News / General

SOLICITOR'S LIABILITY - FINANCIAL SERVICES ACT

By SLAS Spokesperson

The SFA can obtain restitution orders against solicitors who have been knowingly concerned in a client's unauthorised investment business in breach of Section 3 of the Financial Services Act 1986. This was held in Financial Services Authority versus Martin and another in the Appeal Court in England on 25th November 2005 reported in the Times , 7th December 2005. There is, of course, no difficulty with the concept that a person who collaborates with another in illegal activity should faces the consequences of that activity. The difficulty, however, is in the word knowingly. To what extent might a solicitor be taken to know about the business of his client? The danger to many solicitors may be that more knowledge about their client's affairs may be imputed to solicitors than was actually in place at the time of the unauthorised investment business. There might also be difficulties where a client is authorised to conduct investment business and then, unbeknown to his solicitor, loses that authority but continues to conduct investment business. A question might arise in those circumstances as to whether the solicitor was knowingly concerned in unauthorised investment business when he was knowingly concerned in that business but was not aware that it was unauthorised. Difficulties might also arise to solicitors, if there are any such, who are not closely familiar with the provisions of the financial services legislation and may not be aware that particular transactions in which they have been instructed fall foul of these provisions. The answer to the latter question is probably that no practising solicitor can afford to be unaware of at least the principles and main provisions of the financial services legislation.

By A Member

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