FSA may turn to solicitors for reports on assessed firms Companies investigated by the Financial Services Authority (FSA) should be allowed to instruct solicitors to provide the report, it was proposed last week.The FSA opened up consultation ahead of its planned implementation of section 166 of the Financial Services and Markets Act 2000, giving it power to require financial service companies to provide reports by 'skilled persons' - a definition which now formally includes lawyers as well as accountants and actuaries.The decision to commission reports will be based on whether any of the FSA's objectives - maintaining market confidence, promoting public understanding of the financial system, protection of consumers and fighting financial crime - are put at risk by the firm in question.

The FSA - which has final approval over the person chosen will instruct the skilled person as to the content and time limit of the report, which will be funded by the assessed firm.Richard Stones, head of the financial services group at Lovells, said 'solicitors can only benefit' from this liberalisation.

'The new policy allows more flexibility on who can report on a firm's activities and this means the FSA can pick and choose the most appropriate person,' he said.'In situations concerning rule-breaking or the investigation of fact, a solicitor's skills are more apposite than other professions,' he continued.The policy is part of the FSA's plans for a common and integrated approach across all financial services sectors, scheduled to be implemented by November 2001.

An FSA spokesperson said that while it was impossible to tell whether the regulations would mean an influx of new work for solicitors, it 'certainly opened up the possibility'.But Simon Morris, a partner at CMS Cameron McKenna, said that in the past, lawyers were occasionally chosen by the regulator as skilled persons - and the frequency was unlikely to change despite section 166.

'Lawyers are usually brought in to deal with matters arising as a consequence of a report, as opposed to actually making one,' he said.

Andrew Towler