Question of Ethics

Q Will I need to be authorised by the Financial Services Authority (FSA) to administer private mortgages?A There have been developments in this area since publication of the FSA's literature and the Law Society's information pack on the new scheme for regulation of financial services.

The regulated activities linked to regulated mortgage contracts were originally quite wide and appeared to catch solicitors who administer private mortgages by, for example, notifying the borrower of changes in interest rates or payments due. However, article 61 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 has now been amended so that administering a regulated mortgage contract will only be a regulated activity (requiring authorisation by the FSA) where the regulated mortgage contract in question was entered into by way of business.

This means that it will not catch solicitors who administer private mortgages.

Please note that the provisions concerning regulated mortgage contracts do not come into effect until 1 September 2002.

Please noteInvestment businessOn 1 December 2001 the Financial Services Authority became the sole regulator under the Financial Services and Markets Act 2000.

Most firms who were previously doing non-discrete investment business only will not need authorisation under the new Act.

Such firms will automatically be covered by the Law Society's status as a designated professional body, no application to the Law Society is required.

All these firms should already have deleted from their notepaper any statement about authorisation or regulation by the Law Society in the conduct of investment business.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.