ICAEW's code and referral fees: what accountants can accept

ICAEW's Code of Ethics does not prohibit referral fees or commissions. It treats them as a normal feature of professional life that must be handled so as not to undermine the five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. A chartered accountant may receive a fee for introducing a client to another firm, and may pay one for an introduction received.

The Code approaches this, as with other ethical questions, through a threats-and-safeguards framework. Rather than a list of banned activities, it asks you to identify the threats a referral fee creates, evaluate whether they are at an acceptable level, and apply safeguards where they are not. This is principles-based regulation, and it puts the responsibility on your judgement — supported by clear expectations.

The main risk the Code identifies with referral income is the self-interest threat: that a financial incentive to refer could, consciously or not, affect the objectivity of your recommendation. If you stand to earn from sending a client to a particular firm, there is an inherent tension between your interest and the client's, and the Code expects you to recognise it rather than deny it.

The point is not that the threat makes referral fees improper. It is that an unmanaged threat does. The Code's whole purpose is to ensure the threat is brought down to an acceptable level through safeguards, so that the client's interest remains paramount and your objectivity is preserved in substance and appearance.

The pivotal safeguard is disclosure. Where you will receive a referral fee or commission in connection with introducing a client, ICAEW expects the client to be made aware of it. Transparency transforms the arrangement: a fee the client knows about and accepts is very different from one concealed from them. The Code's concern is with hidden inducements, not with openly disclosed and agreed arrangements.

Practically, this means telling the client that you have a referral arrangement and that you will receive a fee if they proceed, in terms they can understand, at or before the point of referral. Being ready to explain the arrangement if asked is part of acting with integrity. A client who feels fully informed and free to choose is a client whose trust — and your objectivity — remains intact.

Two other principles frame the practice. Confidentiality requires the client's consent before you pass their information to the firm you are referring them to; you cannot disclose personal details to a third party without authority to do so. This makes consent an operational necessity, not just a courtesy. Professional competence and due care supports the very act of referring: where a matter falls outside your expertise, introducing a client to a qualified specialist is the responsible course, not a failing.

The professional behaviour principle also bears on your choice of destination. Referring clients to vetted, regulated specialists reflects well on the profession and protects the client; referring for a fee to firms you have not checked would put both at risk. The standing of those you introduce to is, in effect, part of your own compliance.

A chartered accountant running referral arrangements within the Code does a consistent set of things: refers on the merits for the client, discloses the fee arrangement to the client, obtains consent before sharing personal data, refers only to competent and properly regulated firms, and keeps a record that these steps happened. None of this is onerous, and all of it flows naturally from the fundamental principles.

A referral network that embeds disclosure, consent and vetting into its process makes ICAEW compliance easier, because the safeguards the Code expects are part of the workflow. With those in place, accepting a share of the fee — typically a 60-70% member share in this model — sits comfortably within the Code. Treat this as general orientation rather than a substitute for the current ICAEW Code of Ethics, which remains the authority and should be consulted directly when you set your arrangements up.