In house lawyers have different roles but, fundamentally, many will help their businesses identify legal risks and define a tolerance towards those risks.

They then use Contracts, Advice & Training (CAT) to keep those Risks At Tolerance (RAT) – they use CATs to control RATs.

On 29 January 2016 we reported that the FCA had identified uncertainty about whether the GC/Head of Legal function should fall within the scope of the Senior Managers Regime (SMR). The FCA has now published a discussion paper to open its consultation on the issue, in which it invites discussion about how to handle legal professional privilege and whether its current proposal to regulate most of a GCs role should be modified. Whilst the FCA's open consultation has only immediate implications for GCs/Heads of Legal Functions at deposit takers and certain other designated investment firms, it has much wider implications. Should the FCA decide that these roles should come within the SMR, then this will apply to all regulated financial services firms when the SMR is rolled out across the sector in 2018.

The FCA has now identified that the uncertainty it has previously identified occurred partly due to ambiguities in its own messaging but also, astonishingly, because not a single person had raised the issue of the role of the GC in any of its previous consultation work on the new SMR. As a profession we, as in house counsel, are often our own worst enemies - the GP who is so busy looking after the health of our corporate patient that we fail to look after ourselves.

The FCA consultation (which closes in January) states that its current position (which remains applicable now) is that all legal function activity - contracts, training, records management, people supervision etc is, "of course" under its regulation, with the possible exception of those elements of advice given by lawyers that might attract legal professional privilege (i.e. not all the commercial and general business advice, commercial negotiations, corporate policies, board minutes taken etc that makes up most of our work).

The FCA noted that, whilst respondents had previously commented on whether a Senior Manager would need to be appointed to have overall responsibility for a firm's legal function, no feedback was given about two other significant aspects of the new regime. The FCA implied that it had taken this lack of feedback to be agreement for the propositions that: all employees within a legal function (except ancillary staff) are subject to the Conduct Rules; and that the head of the legal function will be caught by the certification element of the new regime, even if they are not designated as a Senior Manager (and as such they will be subject to much the same personal regulation and potential sanctions).

The consultation provides a "good faith ignorance" exception for companies that thought differently until the end of the consultation process.

RPC ran a pilot survey on these topics earlier this year and will now re-run the survey to see if we can provide an informed and representative view to the FCA - so please do contribute when we release it.

Finally - in the interests of further helping the GP to maintain their own "health", please can we remind you to monitor/ engage with the SRA's consultations which, in summary, are proposing both a progressive move from regulation by title (i.e. towards only regulating people in their performance of Reserved Legal Activities and with the title "Solicitor" becoming simply a "quality mark") and also proposing to allow unregulated people to do more in house legal work.

If you feel that this does not matter much to you in practice then perhaps it is worth reflecting on the fact that your ability to offer legal privilege to your advice to your internal clients is based, at law, on the fact that you are currently a person (as a solicitor or barrister) who is personally subject to regulation under the Legal Services Act 2007 - no personal regulation, no privilege. No privilege, no exemption from FCA regulations for any part of your work...