The FSA has issued guidance on overseeing professional firms, including
sol-icitors, which carry out limited investment advice activities but are
not regulated by the FSA.
The Government asked the regulator to provide safeguards to consumers
dealing with firms which do not require directFSA regulation but which
might advise on certain investment areas.
The regulator says this area is perceived as low risk by both the Treasury
and the FSA. However, it emphasises that it has the power to ban firms if
they take inappropriate advantage of the exemption from full FSA regulation.
Firms such as solicitors, actuaries and accountants will continue to be
regulated by their recognised and designated professional bodies, which
will be expected to keep the FSA informed on how these firms carry out
their regulated activities.
These firms are most likely to offer advice on investment issues in
situations such as arranging the sale of shares on the instructions of
executors or trustees.
The new safeguards include rules which require exempt professional firms
to ensure clients are aware that individuals are not authorised persons.
There are about 13,000 exempt professional firms out of a total of 15,000
or so regulated for investment business by DPBs under current legislation.
The other 2,000 firms carry on what are termed as mainstream regulated
activities and will need to be directly regulated by the FSA.
FSA head of recognised professional bodies supervision Roger Purcell says:
“If the activities of exempt professional firms were deemed high risk, then
we would regulate appropriately. This approach will be a light touch.”