Scottish solicitors endorsed amendments to practice rules intended to raise standards around their anti-money laundering practices and incidental financial business - the vote was counted at the Law Society of Scotland’s Special General Meeting, in Edinburgh yesterday, 25 January 2018.
The Law Society’s current incidental financial business (IFB) regime allows firms to conduct certain activities which would otherwise require Financial Conduct Authority (FCA) authorisation.
The changes to the incidental financial business rules, the first in over a decade, are required to ensure that the Law Society implements the terms of the Insurance Distribution Directive by the required date of 23 February 2018.
The purpose of the directive and the amended IFB rules is to raise the standards of conduct of business and introduce greater disclosure requirements in relation to the distribution of insurance products.
The second set of proposed amendments set out what will be required of Scottish solicitors in terms of their anti-money laundering (AML) practices and how the Society will supervise compliance. The key difference will be the introduction of desk-based risk assessment and reviews, which in some cases may lead to an onsite AML audit of firms by the Law Society.
Convener of the Client Protection Committee and Vice President of the Law Society of Scotland, Alison Atack introduced both sets of amendments. She said, “We take our regulatory role very seriously and it is imperative that we have a robust set of practice rules, which provide clarity for the profession and the appropriate and necessary protections for solicitors’ clients.
“I am pleased that our membership has endorsed the proposed amendments. We will now seek formal approval from the Lord President’s office and work towards their implementation. We will of course keep our members up to date as matters progress”.
The Law Society of Scotland consulted widely on the proposed changes, seeking the views of its members, the Lord President’s Office and the Financial Conduct Authority (FCA) on the IFB rules. It will seek the Lord President’s formal approval on the AML rules once a supporting legislative change process has been concluded and before implementation.
The Law Society will develop and issue guidance relating to both rule changes and keep members informed of progress.