The FSA has published an agreement between itself and other regulatory and professional bodies on 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 now 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.
Other signatories apart from the FSA include the Solicitors Regulation Authority, the Ministry of Justice, the Bar Standards Board, the Law Society of Scotland, the Royal Institution of Chartered Surveyors, and the Institute of Chartered Accountants of England and Wales.
The documents 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 inform consumers what activities are and are not covered by professional indemnity insurance and compensation arrangements.
They will also provide each other with points of contact to ensure “prompt co-operation and communication” in future.
The memorandum will be reviewed in 2015.
It states: “This memorandum provides a framework of co-operation, co-ordination and exchange of information in order to facilitate effective public protection and working relationships.
“It does not create legal rights or liabilities, but it is a statement of intent, comprising principles to which the signatories will adhere so far as they practicably and lawfully can.”