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ICAEW & RQ — Frequently Asked Questions

What is a DPB (Designated Professional Body) licence?

A Designated Professional Body (DPB) licence is issued by ICAEW to member firms that wish to conduct certain regulated investment business activities. **What it allows:** Under the Financial Services and Markets Act 2000, accountancy firms regulated by ICAEW can obtain a DPB licence to provide limited investment services that are incidental to their main professional work. This includes: - Advising clients on investments as part of wider services - Arranging deals in investments - Making introductions to regulated firms **Compliance obligations:** Firms with DPB licences must comply with specific conduct rules, including: - Proper record-keeping of investment-related activities - Disclosure of any commercial arrangements - Due diligence on firms they introduce clients to - Training and competence requirements **How RQ helps:** RQ was designed with DPB compliance in mind, providing: - Audit trails for all referral activity - Consent and disclosure capture - Due diligence documentation - Complete records for regulatory review ICAEW members with DPB licences can use RQ to demonstrate they have proper processes in place for managing referrals and introductions to other regulated firms.

What is the ICAEW partnership?

RQ was built in close collaboration with ICAEW (Institute of Chartered Accountants in England and Wales) to support their members with referral management and DPB compliance. **Key aspects of the partnership:** - **Joint development** – RQ was designed with input from ICAEW to address real member needs - **Free access** – ICAEW members get access to RQ at no cost - **DPB support** – Features specifically designed to help with Designated Professional Body obligations - **Ongoing collaboration** – Continued partnership to enhance the platform based on member feedback **Why ICAEW partnered with RQ:** ICAEW recognised that many member firms were managing referrals informally, creating compliance risks and missing commercial opportunities. RQ provides the structure and audit trails that firms need while making referral activity easier to manage. **Benefits for ICAEW members:** - Compliant referral processes out of the box - Audit trails for regulatory requirements - Visibility over referral activity - No cost to access the platform To access RQ through ICAEW, members can sign up at rq.app and select the ICAEW member option during registration.

Is RQ recognised by ICAEW?

ICAEW member firms gain structure, audit trails, and visibility over referral activity.

When does my firm need a DPB investment business licence?

Your firm needs a DPB investment business licence from ICAEW if it carries out regulated investment activities that go beyond making simple referrals. This includes: giving advice on investments such as pensions, ISAs, or unit trusts; arranging deals in investments for clients; managing client portfolios; or receiving ongoing commission from financial services providers. If you simply refer clients to an FCA-regulated adviser without providing any advice or commentary on the suitability of investments, you may not need a licence. However, if you discuss investment options, recommend specific products, or comment on the appropriateness of investments for a client, you likely require a DPB licence. Use the <a href="https://www.icaew.com/-/media/corporate/files/regulations/dpb-investment-business-licence/icaew-traffic-light-guide-to-investment-business-activity.ashx" target="_blank" rel="noopener noreferrer" class="text-[#0073cc] hover:underline">ICAEW Traffic Light Guide</a> to determine your licensing requirements.

Does this replace DPB requirements?

No. It helps firms apply DPB rules consistently.

What activities are covered by a DPB licence?

A DPB licence from ICAEW covers several regulated investment business activities: <strong>Advising on investments</strong> – providing recommendations to clients about specific investments or investment strategies. <strong>Arranging deals in investments</strong> – facilitating transactions in investments on behalf of clients. <strong>Managing investments</strong> – making discretionary investment decisions for clients. <strong>Safeguarding and administering investments</strong> – holding or managing client assets. <strong>Sending dematerialised instructions</strong> – electronic transfer instructions for investments, typically through CREST (the UK's settlement system for share transfers). <strong>Important conditions:</strong> The licence allows these activities only when they are <strong>incidental to and arising out of</strong> your main professional services as an accountant. Activities must comply with the ICAEW DPB Handbook requirements, including the Conduct of Business Code in Part 4. Schedule 1 of Part 3 in the DPB Handbook lists activities that can <strong>only</strong> be conducted by FCA-authorised firms and cannot be performed under a DPB licence.

Is making referrals to financial advisers considered investment business?

Making a simple referral to an FCA-regulated financial adviser is generally not considered investment business activity and does not require a DPB licence. However, the distinction is important. <strong>What is exempt (Schedule 4 of the DPB Handbook):</strong> A "generic referral" where you simply pass on a client's name and contact details to an adviser, without providing any view on the suitability of investments or specific advice, is exempt from regulation. This is sometimes called a "bare introduction". <strong>What may require a DPB licence:</strong> If you go beyond a generic referral by discussing the client's investment needs, commenting on whether particular investments might be suitable, or recommending specific advisers based on their investment offerings, you may be conducting a regulated activity that requires a licence. <strong>The key test:</strong> Does your referral involve any element of investment advice or suitability assessment? If so, it likely falls within regulated activity. RQ helps firms document and evidence that referrals are compliant introductions rather than regulated advice, providing clear audit trails that demonstrate the nature of each referral.

What is the difference between DPB regulation and FCA regulation?

The key difference is that FCA (Financial Conduct Authority) regulation is direct authorisation for firms whose primary business is financial services, while DPB (Designated Professional Body) regulation is an alternative route for professional services firms. <strong>The DPB exemption:</strong> Under the Financial Services and Markets Act 2000, ICAEW is a Designated Professional Body. This enables member firms to carry out certain regulated activities without needing direct FCA authorisation, provided those activities are <strong>incidental to and arising out of</strong> the firm's main professional services. <strong>Key requirements for the DPB route:</strong> <ul> <li>The investment business must be secondary to your main accountancy work</li> <li>Activities must be conducted in accordance with the ICAEW DPB Handbook</li> <li>You must hold a valid DPB licence from ICAEW</li> <li>Your firm cannot be both DPB-licensed and FCA-authorised simultaneously</li> </ul> <strong>When FCA authorisation is required instead:</strong> If your investment activities are not incidental to professional services, or if you wish to conduct activities prohibited under the DPB regime (listed in Schedule 1 of Part 3 of the DPB Handbook), you must apply directly to the FCA. DPB regulation is generally less burdensome than full FCA authorisation but still requires robust compliance with the DPB Handbook, including rules on conduct, competence, and client money handling.

How does RQ help firms comply with DPB regulations?

RQ supports DPB compliance in several key ways: **Commission and fee tracking** - **Audit trails for all income** – Track fees, commissions, and any other payments received for introductions (software credits, referral fees – anything) - **Client consent capture** – Record fully informed client consent before receiving any third-party payment, as required by fiduciary duty and the law around secret commissions **ERA (Exempt Regulated Activity) oversight** - **ERA tracking and triage** – Identify which referrals may constitute exempt regulated activities requiring DPB oversight - **Approval workflows** – Ensure senior oversight of referrals involving investment business, as required by DPB rules - **Partner due diligence** – Track the regulatory status of referral partners to ensure you are only working with appropriately authorised firms **Firm-wide consistency** - **Documented processes** – A consistent, firm-wide approach to making and recording referrals - **Staff training records** – Evidence competence for referral processes and compliance obligations - **Referral rationale** – Record the reasoning behind each referral on client files These features help demonstrate to ICAEW that your firm maintains appropriate oversight of its referral activities and is tracking all income received from third parties.

What is the ICAEW DPB Handbook?

The ICAEW DPB Handbook (effective from 1 June 2023) is the regulatory rulebook that governs firms holding a Designated Professional Body (Investment Business) licence. <strong>Key sections of the Handbook:</strong> <ul> <li><strong>Part 1 – Introduction:</strong> Explains the legal basis for the DPB exemption under the Financial Services and Markets Act 2000</li> <li><strong>Part 2 – Terms and conditions for a licence:</strong> Eligibility requirements and application process</li> <li><strong>Part 3 – Regulated activities:</strong> Details which activities can be conducted under a licence, including schedules on corporate finance, insurance, and mortgages</li> <li><strong>Part 4 – Conduct of Business Code:</strong> Rules on client agreements, disclosures, complaints, and commission</li> <li><strong>Part 5 – Affiliate regulations:</strong> Rules for non-member principals in licensed firms</li> </ul> <strong>What the Handbook requires:</strong> <ul> <li>Competence – staff must have appropriate knowledge and qualifications</li> <li>Client agreements and disclosures – proper engagement letters and status disclosure</li> <li>Annual compliance review – firms must conduct yearly compliance checks</li> <li>Complaints handling and compensation arrangements</li> <li>Professional indemnity insurance – minimum cover requirements</li> <li>Record keeping – documentation retained for at least 6 years</li> </ul> Firms are subject to periodic ICAEW review. Non-compliance can result in conditions, restrictions, or withdrawal of the licence.

How do I apply for a DPB licence from ICAEW?

To apply for a DPB investment business licence from ICAEW: 1. **Check eligibility** – Your firm must be an ICAEW member firm in good standing 2. **Assess your activities** – Use the <a href="https://www.icaew.com/-/media/corporate/files/regulations/dpb-investment-business-licence/icaew-traffic-light-guide-to-investment-business-activity.ashx" target="_blank" rel="noopener noreferrer" class="text-[#0073cc] hover:underline">ICAEW Traffic Light Guide</a> to determine what licence category you need 3. **Prepare documentation** – Gather evidence of competence, compliance procedures, and professional indemnity insurance 4. **Submit application** – Complete the application through ICAEW online regulatory portal 5. **Pay fees** – Annual licensing fees apply based on your firm turnover from investment business activities 6. **Await approval** – ICAEW will review your application and may request additional information. Processing typically takes several weeks Once approved, you must maintain ongoing compliance with the DPB Handbook requirements.

What is the ICAEW Traffic Light Guide for investment business?

The <a href="https://www.icaew.com/-/media/corporate/files/regulations/dpb-investment-business-licence/icaew-traffic-light-guide-to-investment-business-activity.ashx" target="_blank" rel="noopener noreferrer" class="text-[#0073cc] hover:underline">ICAEW Traffic Light Guide</a> is a practical decision-making tool to help accountancy firms assess whether their activities constitute regulated investment business. Activities are categorised as: - **Green** – Activities that are clearly not regulated and do not require a DPB licence, such as general information provision or simple referrals - **Amber** – Activities that may or may not require a licence depending on the specific circumstances and should be assessed carefully - **Red** – Activities that clearly constitute regulated investment business and require either a DPB licence from ICAEW or FCA authorisation The guide covers common scenarios including pension advice, investment discussions, and referral arrangements. It is an essential resource for compliance officers and partners.

Can I receive fees for referrals to financial advisers under DPB rules?

Under DPB regulations and general law, accountancy firms receiving any payment for referrals must follow strict rules: **Legal requirements (all accountants):** A 2024 Court of Appeal judgment clarified that where there is a fiduciary relationship (which most accountant-client relationships are), you cannot receive payment from a third party without the client's **fully informed consent**. This applies to all fees, commissions, software credits, or any other benefit received for introductions. Simply mentioning commissions in small print is not sufficient. The ICAEW's January 2025 guidance confirms that disclosure must be: - Given before the referral is made - Specific about the amount or basis of calculation - Clearly communicated (not buried in terms and conditions) - Accompanied by explicit client consent **Additional DPB requirements:** For firms with DPB licences, additional rules apply: - Fee arrangements must not compromise your duty to act in the client's best interests - Any arrangements must not create conflicts of interest or bias your recommendations - All fee arrangements must be documented and retained for at least 6 years - Receiving ongoing commission may push certain activities into requiring ERA oversight RQ helps firms track fee-sharing arrangements transparently, capture fully informed client consent, and maintain proper disclosure records.

What is the partnership between ICAEW and RQ?

ICAEW and RQ have formed a strategic partnership to help member firms manage their professional referral relationships compliantly and effectively. Under this partnership: - **Free standard subscription** – ICAEW member firms receive RQ standard subscription at no cost as a membership benefit - **Compliance focus** – RQ is designed specifically with ICAEW regulatory requirements in mind, including DPB compliance - **Integration** – The platform is listed on ICAEW Practice Resources as a recommended tool for member firms - **Ongoing development** – RQ continues to evolve based on feedback from ICAEW members and regulatory changes The partnership aims to professionalise referral management across the accountancy profession and help firms turn referrals into a strategic, auditable asset.

Is RQ really free for ICAEW members?

Yes, as part of the ICAEW partnership, member firms can access RQ standard subscription completely free of charge. This includes: - **Unlimited users** – Add your entire team without per-seat fees - **Unlimited referral partners** – Manage as many introducer and referral partner relationships as you need - **Full compliance tools** – Approval workflows, audit trails, and consent management - **Dedicated onboarding** – Support to get your firm set up and running quickly To access this benefit, simply register for RQ using your ICAEW member firm details. There are no hidden costs for the standard subscription. Premium features and integrations may be available at additional cost for firms with more advanced requirements.

How does RQ verify ICAEW membership?

When you register for RQ as an ICAEW member, we verify your membership status through the firm details you provide. This includes your firm name, practice address, and ICAEW membership number or firm registration details. Verification typically happens automatically during the onboarding process. If there are any questions about your membership status, our team will contact you to resolve them. This verification ensures that the free access benefit is reserved for genuine ICAEW member firms and maintains the integrity of the partnership.

What record-keeping requirements apply under DPB regulations?

DPB regulations require rigorous record-keeping for all investment business activities. Key requirements include: - **Client records** – Details of clients to whom you provide investment services, including suitability assessments and advice given - **Transaction records** – Documentation of all investment transactions arranged or advised upon - **Fee arrangements** – Records of all remuneration received for investment business activities - **Complaints** – Full records of any client complaints and their resolution - **Compliance monitoring** – Evidence of ongoing compliance checks and reviews - **Retention period** – Most records must be kept for a minimum of 6 years RQ automatically creates comprehensive audit trails for all referral activities, helping firms meet their documentation obligations under the DPB Handbook.

How does RQ create audit trails for regulatory compliance?

RQ creates comprehensive audit trails designed to meet regulatory requirements including those in the ICAEW DPB Handbook. Every referral in RQ records: - **Creation details** – Who created the referral, when, and from which client record - **Partner selection** – Which referral partner was chosen and why - **Client consent** – Evidence of when and how client consent was obtained - **Approval workflow** – Full history of who approved the referral and any conditions - **Communications** – Log of all communications sent between parties - **Status changes** – Complete history of referral progression through your workflow - **Outcome tracking** – Final disposition and any fees received This detailed trail can be exported for regulatory inspections or internal compliance reviews.

What happens during an ICAEW DPB compliance inspection?

ICAEW conducts regular compliance inspections of firms holding DPB licences to ensure ongoing adherence to the DPB Handbook. During an inspection, the ICAEW review team will typically: - **Review documentation** – Examine your client files, transaction records, and compliance policies - **Assess competence** – Verify that staff conducting investment activities are appropriately qualified - **Check client money** – If applicable, review how client funds are handled and safeguarded - **Interview staff** – Speak with key individuals about your compliance arrangements - **Examine complaints** – Review how any client complaints have been handled - **Test controls** – Assess whether your compliance monitoring is effective Having well-organised records and clear processes, such as those provided by RQ, helps ensure smooth inspections and demonstrates good regulatory standing.

Is RQ officially endorsed by ICAEW?

RQ is officially endorsed by ICAEW as a recommended tool for member firms. The partnership includes: - **Practice Resources listing** – RQ is featured on the ICAEW Practice Resources pages as a tool for managing professional referrals - **Joint development** – Features have been developed with input from ICAEW to ensure alignment with regulatory requirements and member needs - **Member communications** – ICAEW promotes RQ through member newsletters and practice updates - **Ongoing collaboration** – We work closely with ICAEW to ensure RQ evolves with changing regulations and best practices This endorsement reflects ICAEW recognition that professional referral management is an important area where technology can help member firms improve their practices and compliance.

How does RQ help with ICAEW DPB compliance?

RQ is designed to help professional services firms meet the record-keeping and compliance requirements of the ICAEW DPB regime without adding administrative burden. When a referral is created in RQ, the system prompts the user to capture client consent and record fee disclosure. This happens as part of the normal referral workflow, so compliance becomes built into the process rather than an afterthought. Every referral in RQ has a complete audit trail: who made the referral, when, to whom, what consent was obtained, what fees were disclosed, and what the outcome was. This is exactly the information an ICAEW monitoring inspector will ask to see during a review. RQ also helps firms manage their referral panel — the group of IFAs, solicitors, and other professionals they refer clients to. You can record due diligence information for each partner, track their regulatory status (such as their FCA registration), and review panel performance over time. For firms that receive referral fees, RQ tracks the commercial terms of each arrangement and records fees against individual referrals. This makes it straightforward to reconcile referral income and provide evidence during monitoring visits. The Compass feature helps firms identify which of their clients might benefit from a referral, using structured needs analysis rather than ad-hoc conversations. This supports the ICAEW expectation that referrals should be in the client's best interest. In short, RQ turns what is often an informal, paper-based process into a structured, auditable system that satisfies regulatory requirements.

Is RQ free for ICAEW members?

Yes. RQ is an ICAEW Business Partner, and ICAEW member firms can access a free version of the RQ app. This is not a trial — it is a permanently free tier available to firms that hold ICAEW membership. The free version includes core referral management features: creating and tracking referrals, capturing client consent, recording fee disclosure, and maintaining an audit trail. This is designed to help firms meet their DPB compliance obligations without any cost. For firms that need additional features — such as advanced reporting, Compass (client needs analysis), fee-sharing management, and integrations with tools like Outlook, HubSpot, or Xero — paid plans start from £250 per month. These are typically used by larger firms or firms with more complex referral networks. The ICAEW partnership reflects a shared goal: helping accountancy firms manage referrals properly, with the right compliance safeguards in place. ICAEW recognised that many of their member firms were handling referrals informally, which created regulatory risk. RQ provides a structured alternative. To access the free version, visit refer.rq.app/sign-up and register with your firm's details. There is no credit card required and no time limit on the free tier.