Family lawyers who advise clients on the financial aspects of their divorces, and firms involved in debt recovery work, may have to be authorised by the Financial Conduct Authority (FCA) in future.
The Solicitors Regulation Authority (SRA) says it is aware of more than 1,100 firms that carry out debt recovery, one area of consumer credit work. Solicitors could require FCA authorisation if they discuss finance with a divorce client and negotiate terms with creditors on behalf of that client for settlement of a joint debt. A solicitor advising on a property deal who seeks to amend information held by a credit information agency about their client’s financial standing would also be caught.
Authorisation became an issue on 1 April, when regulation for consumer credit work passed from the Office of Fair Trading to the FCA. Previously, solicitors were regulated under a group licence managed by the SRA. However, the FCA has not continued this arrangement, and transitional arrangements are due to run out on 1 April 2015.
Firms could then rely on an exemption which allows them to be overseen by a “designated professional body”—the SRA, in this case. However, the SRA is reluctant to adopt the required parts of the FCA’s sourcebook, called CONC.
Crispin Passmore, SRA executive director for policy, says: “It is vital that clients receive the proper protections, and the FCA are much better placed to regulate these activities than we are.”
An SRA consultation on the issue runs until 15 December 2014.
