Law Society welcomes dual regulation decision from the UK's Financial Conduct Authority.
The threat of dual regulation for UK in-house legal teams has receded with the news the Financial Conduct Authority (FCA) is dropping proposals to include the legal function in the Senior Managers Regime (SMR), the Law Society of England and Wales said today.
Law Society vice president Simon Davis said, ‘we’re delighted that the FCA agrees with the Law Society that general counsels should not be included in the SMR. This will ensure lawyers remain free to provide full and frank advice to their employer without the risk of a conflict of interest emerging.’ He added, ‘we opposed these proposals because not only would they put in-house counsel at risk of a conflict of interest with their employers, they would also have meant counsels were answering to two regulators, increasing the cost of doing business..
Mr David explained, ‘crucially, legal professional privilege (LPP) could have been eroded if in-house teams fell under the SMR,’ and ‘if investigated, in-house lawyers could have been uniquely unable to provide evidence to the FCA that they had acted properly, because the advice they give their employer is privileged. A logical outcome of this could have been organisations no longer seeking the advice they need from their own legal teams.. He concluded, ‘we will study the FCA’s consultation in detail, but today we simply welcome the fact they have taken our suggestions on board.’