Leads from other professionals are, quite simply, one of the robust growth opportunities available to any professional services firm.

Proactively introducing a colleague or professional in another field who can solve a client’s problem strengthens your relationship with that client while opening the door to new opportunities; both by expanding the range of ways you can help future clients and by encouraging reciprocal referrals.

But the same process that fuels opportunity can also expose firms to risk. Mishandled referrals can lead to regulatory issues, compliance breaches, or reputational harm.

That’s why referrals must be managed with transparency and control. To capture the upside while removing the risk, firms need a process that’s clear, traceable, and built for compliance.

That’s where structure, process, and the right tools make all the difference.

The opportunity and the risk‍

Referrals work because someone you trust is staking their reputation. 

Done well, they deliver:

• Better outcomes for clients
• Warmer conversations and quicker decisions
• Predictable leads you can forecast, not just hope for
• A reputation for being connected and dependable

Where firms stumble isn’t in making the referral - it’s everything that surrounds it.

Where was it sent? Was adequate due diligence carried out on the firm? Who approved it? How was the introduction made? Was client consent obtained? Where’s the record? Was it regulated or not? How was any commission handled?

If you can’t evidence those fundamentals, risk quickly creeps in.

Obligations: the non-negotiables

Every referral should pass three simple tests.
Use this as a quick compliance checklist

1. Due diligence

Know who you’re introducing. Carry out thorough checks on the firm you’re referring your client to. Are they reputable, regulated, and appropriate for your client’s needs?

2. Licence awareness‍

Understand what a DPB (Investment Business) licence is and when you need one. Know the difference between unregulated referrals and those that fall under exempt regulated activity for ICAEW firms.

3. Transparent commission handling

Whether regulated or unregulated, any income from commissions must be properly disclosed and accounted for.

If any of that relies on memory, manually updated spreadsheets, or email searches, you’re exposed.

What’s a DPB (Investment Business) licence, and when do you need one?

For ICAEW member firms, a Designated Professional Body (DPB) licence allows certain exempt regulated activities without FCA authorisation. Whether you need one depends on who initiates the referral and what kind of service it involves.

A quick way to think about it:

• Client-initiated
  
  • The client asks you about a provider or product, and you share firm details but don’t make a formal introduction. A DPB (Investment Business) licence isn’t required for this.
    
    
• Firm-initiated
  
  • The client asks you about a provider or product, you proactively introduce a client for an insurance or restricted investment service. This is a regulated referral - a DPB (Investment Business) licence is required.

When in doubt, check the ICAEW DPB Handbook and document your reasoning.

(Reference the ICAEW DPB (Investment Business) Handbook, Section 1.5–1.7, and the FCA’s Exempt Regulated Activities under the Financial Services and Markets Act 2000.)

The risk of getting it wrong

Referrals must be handled with care. Mishandling them can lead to:

• Breaches of DPB (Investment Business) licence or FCA rules
• Loss of client trust and reputation
• Financial penalties or regulatory sanctions

Even small administrative slips - a missing consent record, an unverified partner, a lost email trail - can cause problems later.

Too often, firms rely on spreadsheets or inbox searches to piece together evidence after the fact. The rules themselves are clear, but without the right infrastructure, tracking, auditing, and realising the full value of referrals becomes far harder than it should be.

ICAEW and RQ: setting a new standard

Recognising the challenges firms face, ICAEW and RQ have worked together to provide a secure, scalable way to manage referrals - combining compliance rigour with modern tech.

RQ provides the infrastructure for professional referrals, ensuring every introduction is:

• Tracked – From first email to outcome, with full visibility across the firm
• Easy – Captured where they start (often in Outlook)
• Compliant – Automatically categorised as regulated or unregulated
• Auditable – RQ relationships include due diligence, and referrals includes consent evidence, and commission disclosure

Referrals done properly

Referrals remain one of the most powerful growth levers for professional firms - but without structure, they carry risk.

With RQ, you can unlock both sides of the equation: opportunity and compliance, together in one clear, repeatable process