Referral fees for accountants: what the rules actually say

Start with the pleasant surprise: neither ICAEW nor ACCA bans referral fees. Both codes of ethics treat commission and referral income as a self-interest threat to objectivity — something to be managed, not something forbidden.

The management is disclosure. ICAEW's Code of Ethics requires members to tell the client about the arrangement and the fact that a fee is being received; ACCA's requirements run along the same lines. Best practice, and the standard many firms adopt, is written disclosure of the actual amount, with the client's acknowledgement kept on file.

Two further wrinkles. Members holding an ICAEW Designated Professional Body licence face specific handling rules for commissions connected with regulated activity. And a fee that is never disclosed is not a technical breach to be tidied up later — it is exactly the kind of conduct finding that professional indemnity insurers and disciplinary committees take an interest in. Disclosure costs a paragraph. Silence costs considerably more.

The sharper boundary is regulatory. Recommending a specific pension transfer, investment or policy is a regulated activity under the Financial Services and Markets Act 2000, and conducting it without authorisation is a criminal offence — up to two years' imprisonment. Accountants stay safe by remaining introducers: identifying that a client has a need and connecting them with an authorised firm, checkable in two minutes on the FCA Register.

The line in practice:

• Safe: "Your pension arrangements look worth a professional review — I can introduce you to a regulated adviser."
• Not safe: "You should transfer that old scheme into a SIPP."

The introducer exclusions cover making introductions and passing information. They do not cover steering the client towards a particular product, however casually it is phrased across a desk. Since the Consumer Duty took effect in July 2023, adviser firms also scrutinise their introducer arrangements harder — expect the receiving firm to ask questions about yours.

A compliant referral arrangement is not complicated, but it is deliberate. The working checklist:

• A written agreement with the adviser firm setting out fee basis and each party's role
• Verification that the firm is FCA-authorised, revisited periodically rather than assumed forever
• Client disclosure in writing, stating the fee, before or at the point of referral
• A file note showing an introduction was made — not a recommendation
• Ethics code obligations checked against your own body's current wording, since detail shifts between ICAEW, ACCA and others

The alternative structure, passing the fee back to the client as a discount, removes the self-interest threat entirely; some firms prefer it for that reason. Either way, the paper trail is the protection. Platforms such as SmartPeer exist to track referrals and generate the disclosure letters automatically, which turns the compliance overhead into a byproduct of the workflow rather than a separate chore.