As a recognised professional body under the Financial Services Act 1986, the Law Society will play its part in the saga of the mis-selling of personal pensions.

The Law Society acts as a regulator for the profession authorising solicitors to conduct investment business under the Financial Services Act.

Authorised firms who conduct discrete investment business (DIB) will feel the impact of the Securities and Investments Board's (SIB) requirement for those engaging in mainstream investment business to undertake a review of past pensions business.The SIB is the 'government financial services watchdog' having delegated powers to 'regulate the regulators' industry wide.

Research conducted by the SIB indicated that between 1988 and 1994 a large number of people decided to change their pension arrangements.

In April 1988 it became possible for people to opt out of occupational pension schemes, to decide not to join such a scheme when first entering employment or to transfer the benefit of their accrued rights on or after the end of their employment to some other pension provider, for example a life office by means of a personal pension plan.

It is believed that some of those people decided to change their pension arrangements as a result of bad or inadequate advice.As a result of this the SIB have promulgated a scheme which involves self-assessment of past work by all those who have been involved in the selling and arranging of personal pensions.

In relation to each transaction it must be ascertained whether the transaction was compliant (was proper and adequate advice given?), has the client suffered loss and, finally, whether the loss was caused by the non-compliance.

If the loss was caused by the non-compliant transaction then what redress should be afforded to the client? There is a system of priorities by which certain categories of cases must be examined in the earl y stages of the review.The Law Society's monitoring unit has conducted its own research into how many authorised firms may be affected by SIB's requirements.

Questionnaires were sent to all firms known to be conducting DIB in January 1994 requesting information regarding the number of personal pensions arranged by the firm as a result of the transfer of deferred benefits or clients having opted out of occupational schemes.

The Law Society's Council then issued mandatory statements in respect of past and future pensions work.

Once again these were distributed to all firms known to have conducted DIB.

Council statement document B (dealing with past work) inter alia required firms to 'prepare for a systematic reassessment of "high priority" categories of case by taking steps on how to identify the cases in those categories and by collecting relevant data on those cases'.

It also indicated what the 'high priority' categories were -- beware, the 'high priority' categories have now been amended and this is covered later in this article.

So, before firms which no longer conduct DIB discount this article as being one which does not apply to them, remember the review process applies to past work.

Therefore any firm which has arranged a personal pension on behalf of a client between 29 April 1988 and 30 June 1994 (policies taken out after 30 June will be included if advice was provided before that date) may be affected by the review.Council statement document B, to recap, started the review process by requiring firms to initiate the identification of high priority cases pending the issue of further detailed guidance.

This has now been issued in the form of Council statement C.

In essence, document C requires firms to carry out a review of past cases of pension transfers and pension opt outs in accordance with SIB's detailed specification document -- 'Review of past business part II: specification of standards and procedures' -- which forms annex 2 to Council statement document C.

The review itself, for both transfers and opt outs, is a six-stage process starting with 'identifying priority cases' and ending with, if applicable, 'redress and settlement'.As expressed above, caution should be exercised in respect of 'high priority' categories as these have now been amended.

Firms should disregard the categories as set out in Council statement document B and only refer to annex 2, pp.7 and 45.In brief, the categories for transfers include those clients who have died since the date of the transfer, those who have started to draw retirement benefits and women at or over 45 at the date of transfer and men at or over 50 at the date of transfer.Therefore, the categories in respect of age for transfers have been extended.

The categories for opt outs have been amended and a separate category of 'non-joiner' has been created; previously, document B required firms to work on the basis that all opt outs were 'high priority'.

'Priority' status includes clients who have died since the date of the opt out and clients already drawing benefits from the personal pension.

The age categories are split into clients under 35 and over 35 and depend upon whether the client is still with the same employer and, in certain instances, whether the client is still making contributions to the plan.

The category of 'non-joiner' refers to a client who was entitled to join an occupational scheme but was advised to take out a personal pension plan instead.

Again, the 'priority' status will depend upon age and whether the client is still with the same emplo yer and making his or her own contributions.If a firm identifies a transaction as being 'priority', it must then proceed to review the transaction in accordance with the detailed guidance (annex 2), ensuring that any review is undertaken and completed within the applicable time limits specified.

In addition, any client who requests a firm to review his or her case should have the case reviewed within two years of the request, again following the procedures specified by the SIB in annex 2.The reason why the review may have an impact on all firms which have conducted DIB in this area is due to the 'non-joiner' category.

This category may be difficult to identify and, therefore, the SIB has devised a form of questionnaire, annex 3 to Council statement C, to assist firms in identifying such cases.

The questionnaire must be sent to as many personal pension holders as need to be reached in order to identify priority cases.The role that the monitoring unit will play will be two-fold -- first, to undertake monitoring visits to firms affected by the review to assess compliance with Council statement C and the detailed SIB specifications and to provide guidance to firms during the process of the review.

Monitoring officers on routine or specific visits will wish to ascertain the progress made by the firm in respect of the stages of the review and to examine records required to be kept at various stages.

In addition, officers will also cross check information obtained on visits with that from life offices.If your firm may be affected by the review and has not received Council statement C together with the detailed guidance then you should contact Sarah Ball at the Professional Standards Directorate on 0171 242 1222.

If you wish to discuss in confidence whether your firm is affected by the review or require guidance on the review generally then please contact Alison Matthews, investment business executive in professional ethics, also based at the Professional Standards Directorate.

Alternatively, if you have a technical query or wish to speak to someone regarding the review and a forthcoming monitoring visit then please speak to Bob Copeland or myself.For information, the Personal Investment Authority runs an investors helpline and firms may wish to advise their clients of the availability of this service; tel 0171 417 7001.