Legal Services - ALL

Question 1

What are the 7 regulators who fall under the umbrella of the LSB?

Answer 1

Each regulator sets out their own rules for the different branches of the legal profession. * Solicitors Regulation Authority (solicitors and law firms of England and Wales, non-lawyers who are managers or employees of regulated law firms, registered foreign lawyers (‘RFLs”), and registered European lawyers (‘RELs”))* Bar Standards Board (barristers)* CILEX (legal executives i.e. lawyers who specialise in specific areas)* The Intellectual Property Regulation Board (patent and trademark attorneys) * The Council of Licenced Conveyancers (individuals and firms which specialise in property/probate transactions)* Costs Lawyer Standards Board (lawyers who specialise in the preparation of bills and schedules of costs)* Master of the Faculties (notaries)

Question 2

What six activities are considered reserved legal activities?

Answer 2

1. Exercising right of audience (right to appear in and address a court, including calling and examining witnesses)2. Conducting litigation (issuing and defending proceedings)3. Reserved instrument activities (preparing transferor charges, applying and lodging documents under the Land Registration Act, or preparing any other instrument relating to real or personal estate, which includes a contract for the sale of land)4. Probate activities (preparing probate papers or court documents relating to probate proceedings)5. Notary activities (preparing, witnessing, and certifying documents, and non-contentious legal work e.g. wills and administration of estates)6. Administration of oaths and taking affidavitsThey can only be undertakien by whose who are authorised by the regulatory bodies unless an exemption applies.

Question 3

When is a person exempt from the requirement to be authorised to carry out reserved legal activities?

Answer 3

Nothing can stop an individual acting on their own behalfExample:* writing their own will* they are a party to proceedings and would otherwise have the right to conduct litigation in their capacity as a party (litigant in person)

Question 4

What is the level of professional indemnity insurance which a firm must have?

Answer 4

Adequate and appropriate insurance at a minimum level of £3 million per claim (note, the level required can differ from firm to firm). The requirement for adequate and appropriate coverage is ongoing and the firm must reconsider the level if there are any changes to its offering/clients/claims history etc.

Question 5

What factors does a firm need to take into account to determine the level of professional indemnity insurance cover that is adequate and appropriate?

Answer 5

• Type of client * Value of matters taken on each year (probable max loss for each type of work)* Transparency of information provided to clients about insurance coverage* Claims history of the firm* Alternative arrangements the parties might make (e.g. if a firm agrees to cover any losses itself up to a certain amount)If the firm can show that it has considered these factors in a reasonable and rational assessment, the SRA is unlikely to intervene.

Question 6

In the exam what will give away the fact that higher levels of insurance might be needed?

Answer 6

High value workExample: International firm working on multi-million pound property deals require much more coverage than small high street conveyancing firm

Question 7

What is a freelance solicitor?

Answer 7

A solicitor who:* practises on their own (i.e. no employees)* in their own name (i.e. not through a company or trading name)* whose clients engage and pay them directly. Freelance solicitors only need authorisation from the SRA as a sole practitioner firm if they carry outreserved legal activities.

Question 8

Does a freelance solicitor require professional indemnity insurance?

Answer 8

• Only if they are carrying out reserved legal activities* This does not need to be on the SRA’s minimum terms but must be adequate and appropriate and clients must be made aware that the cover doesn’t meet the SRA minimum and that alternative arrangements are in place with detail provided if requested.* The SRA must be notified that the solicitor is acting as a freelance solicitor.

Question 9

What conditions must be satisfied for a solicitor to carry on reserved legal activities without being authorised as a sole practitioner firm?

Answer 9

1. Three years PQE2. Must not hold client money (minor exceptions)3. Adequate and appropriate insurance

Question 10

What must a solicitor carrying out reserved legal activities for a non-commercial body that provides reserved legal activities to the public ensure?

Answer 10

That the non-commercial body takes out adequate and appropriate coverage covering not only reserved activities but also any other work done by the solicitor (even though it wouldn’t require insurance but for the reserved activities).This applies for e.g. charities, not-for-profit organisations, independant trade unions, community interest companies.

Question 11

What 2 funding arrangements are available to clients in non-litigation matters?

Answer 11

1. Private retainer and private funding (fee arrangement forms part of contract)2. Fixed fee financing (fee agreed with client at outset)

Question 12

How does a private retainer work?

Answer 12

• The fee arrangement forms part of the retainer* Solicitor will normally ask for a sum up front ‘on account’ of costs (to pay for disbursements and costs of anything needed to support the client’s claim) * Generally, the solicitor will then invoice costs and disbursements on a monthly basis.

Question 13

How does fixed fee financing work?

Answer 13

• Solicitor agrees to be paid a fixed fee agreed with the client at the outset. * Fee could be inclusive or exclusive of VAT and may include disbursements e.g. search fees.* Common in domestic conveyancing transactions but are growing in popularity in other areas.

Question 14

What three things are required of a retainer?

Answer 14

1. In writing2. Contain all relevant terms (including pricing)3. Signed by the client

Question 15

What should a solicitor do before recommending a conditional fee arrangement or a damages based agreement, and why?

Answer 15

Ascertain whether the client can afford to pay privately (i.e. just pay the fees) as this may be more cost-effective for a client who can afford it

Question 16

What advice and updates must the solicitor provide on costs?

Answer 16

Clear and transparent advice with likely overall cost at the outset, updating the client as the case progresses and keeping note of any relevant discussionsThis would be breached if the solicitor encouraged a client to enter into one method of funding without explaining fully how it works or that there are other methods available which may be more in the client’s interests.

Question 17

What are a client’s funding arrangement options for litigation?

Answer 17

1. Private funding 2. Conditional fee agreement 3. Damages based agreement 4. Third party funding 5. Before/After the event insurance6. Union cover7. Civil legal aid 8. Criminal legal aid

Question 18

What is a conditional fee agreement?

Answer 18

‘no win, no fee agreement’ that should be in writing* If the claim is unsuccessful, the client will not have to pay the solictor any fees (they may have to pay the defendant’s costs and expenses in some cases - this must be made clear to the client). * If the claim is successful, the solicitor is entitled to their normal fee (usually from losing party along with disbursements) and a success fee from their client (usually from proceeds of claim) agreed as a percentage of the solicitor’s normal fee.Note: a win may include damages as part of a negotiated settlement (not just win in court)

Question 19

What is the maximum a success fee under a conditional fee agreement can be?

Answer 19

No more than 100% of the normal fees charges, i.e. the total fees recovered can be no more than 2x the normal fees

Question 20

In what categories of proceedings can conditional fee agreements not be used?

Answer 20

Family proceedings

Question 21

What must a solicitor inform a client of within the context of conditional fee agreements?

Answer 21

If they lose, whilst they won’t have to pay their solicitor anything, they may be liable for the other side’s costs

Question 22

What is a damages based agreement?

Answer 22

Sometimes known as a “contingency fee agreement” and should be in writing* If successful, the solictor will be entitled to a specified percentage of the client’s award (note, solicitor’s standard time costs and disbursements can be recovered from the losing party). * If unsuccessful, the solicitor is not entitled to any fee or repayment of disbursements.

Question 23

What 7 elements must be in a damages based agreement?

Answer 23

The agreement must specify:* claim to which the proceedings relate* circumstances in which the legal representatives’ costs and expenses are payable* reason for setting the payment at that level. * expected disbursements giving an approximate amount.* definition of success* what happens in the event adverse costs (costs payable to the opponent) are awarded * how the parties can terminate the agreement.

Question 24

What is the maximum % a solicitor can agree in a damages based agreement?

Answer 24

1. 25% in personal injury2. 50% in all other cases

Question 25

What is the interplay between the solicitor’s % recovery in a damages based agreement and the costs paid by the losing side?

Answer 25

The % of the damages is worked out and any costs paid to the solicitor by the losing side are subtracted from the damages % for a net figure payable.Example: * 10% damages based agreement.* £500k is awarded in damages and £10k in costs* Solicitor is entitled to £50k (£10k already received in costs, £40k from the damages award).

Question 26

What is third party funding?

Answer 26

A known as ‘litigation funding’ and is only really applicable in high value cases from designated litigation funding companies.* Third party covers the cost of the legal fees and disbursements, including barrister’s fees, court fees, and ‘after the event’ insurance but **not the other side’s costs. *** Funder usually expects to make a profit from funding (usually between 15% and 45% more than the actual costs). * If successful, funder will usually be paid from awards made to the party and if not successful, the funder will bear the costs it has agreed to fund and client pays other party’s costs and disbursements.

Question 27

What is before the event insurance?

Answer 27

Insurance which covers:* If successful: the solicitor’s legal costs* If unsuccessful: the solicitors costs, disbursements and other sides costs. Policies often require the insured to use a designated solicitor so a solicitor must always check if the client has this insurance before taking the case.Sometimes referred to as legal expenses insurance’ and often in car insurance policies and sometimes house insurance policies.

Question 28

What is after the event insurance?

Answer 28

Insurance taken out after the event, through which disbursements are paid and usually also cover the risk of having to pay costs to the other side if you are unsuccessfulAfter the event insurance does not cover solicitor’s fees so often taken alongside conditional fee agreements.

Question 29

What type of fee agreement is after the event insurance often associated with, and why?

Answer 29

Conditional fee agreements, because it doesn’t cover solicitor’s costs but it protects you from the risk of having to pay your own disbursements and the other side’s legal costs if you lose

Question 30

Why is union cover relevant to funding of litigation?

Answer 30

If a client is a member of a union, they may have entitlement to legal expense cover as part of their union subscription e.g. if they have an accident at work and are part of a trade union.Solicitors therefore have an obligation to ask about this as there may be a union designated solicitor.

Question 31

What is civil legal aid?

Answer 31

• Also known as ‘public funding’, sometimes available for low-income clients in housing disputes, family or debt cases subject to passing financial need and merits test for legal costs and disbursements. * Solicitor might not be able to accept the claim if client is eligible because public funding is available only through Legal Aid Agency contracted firms. * Even if eligible, the client might still have to make a partial contribution toward costs.

Question 32

What two tests must be satisfied to receive legal aid in a civil context?

Answer 32

1. Financial eligibility test (based on individual circumstances i.e. income, savings, family circumstances, living costs).2. Merits test (good prospect of success)

Question 33

What is required to pass the merits test in a civil context?

Answer 33

It must appear that the claim has a good prospect of success

Question 34

What three situations is civil legal aid available in and what two situations is it not?

Answer 34

Available:1. Housing disputes2. Family issues3. Debt issuesNot available:1. Contract claims2. Tort claims (except for birth defects in children)

Question 35

In what circumstance could legal aid in a civil context be withdrawn?

Answer 35

If there is a change in the merits of the case or if the opponent raises concerns about conduct.

Question 36

Can a civil legally aided party be forced to pay the other side’s costs?

Answer 36

No

Question 37

What is criminal legal aid?

Answer 37

Public funding for costs for defendants in criminal cases subject to eligibility criteria which must be met (means and merits tests).

Question 38

In a criminal legal aid context, in what two situations is the financial eligibility (means) test automatically satisfied?

Answer 38

Applicant is:1. Under 18, or2. In receipt of certain welfare benefits (including job seekers and universal credit)

Question 39

In a criminal legal aid context, might an applicant in the Crown Court have to contribute to their fees?

Answer 39

Yes, depending on their income

Question 40

What is considered for the means test for criminal legal aid?

Answer 40

The client’s finances (household income, outgoings, savings or capital)

Question 41

What is required to pass the merits test in a criminal context?

Answer 41

Applicant must show that it is in the interests of justice for them to receive funding. This depends on whether:* proceedings deal with a substantial question of law* client is likely to lose livelihood or liberty* client would be unable to present their own case.Crown Court proceedings automatically satisfy this test.

Question 42

Criminal cases in what court automatically satisfy the merits test?

Answer 42

Crown court

Question 43

What are a solicitor’s professional conduct obligations in relation to funding?

Answer 43

Explore all options and act in client’s best interests (e.g. check for insurance)They must:* Clearly explain nature of funding options available * Explain other options available * Refrain from favouring their own interests over the client (e.g. if client can pay privately don’t offer damages based agreement)

Question 44

What does the SRA Principle to act in a way that encourages equality, diversity and inclusion require?

Answer 44

• Solicitors must not unfairly unfairly discriminate by allowing personal views to affect their professional relationships and the way in which they provide their services. * Solicitors must also comply with the provisions of the Equality Act 2010 (including providing reasonable adjustments).

Question 45

What is direct discrimination?

Answer 45

Treating person A less favourably than person B because of person A having a protected characteristic.Firms cannot act or create policies in a way that directly discriminates (subject to minor exceptions)| Prohibited by the Equality Act 2010

Question 46

What are the 9 protected characteristics under the Equality Act 2010?

Answer 46

• Age* Disability* Gender reassignment* Marriage and civil partnership* Pregnancy and maternity* Race* Religion or belief* Sex* Sexual orientation

Question 47

Can direct discrimination take place if a person does not have a protected characteristic themselves?

Answer 47

Yes, e.g. a person can be discriminated against because of their association with a person who has a protected characteristic, or because they are wrongly perceived to have one, or are treated as if they do.

Question 48

What is indirect discrimination?

Answer 48

When a policy or provision is apparently neutral but on closer examination puts individuals with a protected characteristic at a disadvantage compared with individuals who do not have that characteristic.Example: Providing gym membership to all full-time solicitors (mostly men) and not part-time solicitors (mostly women)| Prohibited by the Equality Act 2010

Question 49

What are the two protected characteristics for which direct discrimination can be justified?

Answer 49

1. Age2. A consequence of someone’s disabilityDirect discrimination is not justifiable for the other protected characteristics.

Question 50

Can indirect discrimination be justified?

Answer 50

Yes, in relation to all protected characteristics provided the discriminator can show the action is a proportionate means of achieving a legitimate aim.

Question 51

What is the difference between a legitimate aim for direct and indirect discrimination?

Answer 51

Direct: there must generally be some kind of public policy reason e.g. compulsory retirement age aimed at reducing unemployment in a certain age groupIndirect: broader than direct, there doesn’t have to be a public policy reason, it can just be something specific to the employer’s business e.g. offering higher pay for night shifts as it is difficult to attract employees to work unsociable hours.

Question 52

What must be shown of measures that directly discriminate on the basis of age or the consequence of someone’s disability, or that indirectly discriminate on any ground?

Answer 52

They are a proportionate means of achieving a legitimate aim

Question 53

When assessing proportionality, what will the courts look at?

Answer 53

Whether there is another less discriminatory way of achieving the same aimExample: requiring 10 years PQE on a job description may not be proportionate to achieving a legitimate aim of having a suitably qualified person for a job. A list of required skills and knowledge may be less discriminatory.

Question 54

Does the prohibition against discrimination apply to the provision of services?

Answer 54

YesFirms must not discriminate against a person requesting legal advice by:* not providing them with that service* offering the service on different terms* subjecting the person to any other detriment.Example: refusing to act for a same sex couple/agreeing to act for a BAME client but charging a higher than usual rate.| Prohibition is under the Equality Act 2010

Question 55

What is a firm’s legal obligation regarding disabled employees and clients?

Answer 55

They must provide reasonable adjustments such that these parties are not at a substantial disadvantage, and must not pass the costs onExamples: Ensuring that clients can access the firm’s premises easilyProviding sign language servicesProviding specialist equipment for employees.| Rule is under the Equality Act 2010

Question 56

Does “reasonable adjustments” means that all requirements must be catered for?

Answer 56

No, only those which are reasonableReasonableness is decided based on the size and resources of the firm.Example: intercom and temporary ramp might be reasonable for a small firm but a large international firm should have a wheelchair lift or permanant ramp for access.

Question 57

What is money laundering?

Answer 57

Process of converting the proceeds of crime (cash or other property) into assets which appear to have a legitimate rather than illegal origin.

Question 58

What is the main act and main regulation in relation to money laundering in the UK?

Answer 58

Proceeds of Crime Act 2002Regulations (such as the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017 set out required procedures for certain businesses to prevent the use of professional services for money laundering.

Question 59

Which body enforces the Proceeds of Crime Act 2002?

Answer 59

The NationalCrime Agency

Question 60

What are the three phases of money laundering?

Answer 60

1. Placement2. Layering3. Integration

Question 61

Can passive possession of criminal property be money laundering?

Answer 61

Yes

Question 62

What happens during placement?

Answer 62

Cash generated from crime is placed in the financial system Example: by setting up a legitimate business dealing primarily in cash to mix dirty funds with cash from legitimate sales.

Question 63

What does layering involve?

Answer 63

Obscuring the origins of the proceeds of crime by passing them through complex transactionsGoal: lose the audit trail so authorities cannot trace proceeds often using different entites and multiple jurisdictions.

Question 64

What is integration and what are some examples of how it can be achieved?

Answer 64

Making the funds appear to be legitimate funds or assets.Investing funds in legitimate businesses or other forms of investment.Examples: using an independant legal professional to buy property, set up a trust, acquire a company or settle litigation etc.

Question 65

At what stages is a solicitor most likely to become involved in money laundering?

Answer 65

Layering or integration stagesSolicitors are most likely to get involved if working on matters with credit institutions, investment service companies, banks, insolvency practices, businesses that participate in buying and sellingproperty, securities, or other assets, casinos etc.

Question 66

To whom does the Proceeds of Crime Act apply?

Answer 66

Generally everyoneNote, certain indirect offences such as failure to report and tipping off only apply to persons engaged in activities in the regulated sector

Question 67

What are the 3 direct and 3 indirect offences under the Proceeds of Crime Act 2002?

Answer 67

Direct (i.e. party is directly involved in the money laundering activity)1. Concealing2. Arranging 3. Acquiring/using/possessingIndirect (a failure to fulfil AML obligations)1. Failure to Report2. Tipping off3. Prejudicing in investigation

Question 68

Explain the presumption of a predicate offence in the context of money laundering

Answer 68

Money laundering offences assume that a criminal offence has occurred in order to generate the criminal property being laundered. A conviction of a predicate offence is not required for prosecution for a money laundering offence. Laundering the proceeds of any crime can constitute an offence.

Question 69

Is a conviction of a predicate offence required for a prosecution for a money laundering offence?

Answer 69

No

Question 70

Are there inchoate offences related to money laundering offences?

Answer 70

Yes. It is an offence to conspire or attempt to launder, and to counsel, aid, abet, or procure money laundering.

Question 71

What is the maximum penalty for the principal money laundering offences?

Answer 71

14 years in prison and/or unlimited fine

Question 72

What are the three direct money laundering offences?

Answer 72

1. Concealing2. Arrangement3. Acquisition, use, or possession

Question 73

When does a person commit the offence of concealing?

Answer 73

• When they conceal, disguise, convert, or transfer criminal property or remove it from the UK and no defence applies.* Note: Concealing or disguising may be of the property’s nature, but also its source, location, or ownership* The offender has to subjectively know or suspect that the criminal property represents a benefit from criminal conduct.

Question 74

What is criminal property?

Answer 74

Any property derived from criminal conduct, including money, real and personal property, and intangible property whether in the UK or not

Question 75

Can a person unwittingly be guilty of the offence of concealing?

Answer 75

No, they must know or suspect the property represents a benefit from criminal conduct.

Question 76

What is the mental state required to commit the offence of concealing?

Answer 76

Subjectively **know* or suspect that the property represents a benefit from criminal conduct

Question 77

What 2 defences apply to the money laundering offences of concealing, arranging and acquisition/use/possession?

Answer 77

1. If an authorised disclosure is made by the offender2. If legal privilege excuses not disclosing

Question 78

What are the three timings which determine the rules applicable to the authorised disclosure defence available to a charge of concealing?

Answer 78

1. Before concealing2. During concealing3. After concealing

Question 79

What is the authorised disclosure defence if disclosure is made before concealing?

Answer 79

It is a full defence if a person makes an authorised disclosure of the act to police, customs officer, or other nominated officer within the organisation, before the actExample: a solicitor is asked to transfer criminal funds into multiple bank accounts by a client, and the solicitor knows the property is the proceeds of crime. The solicitor must report before making any transfers.

Question 80

What is the authorised disclosure defence if disclosure is made during concealing?

Answer 80

It is a full defence during the act if:1. Person had no relevant knowledge or suspicion when the act started2. Disclosure was made as soon as practicable after knowledge or suspicion; and3. Disclosure was made on the person’s own initiative (not prompted by imminent discovery/encouragement of another)

Question 81

What is required to avail of the the authorised disclosure defence if disclosure is made after concealing?

Answer 81

There must have been good reason why a disclosure was not made before the act was carried out.

Question 82

Which way is the conflict between disclosure as a defence to concealing and the duty of confidentiality resolved?

Answer 82

Disclosure is an exception to the general duty of confidentiality

Question 83

In what situation could a solicitor not rely on legal professional privilege in the context of concealing?

Answer 83

Where the solicitor knows the transaction they are working on is a money laundering offence

Question 84

In the context of concealing, what if a solicitor merely suspects the transaction they are working on is a money laundering offence?

Answer 84

The ability to rely of the privilege is only lost when they know the transaction is a money laundering transaction, i.e. their suspicions are found to be true.If suspicions are unfounded, communications should remain privileged and are therefore non-disclosable.

Question 85

When does a person commit the offence of arrangement?

Answer 85

Except in the conduct of ordinary litigation and other dispute resolution, * When they know or suspect what they are doing facilitates (by whatever means) the acquisition, retention, use, or control of criminal property by or on behalf of another person* This catches a wide range of activity, particularly in relation to assisting, usually at the layering and integration stages.Example: helping a person buy a house or a shelf company to disguise the criminal source of funds

Question 86

Which 4 types of situations should you be particularly careful about in the SQE in relation to the offence of arrangement?

Answer 86

• Misuse/abuse of client accounts* Sale/purchase of real property* Creation of trusts, companies, and charities* Management of trusts and companies.If you’re told the property involved was tied to criminal activity, remember the solicitor did not actually have to know the property was criminal property to have committed the offence of arrangement; it’s enough thatthey merely suspected.

Question 87

Conduct in what context is exempt from the offence of arrangement?

Answer 87

The offence does not cover or affect the ordinary conduct of litigation, from issue to disposal of final judgmentOrdinarily,** settlements, negotiations, ADR, and tribunal representation** are not arrangements.Note: sham litigation exception.

Question 88

What is one exception to the litigation exemption to arrangement?

Answer 88

• Sham litigation for the purpose of money laundering would be an offence* Can arise if a whole claim or category of loss is fabricated to launder the criminal property. * The offence arises upon execution of the judgment or completion of the settlement.Example: contacted by a client in a different jurisdiction, they send money upfront on account, they then say the matter settled and request the money on account to be refunded. If solicitor suspected it was criminal proceeds, they have committed the offence of arrangement.

Question 89

When does a person commit the offence of acquisition?

Answer 89

When they acquire, use, or possess (i.e. have physical custody of) criminal propertyThey must know or suspect the property is the proceeds of crimeExample: solicitor stays in a client’s villa abroad knowing it was bought with the proceeds of crime/buys something at a suspiciously reduced price

Question 90

In the context of acquisition, what is possession?

Answer 90

Physical custody

Question 91

What are the defences to acquisition?

Answer 91

1. If an authorised disclosure is made by the offender2. If legal privilege excuses not disclosing3. If the property was acquired, used or possessed for adequate consideration and there was no suspicion that it was criminal property.

Question 92

What is the additional defence to acquisition?

Answer 92

• If the criminal property was acquired, used, or possessed for adequate consideration, i.e. they paid a reasonable amount, in good faith, for an item that they did not know or suspect was stolen. * The defence applies when professional advisers receive money for or on account of costs, whether from the client or from another person on the client’s behalf. Disbursements are also covered. The fees charged must be reasonable, and the defence is not available if the value of the work is significantly less than the money received.

Question 93

What is an instance in which the consideration defence to acquisition would not apply?

Answer 93

When the accused knows or suspects that the consideration may help another to carry out criminal conduct

Question 94

What are the three indirect money laundering offences?

Answer 94

1. Failure to report2. Tipping off3. Prejudicing an investigation

Question 95

What are SARs?

Answer 95

A suspicious activity report is a disclosure of suspicions of money laundering or terrorist financing required under the Proceeds of Crime Act 2002 and the Terrorism Act 2000.Solicitors, bankers, jewellers etc. are required to make SARs and failure to do so is an offence.

Question 96

When does a person commit the offence of failure to report?

Answer 96

When they: * have reasonable grounds for suspicion of (i.e. should have known or should have been suspicious) money laundering and/or terrorist financing and * do not make a suspicious activity report * as soon as practicable (slight delay permitted for taking legal advice)* and no defence appliesThis includes any information coming to the solicitor in the course of business (not just information relating to clients and their affairs) i.e. information about potential clients, associates, and counterparties of clients, acquisition targets, and even employees of businesses the solicitor is dealing with.

Question 97

What activities would be a flag for money laundering?

Answer 97

1. Depositing money with solicitor and then requesting return of funds2. Transfers between bank accounts, in multiple names, multiple banks, and multiple countries3. Overpayment of tax4. Buying investments and cashing them in.

Question 98

What is the scope of information which must be reported in a SAR?

Answer 98

Anything coming to the solicitor in the course of business, and not just relating to their clients/matters

Question 99

Within what timescale must the solicitor make their report, and what is one acceptable reason for delaying?

Answer 99

As soon as practicable. Delay may be excused if the reason is legal advice is being sought, provided action is still prompt.

Question 100

What is the required mental state for when conduct would give rise to the requirement to file a suspicious activity report?

Answer 100

If a person should have known or been suspicious (objective)Test: reasonable grounds for suspicionSolicitors cannot deliberately ignore an obvious inference from information known to them that another person was committing or had committed a money laundering offence.

Question 101

What 2 defences are available for the offence of failure to report?

Answer 101

1. The information falls within a privilege and privileged circumstances not excluded by AML laws 2. Lack of training

Question 102

What are the requirements for the defence of privilege and privileged circumstances for the offence of failure to report?

Answer 102

The information must fall within a privilege that has not been excluded by the AML laws or has come to the solicitor in privileged circumstance, including information that came to the solicitor: 1. From a client/representative of a client, in connection with the giving of legal advice to the client:2. From a client/representative of a client seeking legal advice from the professional adviser3. From a person in connection with legal proceedings or contemplated legal proceedings.Example: * Legal advice privilege: a solicitor advising on the legal aspects of a take-over bid/duties of directors under the Companies Act.* Litigation privilege: a solicitor assisting a client by taking witness statements from the client or from third parties in respect of litigation.

Question 103

What is the lack of training defence to failure to report?

Answer 103

• Employees in firms who have no knowledge or suspicion of money laundering, even if there were reasonable grounds for suspicion, have a defence if they have not received training* Note, partners may be prosecuted instead.* This is not a defence to terrorist funding charges.

Question 104

Who is liable for failure to train staff?

Answer 104

The firm’s partners are liable for breach of the Regulations

Question 105

What offence is lack of training not a defence to?

Answer 105

Terrorist funding charges

Question 106

What are the two tipping off offences?

Answer 106

1. Disclosing to a third person that a suspicious activity report has been made to the police, HMRC, NCA or the MLRO if that disclosure might prejudice any investigations2. Disclosing an investigation to a third personThis may be in writing or verbally and direct or indirect (including publishing relevant details) e.g. asking the client for a delay that causes them to be suspicious can amount to tipping off.Note there are 2 exceptions:* Normal enquiries about instructions and retainer* Language included in the standard terms of engagement

Question 107

Does tipping off have to be in writing an direct?

Answer 107

Tipping off can be in writing, oral, or by conduct (e.g. waiting too long or wanting to delay and making a person suspicious), and it can be direct or indirect

Question 108

What are the 2 exceptions to the offence of tipping off?

Answer 108

• Normal Enquiries About Instructions and Retainer in order to remove, if possible, any concerns and enable them to decide whether to take on or continue the retainer (note: cannot disclose that a SAR has been made or an investigation is contemplated or ongoing)* A paragraph about money laundering obligations included in Standard Terms of Engagement

Question 109

What are the four defences to tipping off?

Answer 109

1. Disclosures within an undertaking or group2. Disclosures between institutions (i.e. lawyers)3. Disclosures to supervisory bodies4. Disclosures to client to dissuade the client from committing an offence

Question 110

What is the defence to tipping off of disclosure within an undertaking or group?

Answer 110

This applies to lawyers in the same firm or working on the same matter.* It is not tipping off to disclose to an employee, colleague, officer, or partner in the same undertaking/group that a SAR has been made* A legal professional will also not tip off if a disclosure is made to another legal professional in a different undertaking (i.e. not an accountant), provided that the undertakings the parties work in:1. Share common ownership, management, or control; and 2. Carry on business in either the UK, European Economic Area state, or a country that imposes money laundering requirements equivalent to the EU.

Question 111

What four elements must be satisfied for the defence of disclosure between institutions (i.e. lawyers) to the offence of tipping off?

Answer 111

1. Disclosure made to legal professional (i.e. not an accountant) in EEA or country with money laundering laws equivalent to the EU2. Disclosure relates to client/former client or both parties, or a transaction or provision of services involving both3. Disclosure is made for purposes of preventing a money laundering offence, and4. Both parties have equivalent professional duties of confidentiality and protection of personal data

Question 112

When is disclosure to a supervisory body not tipping off?

Answer 112

When the disclosure is for the purpose of prevention, investigation, or prosecution of a criminal offence, an investigation under POCA, or enforcement of any court order under POCA

Question 113

What are the two ways in which a person can commit the offence of prejudicing an investigation?

Answer 113

Know or suspect that a money laundering, confiscation, or civil recovery investigation is being or is about to be conducted and either1. Make a disclosure to any person that is likely to prejudice the investigation, or2. Falsifies, conceals, or destroys documents relevant to the investigation, or causes that to happen

Question 114

What are the 4 defences to the offence of prejudicing an investigation?

Answer 114

1. Did not know/suspect the disclosure would be prejudicial2. Did not know/suspect the documents were relevant3. Did not intend to conceal facts from person carrying out investigation4. Disclosure is in connection with legal proceedings and not made with the intention of furthering a criminal purpose.

Question 115

If a solicitor suspects delays arising from the other party to the transaction are due to a SAR having been submitted by the otherparty’s legal adviser, can the solicitor tell their own client their suspicions or would they be guilty of the offence of prejudicing an investigation?

Answer 115

If the solicitor is supremely confident in their own client’s bona fide purposes, source of funds, andreasons for being a party to the transaction, they would not commit an offence since it requires a knowledge or suspicion that disclosure would be likely to prejudice any investigation relating to that SAR. They should document their reasons for explaining the position to their client.

Question 116

What is the in connection with legal proceedings defence to prejudicing an investigation?

Answer 116

It is a defence that: * disclosure was made by a professional advisor or other relevant professional adviser * to a client/client’s representative,* in connection with the giving of legal advice or to any person in connection with legal proceedings or contemplated legal proceedings* provided the disclosure is not made with the intention of furthering a criminal purpose.Example: Client seeks litigation advice from a solicitor over suing a previous legal adviser in respect of delays in a matter. The solicitor realises or suspects that the delays were caused by a SAR having been made by a legal adviser to the other party in the original proposed transaction. The solicitor can advise the client as to the probablecause of the delay, without committing an offence.

Question 117

What 5 activities are covered by the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017?

Answer 117

Activities of a legal professional when there is a risk of money laundering occurring, e.g. when the legal professional participatesin transactions concerning:* Buying and selling real property or business entities* Managing client money, securities, or other assets* Opening or managing bank, savings, or securities accounts* Organising contributions necessary for the creation, operation, or management of companies* Creating, operating, or managing trusts, companies, foundations, or similar structures.Participating: assisting in the planning or execution of the transaction or otherwise acting for or on behalf of a client in the transaction

Question 118

What 6 activities are unlikely to be covered by the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017?

Answer 118

• Opening a general client account for handing their clients’ money* Payment on account of costs to a legal professional or payment of a legal professional’s bill* Provision of legal advice* Participation in litigation or a form of alternative dispute resolution* Will-writing, (although a solicitor should consider whether any accompanying taxation advice is covered* Work funded by the Legal Services Commission.If a solicitor is uncertain whether the Regulations apply, they should take legal advice or apply the broadest possible approach to compliance with the Regulations.

Question 119

What are the 5 requirements of businesses regulated by the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017?

Answer 119

1. Internal controls, policies and procedures (customer due diligence measures to comply with Regulations and deter criminals)2. Identification (obtain sufficient evidence of identity in a timely manner)3. Recordkeeping (Minimum of 5 years after the completion of business)4. Recognising and reporting (Staff reprots to MLRO, MLRO investigates further and reports to authorities if necessary)5. Training (MLRO responsible for training all relevant staff on AML rules and regulations and the firm’s internal controls, policies and procedures)

Question 120

Under the Money Laundering and Terrorist Financing Regulations, who must a firm appoint and what is their role?

Answer 120

A Money Laundering Reporting Officer (MLRO/Nominated Officer)

Question 121

Who is exempt from having an MLRO?

Answer 121

An individual who provides regulated services but does not employ any people or act in association with anyone else

Question 122

What level of seniority must an MLRO be?

Answer 122

Sufficient seniority * to make decisions on reporting which can impact a business’s relations with its clients and its exposure to criminal, civil, regulatory and disciplinary, sanctions, and * to have access to all the business’s client files and business information to enable them to make the required decisions.

Question 123

What are the 8 duties of the MLRO/Nominated Officer?

Answer 123

• Ensuring that, when appropriate, reports are made to the relevant authority.* Acts as the central point of contact between a firm or business and the NCA and law enforcement. * Assessing internal reports, making further enquiries if need be, and, if appropriate, filing SARs with NCA.* Determining whether consent is required to continue with the engagement or any aspect of it * Making decisions on how business should be conducted pending receipt of consent (usually) * Training within the business * Advising on how to proceed with work once an internal report and/or SAR has been made in order to guard against risks of tipping off or prejudicing an investigation* Designing and implementing internal anti-money laundering systems and procedures.

Question 124

What information must the MLRO report?

Answer 124

Information or other matter leading to knowledge or suspicion (including reasonable grounds for such) must be disclosed

Question 125

Must the MLRO have sole discretion to report?

Answer 125

Yes, this must not be subject to the consent of anyone else

Question 126

Who has the responsibility of reporting to the MLRO?

Answer 126

The individual, alwaysA report to a line manager or other colleague is not sufficient (but they may discuss the matter with managers/colleagues before making a report to the MLRO.

Question 127

What is best practice when a MLRO is away?

Answer 127

• Alternative arrangements e.g. appointing a deputy MLRO should be made and staff informed* If there are no alternative arrangements: self report any suspicions directly to the NCA as harm might arise from the delay

Question 128

After a SAR is submitted, what time scale does NCA have to review and ask for more information?

Answer 128

7 days (“the notice period”)During this time, the act which may constitute money laundering must not be carried out but other activities on the same file such as searches or writing letters can continue.

Question 129

What is the situation if NCA has not responded to a SAR after 7 days?

Answer 129

Deemed consent is given and the act suspected of constituting money laundering can take place

Question 130

During the 7 day notice period after submission of a SAR, must all work on the matter cease?

Answer 130

No, other activities such as searches or writing correspondence can take place, but the main act subject to the SAR must not unless the NCA gives consent during the notice period.

Question 131

What happens if NCA refuses consent within the 7 day window of submitting a SAR?

Answer 131

There is a 31 day moratorium during which the act must not take place, but other activities can just like within the 7 day period

Question 132

What happens after the 31 day moratorium period following refusal of consent after submission of a SAR?

Answer 132

The MLRO can then give consent for the actThe 31 days was intended to give the NCA the opportunity to take action. Note, delays caused by SARs may cause problems with clients but solicitors need to be careful that any explanation they give does not amount to a tipping off offence.

Question 133

What is the purpose of customer due diligence?

Answer 133

In order to put the regulated businesses in a better position to recognise when a customer or client may be using the business to launder money.Used to establish that the client:* is who they say they are* has been transparent about the nature of their businessOne of the most important elements of the AML regime.

Question 134

What 3 things should customer due diligence measures include?

Answer 134

• Identifying the client and verifying their identity, such as name and address, on the basis of documents, data or information obtained from a reliable and independent source (e.g. passport)* Identifying the beneficial owner (if this is not the client) and taking adequate measures, on a risk-sensitive basis, to verify the beneficial owner’s identity (including understanding the ownership and control structure of a legal person, trust, or similar arrangement)* Obtaining information on the purpose and intended nature of the business relationship

Question 135

When 4 events would trigger a requirement to carry out customer due diligence?

Answer 135

1. Establish a business relationship2. Carry out an occasional transaction3. Suspect money laundering/terrorist financing4. Doubt the veracity or adequacy or documents or information previously obtained

Question 136

When is a solicitor-client relationship considered to be a business relationship?

Answer 136

When, at the time it is established, it is expected to have an element of duration

Question 137

What is an occasional transaction?

Answer 137

Transaction (single operation or multiple that appear to be lined) worth €15,000 or more, carried out other than as part of a business relationship

Question 138

What must a solicitor do if customer due diligence cannot be completed?

Answer 138

1. Not carry out a transaction with or for the client through a bank account2. Not establish a business relationship or carry out an occassional transaction3. Terminate any existing business relationship4. Consider making a disclosure to NCA

Question 139

What is the as soon as practicable exception to the immediacy of the customer due diligence requirement?

Answer 139

Verification need not be completed as soon as contact is first established and may be completed as soon as practicable if:1. It is necessary not to interrupt the normal conduct of business, and2. There is little risk of money laundering/terrorist financingThis exception does not apply to occasional transactions.Example: In an urgent insolvency appointment, a practitioner should gather enough information to allow them to at least form a basic assessment and to complete other acceptance formalities such as considering the potentialfor conflicts of interest. However, it may take, for example, a few days to complete the other aspects of the required CDD.

Question 140

In what situation does the as soon as practicable exception not apply?

Answer 140

If it is an occasional transaction

Question 141

Do customer due diligence checks need to be completed at any time other than the beginning of a transaction?

Answer 141

Information must be updated as needed e.g. when there is a suspicion of money laundering or terrorist financing or when there are doubts about the sufficiency of identification information alreadyheld. If information held is insufficient, the solicitor should remedy this as soon as is practicable.

Question 142

What are a solicitor’s customer due diligence obligations when dealing with a trust or other legal arrangement/entity that is not a company involving beneficiaries?

Answer 142

They must verify the identity of any beneficiaries before a payment to them or before they exercise their vested rights

Question 143

What should a solicitor not do until full verification of beneficiaries to a trust/other entity that is not a company is completed?

Answer 143

1. Undertake substantive work2. Permit funds to be deposited in the firm’s client account3. Permit property to be transferred4. Permit final agreements to be signed

Question 144

Does the requirement to cease acting and consider making a report to the NCA when a solicitor cannot complete customer due diligence apply where the solicitor is providing legal advice/preparing for or engaging in litigation or ADR?

Answer 144

No

Question 145

What types of records should be kept in relation to customer due diligence material?

Answer 145

• Clients’ identity* Supporting evidence of verification of identity (including the original and any updated records)* business relationships with the clients* Details of any occasional transactions* Details of the **monitoring of the relationship. **

Question 146

What types of records should be kept in relation to suspicions and disclosures regarding customers?

Answer 146

Comprehensive records of suspicons and disclosures because authorised disclosure of a suspicious activity is a defence to criminal proceedings. Notes of:* Concerns raised by relevant persons and staff* Discussions with the MLRO/nominated officer regarding concerns* Advice sought and received regarding concerns* Reasons why the concerns did not amount to a suspicion and a disclosure was not made* Copies of any disclosures made.

Question 147

What types of records should be kept in relation to customer due diligence broadly?

Answer 147

• Customer due diligence material * Suspicions and disclosuresA business’s records system must outline: * what records are to be kept* the form in which they should be kept* how long they should be kept.

Question 148

What is the requirement for training under money laundering/terrorist financing laws?

Answer 148

Relevant employees (i.e.all client-facing or at least senior support staff) are required to be:* made aware of law related to money laundering /terrorist financing * in context business operates* to identify red flags and * deal with transactions which may be related to money laundering /terrorist financing * at regular and appropriate intervals (exact frequence is for business to determine)

Question 149

What are the SRA’s 5 recommendations for best practice in complying with the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017??

Answer 149

• When possible, meet clients in person and verify their ID using original documentation and take extra steps for ID verification when not meeting clients in person* Use a client account to hold client funds for a legal transaction only* Investigate further if a client asks you to perform large cash transactions and the source of funds is unclear or involves a high-risk jurisdiction (high-risk jurisdictions include countries such as Bosnia and Herzegovina, North Korea, Ethiopia, Iran, Iraq, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu and Yemen)* Take advice from the MLRO/nominated officer if something does not seem right about a client and/or transaction* Submit SARs to the MLRO/nominated officer that are not vague or inaccurate.

Question 150

A solicitor is representing a client who is accused of being the head of a criminal organisation involved in human trafficking. The solicitor discovers that the client is the beneficial owner of a number of overseas bank accounts in which large sums of cash have been deposited. Does the solicitor have an obligation to report?

Answer 150

Maintaining client confidentiality trumps the obligation to report suspicion of money laundering in cases in which a solicitor is acting for the client on a bona fide litigation. There is no need to report to the MLRO/nominated officer. If, however, a solicitor was representing the same client in a property sale, the solicitor would need to alert the MLRO/nominated officer.

Question 151

What legislation is relevant to the regulation of financial services?

Answer 151

Financial Services and Markets Act 2000, as amended by the Financial Services Act 2012. Goal: help make sure that banks and other financial institutions have good management, so they don’t make bad investments or take too many risks.

Question 152

Which 2 entities are involved in financial regulation?

Answer 152

1. Bank of England - Prudential Regulation Authority 2. Financial Conduct Authority

Question 153

What is the role of the Financial Conduct Authority in financial regulation?

Answer 153

Independent body accountable to HM Treasury, but works very closely with the Prudential Regulation Authority. * Regulates the conduct of all financial services firms in the UK. * Strategic objective: ensure relevant markets function well by, among other things: Protecting Consumers and Protecting Financial Markets (i.e. taking measures to safeguard the integrity of the UK financial system) * Granting approved person’ status to people who will work in certain functions of regulated financial services firms, including some solicitors.

Question 154

What is the role of the Bank of England in financial regulation?

Answer 154

• UK’s central bank* Responsible for setting monetary policy* The Bank’s Prudential Regulation Authority regulates and supervises financial services firms.

Question 155

What is the general prohibition under the Financial Services and Markets Act 2000?

Answer 155

No person may carry on a regulated activity in the UK unless they are authorised or exempt from authorisationIt is a criminal offence to carry on a regulated activity without authorisation or exemption.| Under the Financial Services and Markets Act 2000

Question 156

What is a regulated activity?

Answer 156

• A specified activity * in relation to a specified investment * carried out in the course of business * to which no exclusions apply

Question 157

What are the five specified activities which are regulated?

Answer 157

1. Advising2. Dealing as Agent3. Arranging 4. Managing5. Safeguarding

Question 158

What is advising?

Answer 158

Giving advice to an investor (or potential investor) on the merits of buying, selling, subscribing for, or underwriting a particular investmentNote, this does not cover generic advice e.g. “buying shares is a good investment”, it needs to be specific e.g. “buying shares in Company A is a good investment”

Question 159

What is dealing as an agent?

Answer 159

Actually buying, selling, subscribing for, or underwriting a particular investment for another personExample: committing the client to a particular transaction and signing forms of their behalf

Question 160

What is arranging?

Answer 160

Making arrangements for another person to buy, sell, subscribe for, or underwrite a particular investmentExample: filling out forms and liaising with stock borkers for a client regarding selling some shares.

Question 161

What is managing?

Answer 161

Managing assets belonging to another person in circumstances which involve the exercise of discretion (i.e. having a say in the decision making process)Example: solicitor deciding which investments from a portfolio a client should buy.

Question 162

What is safeguarding?

Answer 162

Protecting and administering assets belonging to another personExample: making sure any interest earned on an investment is properly credited to the client.

Question 163

What are the six specified investments most relevant to a solicitor which are regulated?

Answer 163

1. Insurance contracts e.g. defective title insurance/life assurance policy2. Shares/securities3. Debentures4. Mortgage contracts5. Pension schemes6. Funeral plansNote, there are 25 in total.

Question 164

What are two things which are not specified investments?

Answer 164

1. Interests in land2. National savings products, e.g. Premium Bonds

Question 165

When must the conduct be carried out to breach the general prohibition?

Answer 165

In the course of businessThis generally means the activity is carried out for a client as part of their legal work not in their personal capacityExample: * advice at a party is not carried on by way of business (not, to be safe a solicitor should decline to give advice)* Friend comes to the solicitors’s office - likely it is in the course of business.

Question 166

What is the Designated Professional Bodies exemption which means a regulated activity would not violate the general prohibition at all?

Answer 166

If a solicitor provides a financial service incidentally to the provision of legal advice and does not receive compensation for this from anyone else without accounting to the client for it, it is exempted (subject to certain limitations)This exemption applies to certain Designated Professional Bodies including members of the SRA under the Law Society.Example: a solicitor is acting for a client in relation to a dispute and the client receives a settlement and asks for advice on investing it and asks the solicitor to manage the investment for them (so necessary exception doesn’t apply)| Exemption falls under the Financial Services and Markets Act 2000

Question 167

How is it determined whether an activity is incidental for the purposes of the Designated Professional Bodies exemption?

Answer 167

By considering whether the activity is incidental:1. To the work the firm does as a whole, and2. To the client’s particular matterExample: exemption could not be relied on if one of the firm’s main areas of business was the provision of the regulated activities.

Question 168

What are some limitations of the Designated Professional Bodies exemption?

Answer 168

It does not apply to activities contained in the SRA Financial Services (Scope) Rules, including: * recommending that a client get rid of any rights under a personal pension scheme* the firm entering into a regulated credit agreement as lender (except for any credit agreement in relation to the firm’s fees e.g. paying off bill by installments).

Question 169

What are some activities in the SRA Financial Services (Scope) Rules to which the Designated Professional Bodies exemption does not apply?

Answer 169

1. Recommending a client get rid of any rights under a person pension scheme2. The firm entering into a regulated credit agreement as lender (except in relation to the firm’s fees)

Question 170

In order to provide incidental financial services under the Designated Professional Bodies exemption, what special rules does the SRA impose on firms?

Answer 170

Firms must:1. Let clients know at the outset that the firm is regulated by the SRA and not the FCA, and2. Confirm, if relevant, that the client is coming to the firm for execution of this incidental service and has not sought/relied upon any advice from the firm in relation to the transaction

Question 171

What are four exclusions that will render a specified activity in a specified investment not a regulated activity?

Answer 171

1. Takeover exclusion2. Acting as trustee, nominee, or personal representative3. Introducing or acting through an authorised person4. The necessary exclusionNote, these exclusions do not apply to insurance contracts.| In Regulated Activities Order

Question 172

What is the takeover exclusion that will render a specified activity in a specified investment not a regulated activity?

Answer 172

A solicitor can deal as agent, arrange, or advise with respect to a client who is buying/selling 50% or more of the voting shares of a company, or when the object of the transaction is taking control of the company

Question 173

What is the Acting as Trustee, Nominee or Personal Representative exclusion that will render a specified activity in a specified investment not a regulated activity?

Answer 173

A solicitor can advise, arrange, manage, and safeguard investments when acting as a trustee, nominee, or personal representative.

Question 174

What is the introducing/acting through exclusion that will render a specified activity in a specified investment not a regulated activity?

Answer 174

A solicitor may introduce a client to a person authorised by the FCA in order for the client to receive adviceA solicitor may arrange/act as an agent with respect to specified investments if the client receives advice from an authorised person and the solicitor is merely assisting the client in acting on this advice e.g. introducing to a mortgage broker and then dealing with the paperwork for the mortgage.Exceptions: * this does not apply to insurance contracts* this does not apply if the solicitor received payment or commission from the authorised person or any other source other than the client.

Question 175

In what two circumstances is the introducing/acting through exclusion that would render a specified activity in a specified investment not a regulated activity not available?

Answer 175

1. Where the specified investment is an insurance contract2. Where the solicitor received payment/commission from the authorised person/any source other than the client

Question 176

What is the necessary exclusion that will render a specified activity in a specified investment not a regulated activity?

Answer 176

It is not a violation of the general prohibition to carry on an activity (other than managing) if the activity is reasonably regarded as a necessary part of providing legal servicesThis exclusion cannot be used if: * the activity is billed separately from the main legal advice * if the activity relates to insurance policies.Example: administering an estate (main task) advising and arranging sale of assets to fund IHT (incidental and necessary).

Question 177

In what three circumstances is the necessary exclusion that would render a specified activity in a specified investment not a regulated activity not available?

Answer 177

1. Where the activity is managing2. Where the activity relates to insurance policies3. Where the activity is billed separately from the main legal advice

Question 178

What is the difference between an exemption and an exclusion in relation to the General Prohibition?

Answer 178

An exemption is from the requirement to be authorised under the general prohibition, so all conduct would be excusable under this. An exclusion goes to whether or not the conduct is a regulated activity and therefore caught by the general prohibition, but is not available in all circumstances.

Question 179

Even though they are very similar, what is the key advantage of the Designated Professional Bodies exemption over the necessary exclusion?

Answer 179

The Designated Professional Bodies exemption is available for managing, and for activities related to insurance policies, but the necessary exclusion cannot be used in these circumstances

Question 180

If a firm wishes to carry out activities in relation to insurance policies, what additional requirements does the SRA impose?

Answer 180

1. **Notify SRA **that the firm is carrying out activities related to insurance policies2. Be put on a register of providers3. Appoint an insurance distribution officer (responsible for ensuring clients receive comprehensive information about products)Common in firms dealing with conveyancing, probate and litivation matters.