Can accountants introduce clients to finance providers

Can accountants introduce business clients to finance providers? iwoca’s Richard Sutton has the answer

One of the most common questions accountants ask me is whether they are legally permitted to introduce their business clients to iwoca for finance, without being FCA regulated themselves.

To provide clarity I have compiled a fact sheet of FAQs, with iwoca’s compliance team providing the answers.

Is iwoca a regulated business? Yes, iwoca is fully authorised and regulated by the Financial Conduct Authority (FCA) for consumer credit under licence number 723378.

As a practising accountant, am I able to introduce my clients to external finance providers without an FCA licence? The FCA regulations broadly interpret even a mild form of introduction as a credit-broking activity, which would normally require an FCA licence. However, under the Consumer Credit Act, if you are “supervised and regulated by a professional body designated by the Treasury” then you are exempt from the rules regarding regulated activities (subject to the conditions listed below).

For example, the ICAEW and the ACCA are both designated by the Treasury, and so if you are member of either of these bodies it is permissible for you to introduce your client to external finance providers without an FCA licence. If you are not a member of ICAEW or ACCA check with your own body about their code of ethics.

The following conditions must be met if you are to make such introductions:

• The introducer is not affected by an order or direction made by the FCA

• The introducer is a member of a professional body.

• The introducer must not receive any reward for the introduction unless fully disclosed to the client.

• The introducer provides a regulated activity that is incidental to all professional services undertaken by the introducer.

• The introducer carries out only those activities permitted by the professional body of which they are a member

• The introducer is not already authorised by the FCA

Am I able to earn a referral fee from introducing my clients? Yes, although you are required to disclose your commission arrangements to your client and seek their approval prior to an introduction. This disclosure can be included within your standard letter of engagement, terms and conditions or a separate written notification.

Members of the following bodies should refer to the following publications:

• ICAEW: Code of ethics section 240.5/240.7

• ACCA: Code of ethics for professional accountants working in public practice, Rulebook 2018 section 220.18

For further information on iwoca’s Accountant Referral Scheme email accountants@iwoca.co.uk. To arrange a conversation, or register as an introducer at www.iwoca.co.uk/accountants

• Richard Sutton is iwoca’s Head of Accountant Relationships. iwoca is an ICPA partner – for details go to https://tinyurl.com/y8hd6t5l

NOTE: While the information in this article has been published for your guidance, and is believed to be accurate at the time of publication, it does not constitute formal advice. All members of a professional accountants institute should consult with their members’ helpline for any queries and clarification

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