Q My firm is not authorised by the Financial Services Authority (FSA).

How will the widening of the FSA's regulatory powers in respect of general insurance sales and administration affect us?

A The FSA's regulatory powers are to be extended to include the regulation of general insurance sales and administration from 14 January 2005.

This means that many more insurance products (including legal expenses insurance, insurance against the risk of fire or destruction, mortgage protection policies, etc) will be regulated from this date.

Part XX of the Financial Services and Markets Act 2000 makes special provision for professional firms that do not carry on mainstream investment business but that may carry on regulated activities in the course of providing legal services to clients.

These firms are identified as exempt professional firms.

They are able to carry on exempt regulated activities under the supervision of and regulation by the Law Society as a designated professional body and subject to compliance with the Solicitors' Financial Services (Scope) Rules 2001 and the Solicitors' Financial Services (Conduct of Business) Rules 2001.The Society is in discussion with the FSA.

Amendments to the scope and conduct of business rules will recognise the widening of the FSA's regulatory powers.

The Society maintains that it will be the firms that are already authorised by the FSA that are most likely to want to provide 'mainstream' general insurance services and so require a variation of their authorisation from the FSA.

Most exempt professional firms should find that they can continue as before and in reliance on the amended scope rules and the conduct of business rules.

However, all solicitors are advised to consider the FSA's perimeter guidance for more detail on the relevant statutory provisions.

For immediate queries, telephone the Law Society's professional ethics guidance helpline, tel: 0870 606 2577 or visit the FSA Web site at www.fsa.gov.uk/handbook/legal_instruments/2004/2004_01.pdf.

(Annex E.) Further guidance will follow shortly.

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