The new regulatory regime for law firms conducting investment business will not be in place until at least 2000, it emerged last week.
The government had intended to bring the regulation of all financial services activity under the auspices of the Financial Services Authority (FSA) next year.
But last month, FSA chairman Howard Davies admitted in a circular to financial services organisations that the new regime would not be in place until "some time in the year 2000".
However, even the revised timetable may prove too optimistic. Westminster sources say the legislation needed to underpin the new regime may have to be postponed by a year to allow for more parliamentary time for the government's controversial reform of the House of Lords.
Meanwhile, the FSA has written to the Law Society asking it to comment on its provisional plans for the regime, which will see the society stripped of its powers to regulate the investment business side of law firms' activities. It has indicated that it will ask the society to continue monitoring firms.