QUESTION OF ETHICSQ I find the incidental exception often helps me to avoid doing discrete investment business - is there something comparable in the designated professional body regime after N2?A Yes.

The firm will need to consider whether the regulated activity is prohibited by rule 3 of the Scope Rules. Assuming that this is not the case, rule 4(a) of the Scope Rules allows a firm to carry out a regulated activity if 'the activities arise out of, or are complementary to, the provision of a particular professional service to a particular client.' It is not possible to undertake a regulated activity in isolation for a client.

To satisfy the basic condition, firms must be able to identify the relevant professional services to the client and these must be services provided by the firm in the course of its practice and must not themselves constitute carrying on a regulated activity.

This test is similar to the incidental exception to discrete investment business in the Solicitors' Investment Business Rules 1995.Please noteInvestment businessOn 1 December 2001 the Financial Services Authority (FSA) becomes the sole regulator under the Financial Services and Markets Act 2000.

Questions of Ethics will concentrate on this issue in the coming months.Under the Act, 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.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.