The Financial Services Authority (FSA) has very long tentacles – longer than you would think, especially when it comes to the principles-based ‘Treating Customers Fairly’ (TCF) approach, where the FSA won’t prescribe what is fair – you have just got to get it right.
I have read in the mortgage press recently the comment that the long arm of the FSA may also stretch over into the arena of legal services and as this may be an area of possible confusion I thought I would do my best to provide some clarification.
Looking at the regulator
First and foremost legal services are not regulated by the FSA. We are of course regulated by the Law Society but its rules relate to our professional conduct and our relationships with clients and third parties. Under Law Society rules, any client can instruct any firm of solicitors without any restriction. There is no requirement for this firm to give a quote but, of course, the firm should set out in writing at the outset of the transaction the amount of charges and other details of their service. If that solicitor then fouls up in some way, the client has redress through various means, including the complaints department of the Law Society.
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There are some other regulations when an introducer is referring a client to a firm of solicitors and this is governed by the Solicitors Introduction and Referral Code. This sets out the obligations on the solicitor (and on the introducer) when a referral is made. There are detailed rules about disclosure and information that must be provided to the client under the Code. Again, these rules do not contain any requirement that the client should be offered any alternative legal options or quotes
All these rules together therefore regulate the conduct of solicitors when acting for clients and what information has to be given to clients who are recommended to a particular firm of lawyers but there is no obligation to offer the client ‘whole of market’ if I can borrow a financial services term.
TCF is of course a set of principles emanating from Principle Six of the FSA’s Principles for Business. Principle Six says: “A firm must pay due regard to the interests of its customers and treat them fairly.”
Of course, as stated above, the FSA’s remit is for regulated products only and as legal services are not regulated, then in the words of an FSA spokesman, ‘there are certain areas within the market where we do not get involved’.
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Having established that, there is no requirement for introducers to offer alternative legal options. The question is whether they should be doing so in the general interests of their clients.
In my view it is horses for courses. If the introducer is happy with the service of the lawyers and everything else being pretty much equal then there seems no good reason to change and take them step into the unknown. If, however, the existing legal connection is overly expensive or not resourced to cope with the challenges of modern conveyancing in the 21st century, and is unlikely to be able to adopt to e-conveyancing through the Land Registry, which is being introduced in the next few years, then maybe it is time to change.
Or you may never know how good life could be.
