Referrals for Accountants: when risk management drives growth

Referrals are core to how professional services firms collaborate, grow, and serve clients - but they come with real compliance responsibilities. Whether or not money changes hands, certain referrals can trigger regulatory obligations, and potentially the need for a DPB (Investment Business) licence. Too often, referrals are untracked, unmanaged, and misunderstood - putting firms at risk and leaving value on the table.

This article, explains how to spot when a referral becomes a regulated activity, what can go wrong (including the long tail of undisclosed commissions), and how RQ can help firms manage referrals as a strategic asset - safely, efficiently, and at scale.

Referrals: Fuel for growth, but not without friction

Referrals are a cornerstone of client service and business development for law firms, accountants, and other professionals. But what starts as a helpful introduction can quickly become a compliance risk - particularly when regulated services or client benefits are involved.

This isn’t just about commission. Even referrals with no financial incentive can trigger compliance obligations - including the need for a Designated Professional Body (DPB) licence.

That was the message from a recent ICAEW session delivered in partnership with RQ, the referral compliance platform built with ICAEW input. The core idea: you can’t manage risk - or unlock value - if you’re not tracking referrals in the first place.

When do referrals create risk?

Firms often underestimate when referrals cross the regulatory line. You may have compliance obligations if:

• You proactively introduce a client to a third party
• The subject matter touches on regulated services (e.g., pensions, insurance)
• The third party is a restricted adviser (especially relevant to ICAEW - regulated firms)
• You receive any benefit - commission or otherwise
• You comment on the advice or solution being offered

In these cases, firms may need to:

• Log the referral and keep a full audit trail
• Apply for a DPB (Investment Business) Licence
• Evidence partner due diligence

If there is a fee share involved - no matter how small - remember: liability doesn’t expire. In the case of Hopcraft v Close Brothers Ltd, currently before the Court of Appeal, the courts have made clear that the limitation period for claims arising from undisclosed commissions doesn’t begin until the client becomes aware of the non-disclosure. That could be years later - and even longer if there’s evidence of deliberate concealment.

Crucially, this risk isn’t confined to financial products. If your firm earns commission from referring clients to software providers - such as cloud accounting platforms or practice management tools - you still owe a duty to disclose it and obtain informed client consent. The same fiduciary standards apply, and failure to do so could result in regulatory action, client complaints, or financial liability.

It’s not just about avoiding risk

Yes, compliance matters - but this is also about opportunity. Firms that systematise their referral processes:

• Spot trends and identify new commercial channels 
• Build trust with transparent, well-governed partnerships
• Reduce regulatory exposure without introducing friction
• Deliver a better, more consistent client experience

The challenge? Most firms rely on ad hoc processes - spreadsheets, inbox searches, or memory. That’s no longer sustainable.

RQ: A smarter way to manage referrals

To help firms turn referrals into a strategic asset, the ICAEW partnered with RQ - a compliance-first platform that integrates directly into Microsoft Outlook. RQ works in the background to:

• Detect and compliantly route referrals
• Automatically capture and store client consent (in relation to commissions) 
• Log referral details, third-party partners, and any benefits
• Enable real-time due diligence
• Instantly generate an audit-ready register

It takes minutes to deploy. There’s no need to train teams on a new system. And for ICAEW members, core functionality is available free of charge.

Turn referrals from a grey area into a growth engine.

Whether you’re referring clients to investment advisers, legal specialists, or cloud software providers, the risks - and the rewards - are real.

If your current referral processes rely on informal handshakes or incomplete records, it may be time to reassess both your exposure and your potential.

To find out more, contact RQ CEO Johnny Ridd at [email protected] or visit rq.app to explore the platform.

Written by

Johnny Ridd, CEO, RQ 

Dean Neaves, QAD Senior Manager, ICAEW