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While the Treasury reviews the regulation of financial services, legal groups are watching and waiting, ready to influence the shape of the predicted 'super SIB".
As the Government puts together its review of the regulatory structures for financial services providers, law firms are preparing to put forward their side of the story.
Financial services legal providers are worried by the prospect of change. Indeed, the concerns expressed by Nicholas Grazebrook of Shakespeares at the recent annual general meeting of the Association of Solicitor Investment Managers (Asim) forced the Law Society's Financial Services Working Party to meet a week earlier than scheduled because of the urgency of the matter.
Under current legislation, the Law Society is allowed to regulate its members as a registered professional body (RPB) and it currently looks after around 7,500 firms. Of these, 50 or so provide investment advice to around 50,000 private clients and trustees, while some 200 others provide an array of more general financial services.
Both these groups of firms will be affected by changes to the current regime. Investment managers in particular are concerned that new legislation might fundamentally alter the nature of their service and prevent them from offering a one-stop-shop for investment.
At present, according to Asim member Christopher Jones Warner of Birchams, as long as investment services are offered as an integral component of legal services, firms are exempt from the EU's Investment Services Directive, and consequently from the Capital Adequacy Directive.
The latter regulation requires companies to hold capital reserves equivalent to at least three months' overheads for the whole of the relevant organisation. Jones Warner points out that solicitors' firms do not hold partnership capital resources on anything approaching this scale. Consumer protection is instead provided by the alternative, statute-based mechanism of partners' unlimited liability, backed by mutual compensation and insurance schemes.
He predicts that regulation by a "super-SIB" (the predicted beefed-up successor to the Securities and Investments Board), rather than just by the Law Society, could lead to "some sort of hive-off of investment management departments from firms of solicitors."
Others involved in providing financial services are equally concerned about what lies ahead, although the Law Society claims to be confident of achieving a satisfactory solution because it has a good argument on its side.
Associations such as Asim have already been to see the Treasury to try and find out the thinking behind the Government's plans, and the Chancellor of the Exchequer has asked for a report by the end of July on how a new SIB could be developed. According to an Asim spokeswoman, the association's meeting at the Treasury led it to believe that its members can expect new rules from a new SIB, and that the outcome may be dual regulation, from the Law Society and the SIB.
John Morton of Brachers, who also went to the Treasury meeting, says the news is not as bad as it could be.
"The Law Society has not shot its bolt as a regulating authority," he says, adding that the Treasury still has a long way to go in its review.
A new SIB would give less protection to consumers than they already have, Morton says, but he believes that "we have a job on our hands to convince the Treasury that the RPB scheme must stay in place, and time is of the essence."
Ian Muirhead, head of Sifa (Solicitors' Independent Financial Advisers), says that his organisation has written to the economic secretary to the Treasury, Helen Liddell, and made a case for financial services being integral to the practice of law.
"As a starting point, she said she was not unsympathetic to the argument that RPBs should be able to be regulate their members insofar as financial services were incidental to their work," he says.
He adds that this would make a great deal of sense and would be reminiscent of the Scottish model, where lawyers are "men of affairs".
Muirhead also says that the Law Society has made "an extremely good fist of regulation and has far lower claims than any of the other registered professional bodies."
"If one were to switch to the Personal Investment Authority, it could mean worse consumer protection than there is at the moment," he says.
The Law Society has had one meeting of its working party, headed by Michael Mathews, and says that it is confident that it can get its point across.
Head of policy at the Law Society Alison Crawley says it is currently writing letters to appropriate parties but that the society needs to get "some flavour of the initial thoughts of the way the review is heading."
She says that, as yet, the Law Society has not got as far as lobbying the Government, adding that it will not know to what extent lobbying is necessary until it sees how the review's plans are shaping up.