ICAEW DPB Referral Compliance Guide for Accountants

The Complete Guide to ICAEW DPB Referral Compliance

13 February 2026 — by Johnny Ridd

Everything UK accountancy firms need to know about staying compliant when referring clients under the ICAEW Designated Professional Body regime, from consent requirements to audit trails.

What is the DPB (Investment Business) regime?

The Institute of Chartered Accountants in England and Wales (ICAEW) acts as a Designated Professional Body (DPB) under the Financial Services and Markets Act 2000 (FSMA). This arrangement allows ICAEW-regulated accountancy firms to carry out certain regulated activities without needing direct authorisation from the Financial Conduct Authority (FCA).

In practice, this means your firm can do things like refer clients to financial advisers, handle certain investment-related work, and make introductions - provided you stay within the boundaries of the DPB regime.

The rules are set out in the ICAEW DPB Handbook. Every firm that carries out exempt regulated activities must comply with this handbook. It covers what you can and cannot do, how to document your work, and what records you must keep.

The DPB regime exists because Parliament recognised that accountants regularly encounter situations where clients need financial advice. Rather than forcing every accountancy firm to become FCA-authorised, the DPB route provides a proportionate alternative - with ICAEW acting as the oversight body.

But proportionate does not mean light-touch. ICAEW takes its monitoring role seriously. Firms that fail to comply face sanctions, conditions on their DPB licence, or referral to the FCA.

When does a referral become regulated?

Not every introduction is a regulated referral. The distinction matters.

A simple introduction is when you tell a client that a particular adviser exists. You do not endorse them, recommend them, or receive anything in return. This is generally outside the scope of regulation.

A referral crosses into regulated territory when one or more of the following applies:

• You endorse or recommend a specific adviser to the client
• You receive a fee, commission, or other benefit for making the introduction
• You provide advice alongside the referral (for example, suggesting a particular financial product)
• The introduction is part of an ongoing commercial arrangement with the receiving firm

Part 7 of FSMA 2000 governs this area. If your referral falls within the scope of a regulated activity, you must comply with the DPB regime - including consent, disclosure, and record-keeping requirements.

The safe approach is to treat every referral where you receive a fee or make a recommendation as potentially regulated. Document it accordingly. If in doubt, check the ICAEW DPB Handbook or seek guidance from ICAEW directly.

Client consent requirements

ICAEW requires firms to obtain informed client consent before sharing their details with a third party. This is not optional.

Case-by-case consent vs blanket consent

There are two approaches:

• Case-by-case consent - You obtain the client's explicit agreement each time you make a referral. This is the gold standard and what ICAEW generally expects.
• Blanket consent - You include a general consent clause in your engagement letter or terms of business. This covers all future referrals. ICAEW accepts this in some circumstances, but it must be genuinely informed.

In practice, blanket consent often falls short. A general clause buried in an engagement letter does not meet the threshold of "informed" consent. The client must understand:

• Who they are being referred to
• Why the referral is being made
• Whether you receive a fee or other benefit from the referral
• The nature and approximate amount of any fee

The ICAEW Code of Ethics, particularly Section 330, sets out the principles around transparency and client consent. The requirement is clear: the client must know what is happening, why, and what it means for them.

For most firms, case-by-case consent is the safer and more defensible approach. It demonstrates that the client was informed at the point of each referral, not just at the start of the engagement.

Fee disclosure obligations

If your firm receives a fee, commission, or any other benefit for referring a client, you must disclose this to the client. The ICAEW Code of Ethics is unambiguous on this point.

Your disclosure must cover:

1. The existence of the fee - The client must know you receive something for the referral
2. The nature of the fee - Is it a fixed fee, a percentage of the advised amount, or an ongoing trail commission?
3. The approximate amount - The client should understand roughly how much you receive

This disclosure must happen before the referral, not after. The client needs this information to make an informed decision about whether to proceed.

Verbal disclosure alone is not sufficient for compliance purposes. You must document the disclosure in writing and retain evidence that the client received and understood it.

A common mistake is assuming that a generic fee disclosure clause in your engagement letter is enough. It is not. Each referral where a fee is involved should have its own documented disclosure.

The ICAEW expects firms to be transparent about commercial relationships. Monitoring reviewers will look specifically at whether fee disclosures were made, when they were made, and whether they were adequately documented.

Audit trail and record-keeping requirements

ICAEW monitoring visits will check your referral records. Your firm must maintain a clear audit trail for every regulated referral.

At a minimum, your records should include:

• The referral itself - Who was referred, to whom, when, and why
• Client consent - Evidence that informed consent was obtained, with date and method
• Fee disclosure - Documentation showing what was disclosed to the client
• Outcome tracking - What happened after the referral was made
• Due diligence records - Evidence of checks on the receiving firm

Records must be retained for at least six years from the date of the referral. This aligns with general professional record-keeping obligations and ICAEW guidance.

ICAEW monitoring visits are not announced in detail. Reviewers may ask to see your referral records, your consent documentation, and your fee disclosure processes. They will check whether your firm has a systematic approach or relies on informal arrangements.

Firms that cannot produce adequate records face consequences. These range from recommendations for improvement to formal regulatory action, depending on the severity and pattern of non-compliance.

Common compliance pitfalls

ICAEW monitoring reviews consistently identify the same problems across firms. These are the most common pitfalls:

1. Failing to disclose fees - The single most common issue. Firms receive referral fees but do not tell the client.
2. Using blanket consent when case-by-case is needed - A general clause in the engagement letter does not meet the informed consent threshold for specific referrals.
3. Not recording referral outcomes - The referral is sent, but nobody tracks what happened next. This creates gaps in the audit trail.
4. Treating referrals informally - Referrals happen via email or phone with no formal process. There is no record, no consent, and no disclosure.
5. No due diligence on receiving firms - Firms refer clients to advisers without checking their regulatory status, complaints history, or professional standing.
6. Inconsistent processes - Some partners follow the rules, others do not. There is no firm-wide policy or procedure for referrals.
7. Late disclosure - The fee is disclosed after the referral, not before. This undermines the principle of informed consent.

Each of these pitfalls is avoidable. The common thread is a lack of systematic process. Firms that treat referrals as an informal, ad-hoc activity are the ones that fail monitoring reviews.

How technology can help

Managing referral compliance manually - through emails, spreadsheets, and paper forms - is possible but fragile. It depends on every individual in the firm following the same process every time.

Referral management platforms like RQ help firms build compliance into their referral workflow. Consent is captured at the point of referral. Fee disclosures are documented automatically. Every referral has a timestamped audit trail from creation to outcome.

Tools like Compass also help firms identify referral opportunities systematically, rather than relying on individual partners to remember to make introductions.

The benefit is consistency. Technology ensures that the same process applies to every referral, regardless of who in the firm makes it. That consistency is exactly what ICAEW monitoring reviewers want to see.

Checklist: Is your firm referral-compliant?

• We obtain informed, case-by-case client consent before every referral
• We disclose all referral fees to clients before the introduction is made
• Our fee disclosures include the nature and approximate amount of the fee
• We maintain written records of every referral, including consent and disclosure
• We track the outcome of every referral we make
• We conduct due diligence on every firm in our referral panel
• We retain referral records for at least six years
• We have a firm-wide referral policy that all staff follow
• We review our referral processes at least annually
• We could produce our referral records for an ICAEW monitoring visit at short notice

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