How HR consultants can offer financial-advice referrals without becoming regulated

Run one redundancy consultation and you will hear it: 'Should I take the enhanced package?' A 55-year-old with a £40,000 settlement wants to know whether to pay it into their pension. A TUPE transfer raises questions about what happens to accrued benefits. A departing director asks how their share options are taxed.

You are the person in the room. You are also, almost certainly, not authorised to answer.

That is not a weakness. Employees in financial distress make worse exit decisions, negotiate more emotionally and remember the process as hostile. An HR consultant who can say 'I cannot advise you, but I can connect you with someone regulated who can' de-escalates the conversation and upgrades the whole offboarding experience — at zero cost to the employer.

Under the Financial Services and Markets Act 2000, recommending a course of action on a specific investment or pension is regulated advice. Explaining how something works, in general terms, is not. You can tell an employee that the first £30,000 of a genuine termination payment is usually free of income tax. You cannot tell them to sacrifice the rest into their pension.

Safe ground includes:

• Factual descriptions of how schemes and allowances operate.
• Signposting to MoneyHelper, or to Pension Wise for the over-50s — both free and government-backed.
• Introducing a named, FCA-authorised adviser without recommending any product.

The danger phrase is 'if I were you'. Strike it from your vocabulary in money conversations. Permanently.

The best moment to offer an introduction is before the emotional peak, not during it. Put a line in the offboarding pack: independent regulated financial advice is available, here is how to access it. Settlement agreements routinely fund legal advice; almost none fund financial advice, which is odd given the sums involved often dwarf the legal fees.

For owner-clients the same logic applies at different moments — an exit conversation, a key hire's benefits package, a director's protection gap. Keep a shortlist of two or three advisers you have checked on the FCA Register, and refresh it annually. A referral process that exists only in your head is not a process. It is a habit waiting to be forgotten under deadline pressure.

Introducer fees are lawful and common — provided the client knows. Disclose in writing that you may receive a fee, roughly what it is, and that the client is free to go elsewhere. Do it before the introduction, not after the invoice.

Put the arrangement with the adviser in writing too: what triggers payment, when, and what happens if the client disengages. Networks such as SmartPeer track referrals end to end and generate the disclosure letter for each one, which removes the admin excuse entirely.

One caution. Never let a fee tempt you into nudging an employee towards advice they did not ask for during a live redundancy process. The referral should follow the question. Not the other way round.