which comply with the common law; and

(c)

it is reasonable in all the circumstances to act for A with such safeguards in place;

O(4.5)

you have effective systems and controls in place to enable you to identify risks to client confidentiality and to mitigate those risks.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(4.1)

your systems and controls for identifying risks to client confidentiality are appropriate to the size and complexity of the firm or in-house practice and the nature of the work undertaken, and enable you to assess all the relevant circumstances;

IB(4.2)

you comply with the law in respect of your fiduciary duties in relation to confidentiality and disclosure;

IB(4.3)

you only outsource services when you are satisfied that the provider has taken all appropriate steps to ensure that your clients' confidential information will be protected;

IB(4.4)

where you are an individual who has responsibility for acting for a client or supervising a client's matter, you disclose to the client all information material to the client's matter of which you are personally aware, except when:

(a)

the client gives specific informed consent to non-disclosure or a different standard of disclosure arises;

(b)

there is evidence that serious physical or mental injury will be caused to a person(s) if the information is disclosed to the client;

(c)

legal restrictions effectively prohibit you from passing the information to the client, such as the provisions in the money-laundering and anti-terrorism legislation;

(d)

it is obvious that privileged documents have been mistakenly disclosed to you;

(e)

you come into possession of information relating to state security or intelligence matters to which the Official Secrets Act 1989 applies;

IB(4.5)

not acting for A where B is a client for whom you hold confidential information which is material to A unless the confidential information can be protected.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

IB(4.6)

disclosing the content of a will on the death of a client unless consent has been provided by the personal representatives for the content to be released;

IB(4.7)

disclosing details of bills sent to clients to third parties, such as debt factoring companies in relation to the collection of book debts, unless the client has consented.

In-house practice

The outcomes listed above apply to your in-house practice.

Notes

(i)

The protection of confidential information may be at particular risk where:

(a)

two or more firms merge;

(b)

when you leave one firm and join another, such as if you join a firm acting against one of your former clients.

(ii)

The following circumstances may make it difficult to implement effective safeguards and information barriers:

(a)

you are a small firm;

(b)

the physical structure or layout of the firm means that it will be difficult to preserve confidentiality; or

(c)

the clients are not sophisticated users of legal services.

Chapter 5: Your client and the court

This chapter is about your duties to your client and to the court if you are exercising a right to conduct litigation or acting as an advocate. The outcomes apply to both litigation and advocacy but there are some indicative behaviours which may be relevant only when you are acting as an advocate.

The outcomes in this chapter show how the Principles apply in the context of your client and the court.

Outcomes

You must achieve these outcomes:

O(5.1)

you do not attempt to deceive or knowingly or recklessly mislead the court;

O(5.2)

you are not complicit in another person deceiving or misleading the court;

O(5.3)

you comply with court orders which place obligations on you;

O(5.4)

you do not place yourself in contempt of court;

O(5.5)

where relevant, clients are informed of the circumstances in which your duties to the court outweigh your obligations to your client;

O(5.6)

you comply with your duties to the court;

O(5.7)

you ensure that evidence relating to sensitive issues is not misused;

O(5.8)

you do not make or offer to make payments to witnesses dependent upon their evidence or the outcome of the case.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(5.1)

advising your clients to comply with court orders made against them, and advising them of the consequences of failing to comply;

IB(5.2)

drawing the court's attention to relevant cases and statutory provisions, and any material procedural irregularity;

IB(5.3)

ensuring child witness evidence is kept securely and not released to clients or third parties;

IB(5.4)

immediately informing the court, with your client's consent, if during the course of proceedings you become aware that you have inadvertently misled the court, or ceasing to act if the client does not consent to you informing the court;

IB(5.5)

refusing to continue acting for a client if you become aware they have committed perjury or misled the court, or attempted to mislead the court, in any material matter unless the client agrees to disclose the truth to the court;

IB(5.6)

not appearing as an advocate, or acting in litigation, if it is clear that you, or anyone within your firm, will be called as a witness in the matter unless you are satisfied that this will not prejudice your independence as an advocate, or litigator, or the interests of your clients or the interests of justice.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

IB(5.7)

constructing facts supporting your client's case or drafting any documents relating to any proceedings containing:

(a)

any contention which you do not consider to be properly arguable; or

(b)

any allegation of fraud, unless you are instructed to do so and you have material which you reasonably believe shows, on the face of it, a case of fraud;

IB(5.8)

suggesting that any person is guilty of a crime, fraud or misconduct unless such allegations:

(a)

go to a matter in issue which is material to your own client's case; and

(b)

appear to you to be supported by reasonable grounds;

IB(5.9)

calling a witness whose evidence you know is untrue;

IB(5.10)

attempting to influence a witness, when taking a statement from that witness, with regard to the contents of their statement;

IB(5.11)

tampering with evidence or seeking to persuade a witness to change their evidence;

IB(5.12)

when acting as an advocate, naming in open court any third party whose character would thereby be called into question, unless it is necessary for the proper conduct of the case;

IB(5.13)

when acting as an advocate, calling into question the character of a witness you have cross-examined unless the witness has had the opportunity to answer the allegations during cross-examination.

In-house practice

The outcomes in this chapter apply to your in-house practice.

Notes

(i)

If you are a litigator or an advocate there may be occasions when your obligation to act in the best interests of a client may conflict with your duty to the court. In such situations you may need to consider whether the public interest is best served by the proper administration of justice and should take precedence over the interests of your client.

Chapter 6: Your client and introductions to third parties

There may be circumstances in which you wish to refer your clients to third parties, perhaps to another lawyer or a financial services provider. This chapter describes the conduct duties which arise in respect of such introductions. It is important that you retain your independence when recommending third parties to your client and that you act in the client's best interests.

The outcomes in this chapter show how the Principles apply in the context of your client and introductions to third parties.

Outcomes

You must achieve these outcomes:

O(6.1)

whenever you recommend that a client uses a particular person or business, your recommendation is in the best interests of the client and does not compromise your independence;

O(6.2)

clients are fully informed of any financial or other interest which you have in referring the client to another person or business;

O(6.3)

clients are in a position to make informed decisions about how to pursue their matter;

O(6.4)

you are not paid a prohibited referral fee.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(6.1)

any arrangement you enter into in respect of regulated mortgage contracts, regulated credit agreements, general insurance contracts (including after the event insurance) or pure protection contracts, provides that referrals will only be made where this is in the best interests of the particular client and the contract or agreement is suitable for the needs of that client;

IB(6.2)

any referral to a third party that can only offer products from one source is made only after the client has been informed of this limitation;

IB(6.3)

having effective systems in place for assessing whether any arrangement complies with the statutory and regulatory requirements;

IB(6.4)

retaining records and management information to enable you to demonstrate that any payments you receive are not prohibited referral fees.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

IB(6.5)

entering into any arrangement which restricts your freedom to recommend any particular business, except in respect of regulated mortgage contracts, general insurance contracts or pure protection contracts;

IB(6.6)

being an appointed representative.

In-house practice

The outcomes in this chapter apply to your in-house practice.

Notes

(i)

See Outcome 1.15, in relation to financial benefits that you may receive in respect of introductions to third parties.

(ii)

If the introduction is in connection with the provision of financial services, and your firm is not authorised by the Financial Conduct Authority, you will need to comply with the SRA Financial Services (Scope) Rules 2001 and the SRA Financial Services (Conduct of Business) Rules 2001. Where an introduction is not a regulated activity because you can rely on an exclusion in the Regulated Activities Order, you will need nevertheless to consider Outcome 1.15.

(iii)

This chapter should be read in conjunction with Chapter 12 (Separate businesses).