FINANCE ADVICE: Law Society will govern incidental work

Solicitors who offer their clients mortgage and general insurance advice along with legal services have escaped onerous Financial Services Authority regulation after being granted a special exemption.

Under regulations coming into force in October 2004 and January 2005, businesses offering mortgage and general insurance advice to clients would ordinarily be obliged to acquire FSA authorisation, which can be costly and bureaucratic.

However, the Law Society has persuaded the government to allow solicitors to give such advice under Law Society's regulation so long as the advice is incidental to legal work.

This will cover most solicitors who offer advice on insurance products, for example, in relation to conveyancing or personal injury work.

The FSA will require the Law Society to demand that certain standards are applied by such solicitors - for example, warnings on letters to clients - and a consultation has been issued by the FSA seeking comments on draft rules for exempt professional firms.

The deadline for the consultation is 30 September.

Alison Crawley, the Law Society's director of regulation policy, said: 'I'm pleased we were successful in persuading the government to allow the Law Society to regulate these activities for solicitors.

It is better than having them fully authorised by the FSA.'

Tim Wallis, the immediate past president of the Forum of Insurance Lawyers, said: 'There is going to be a lot more regulation in the insurance market, and as this is the case we welcome the fact that it will be filtered through the Law Society.'

Those solicitors who offer stand-alone advice on insurance will still require FSA authorisation.

LINKS: www.fsa.gov.uk/mgi

Jeremy Fleming