QUESTION OF ETHICS

Q I do not want to opt into authorisation by the Financial Services Authority.

Are there activities which solicitors cannot do under the Law Society's regime as a designated professional body?A Yes.

The Treasury considered some activities too specialised to be carried out by professional firms within the designated professional body (DPB) regime and these are classed as prohibitions in the Financial Services and Markets Act 2000 (Professions) (Non-Exempt Activities) Order 2001 and listed in rule 3 of the Solicitors' Financial Services (Scope) Rules 2001.

Rule 5 of the Scope rules lays down restrictions in relation to certain investments such as life policies and securities and, rule 4 lays down the basic conditions which apply to all activities undertaken as part of the DPB regime.

Solicitors will need to be satisfied that the activity arises out of, or is complementary to, the provision of a particular professional service to a particular client; that the manner of the provision by the firm of any service in the course of carrying on the activities is incidental to the provision of professional services; and that the firm accounts to the client for any pecuniary reward it receives from a third party.

Please noteInvestment businessUnder the Financial Services and Markets Act 2000, most firms now doing non-discrete investment business only will no longer need authorisation and need not return the FSA's opt-in form.

These firms will come within the designated professional body regime (as members of the Law Society) and there is no need to register with the Law Society.

Most firms now doing discrete investment business (or authorised by other regulators) will need to be authorised by the FSA, and must complete and return the FSA's opt-in form by 31 October 2001.l Question of ethics is compiled by the Law Society's professional ethics guidance team.

Send questions for publication to Austin O'Malley, the Law Society, Ipsley Court, Berrington Close, Redditch B98 0TD; DX 19114 Redditch; tel: 020 7242 1222.