City spearheads new initiative to exempt firms from Financial Promotions Order

Corporate Business: lawyers issue disclaimers to counter fear of falling foul of law

City law firms have changed tack in their ongoing struggle with the Treasury to obtain amendments to the Financial Promotions Order, discarding heavy tactics for a softer approach.The order - created under the Financial Services and Markets Act 2000 - regulates inducements and invitations to enter financial agreements.

Fears that its wording might catch solicitors' regular corporate activity have led many firms to insert long disclaimers in communications.Letters were sent by two consortia of City firms to the Treasury this year requesting that the order be changed, but neither was successful.As a result, Clifford Chance, Taylor Joynson Garrett, Wragge & Co and Addleshaw Booth & Co are among those which have decided to opt in to Financial Services Authority regulation to avoid problems.

However, most want to avoid that route.Charles Abrams, head of financial services at SJ Berwin, said the City firms had 'started things on the wrong foot', adopting a heavy-handed approach and asking for an amendment specifically for lawyers.But now SJ Berwin and other City firms including Travers Smith Braithwaite and Denton Wilde Sapte have approached the Treasury with a draft amendment to the order, which enables professionals to be excluded when they are carrying out usual corporate transaction business.The move has been endorsed by the City of London Law Society's sub-committee for regulation.Mr Abrams has also obtained reassurances from Howard Flight - the shadow Paymaster General - that Ruth Kelly, Economic Secretary to the Treasury, will be asked to give the draft serious consideration.Meanwhile, firms are taking widely different approaches to disclaimers.For example, Lovells has included disclaimers on fax, letters and e-mails, while Rowe & Maw is simply including one on its terms of business with clients.Tamasin Little, another SJ Berwin partner involved in the draft, said: 'A change in the regulations is desirable for an army of reasons; disclaimers on notepaper are the least of our problems.

We need to be clear at the moment about what is criminal behaviour and what is not - and we need to be clear about what to advise our clients.'Jeremy Fleming