FSA announces the date for law firm regulation

FINANCE WORK: corporate, City practices face promotion rule

The Financial Services Authority (FSA) will assume its role as regulator of law firms carrying out mainstream investment business from midnight on 30 November, it was announced last week.The Law Society Council last week approved amendments to the solicitors' practice rules ahead of the FSA taking over.Roughly 7,500 firms are currently regulated by the Society to carry out discrete and non-discrete investment business.

It is estimated that only around 250 firms will need to be registered by the FSA.However, there are ongoing doubts relating to a rule for financial promotions also coming into force.

This could require many corporate and City law firms to obtain advance authorisation where they are deemed to promote financial services through communications via third parties or through the Internet.The Treasury has agreed to amend the order so that many firms would not be covered.

But Tim Herrington, Clifford Chance partner and member of the Law Society's financial regulation task force, said: 'At the moment we are not fully content with Treasury drafts.'Another outstanding problem relates to solicitor trustees who loan money to beneficiaries to purchase property in circumstances where the trustee may take a first charge.Under the current rules, such solicitor trustees will need to be regulated by the FSA.The Law Society is still lobbying for amendments to prevent this, but maintains that - unless they are agreed soon - some firms will need to be regulated for this work, and they should adopt FSA regulation this November.

LINKS: www.fsa.gov.ukJeremy Fleming