The FSA has published an agreement with other regulatory and professional bodies about how alternative business structures can be regulated.
The Legal Services Act 2007, which came into effect this year, allows licensed firms to provide legal services alongside non-legal services. It also permits the creation of “alternative business structures”, where non-lawyers can own and invest in law firms.
The FSA has set out a memorandum of understanding about how ABSs will be overseen by the FSA and other regulatory and professional bodies.
It aims to prevent unnecessary duplication of work, provide the best form of consumer protection and redress, minimise market confusion about different bodies’ responsibilities and reduce or remove conflict between different bodies in future.
Twelve signatories signed the memorandum, including the Solicitors Regulation Authority, the Ministry of Justice and the Bar Standards Board.
The document states regulators will agree to share information between each other where it is lawful and in the public interest to do so.
However, the FSA can only disclose confidential information where it is permitted under the Financial Services and Markets Act.
The FSA will be responsible for ensuring licensed firms arrange adequate protection for client money.
Regulators will work together to tell consumers what activities are and are not covered by professional indemnity insurance and compensation arrangements.
The memorandum will be reviewed in 2015.
Baronworth Investment Services director Colin Jackson says: “One hopes each regulator understands its responsibilities, otherwise this could open the door to a lot of disagreements between the bodies over their jurisdiction.”