Q I have heard that the Financial Services Authority (FSA) will regulate insurance selling and administration from January 2005.

What is the scope of its regulation?

A The FSA currently regulates activities relating to long-term insurance contracts (life policies, etcetera).

From 14 January 2005, the FSA's regulatory powers will extend to general insurance.

All types of insurance will be subject to regulation, including after-the-event legal expenses insurance and restrictive covenant indemnity policies.

The regulated activities relating to insurance, 'insurance mediation activities', are:

- Dealing as an agent in contracts of insurance;

- Arranging/making arrangements with a view to a client entering into a contract of insurance;

- Assisting in the administration and performance of a contract of insurance;

- Advising on the merits of buying or selling a contract of insurance, and;

- Agreeing to carry on any of the above activities.

Most solicitors' practices rely on the part XX exemption and operate as exempt professional firms from within the designated professional body (DPB) regime administered by the Law Society.

The Society is preparing amendments to the scope rules and the conduct of business rules, so that they extend to the new regulated activities.

This means that firms that are not providing mainstream financial services should be able to continue providing services from within the DPB regime, provided that they are satisfied that they can comply with the conditions set out in the rules.

Detailed guidance on the various changes will be issued shortly.

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

The guidance is available on-line at the FSA Web site (see www.fsa.gov.uk/ handbook/legal_instruments/2004/2004_01.pdf, (Annex E).

Telephone hotline

The Law Society's professional ethics lines are open for general enquiries between 11am and 1pm, and 2pm and 4pm.

The lines are less busy in the afternoon.

It takes emergency calls outside these hours, tel: 0870 606 2577.

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