Firms to escape FSA

Thousands of firms can breathe a sigh of relief this week as they avoid the expense and burden of regulation by the Financial Services Authority...Thousands of firms can breathe a sigh of relief this week as they avoid the expense and burden of regulation by the Financial Services Authority (FSA), but they will have to work harder to learn how to stay within the boundaries of what is permitted.The warning from the Law Society followed last weeks long-awaited publication of two key draft orders setting out which financial and investment activities will be regulated by the FSA and which by the Society.

Under the regime which is expected to come in later this year most firms will avoid FSA regulation if they continue to undertake investment business when it is complimentary or arises out of the usual provision of legal services.

One key area of concern was the effect on family and private client solicitors.

Subject to certain conditions, most will be able to advise on the disposal of investments and, in some cases their purchase, for example, on the transfer of shares between divorcing couples.Alison Crawley, the Law Societys head of professional ethics, said achieving the status quo had been a difficult task.

However, as the legislation was complex, firms would have to be more careful to stay within the boundaries of what was permitted or face possible criminal prosecution, she said.Sue Allen