The Solicitors Indemnity Fund (SIF) has given the go-ahead to solicitors to be full or sponsored members of Crest.
Members of Asim who are preparing for the introduction of Crest's electronic share settlement system in late 1996, recently approached the Law Society and – through it – the SIF to ask whether the SIF will cover solicitors' nominees if they become sponsored Crest members. Sponsored membership means a solicitors' firm has to let the sponsor operate certain aspects of its nominee company's activities.
John Speedman, managing director of SIF, says: “As I see it, a firm may join [Crest] as a fully participating member or as a sponsor or as a sponsored member.
“Provided the Law Society regards a membership in any of these capacities as proper solicitors' practice, then SIF would provide cover for such a joining firm.”
He continues: “If such an indemnified firm was using a nominee company, it would only be covered if the company was beneficially owned by all the principals in the indemnified firm and was an authorised body, ie authorised by the Law Society. All fee income would have to inure to the practice and be returned in the gross fees certificate.”
“This is very good news,” says John Morton, investment manager at Brachers in Maidstone. “I had approached the Law Society about this question because we needed to make a decision on this. We appreciated there might be a problem recently when I attended an Asim workshop about Crest.”
“Sponsored membership of Crest using a nominee company seems the right way for our firm to proceed,” says Rod Gentry of Brighton firm Donne Mileham & Haddock. “I was hoping for this response from SIF and it seems reasonable because investment management is an important part of the service we provide to clients and the consequences of SIF somehow outlawing it would have caused problems.”
Crest is a voluntary system in that private individuals may still keep their share certificates but when they come to sell or buy shares the transaction will have to be done electronically through the Crest system.