FSA is consulting on how the “alternative business structures” for provision of legal services should fit within its regulation. FSA currently regulates around 300 professional firms for mainstream or non-mainstream regulated activities, while 17,000 are exempt professional firms, regulated by their own supervisory authorities. The Law Society of England and Wales and the Solicitors Regulation Authority (SRA) have said their jurisdiction under the new Legal Services Act 2007 in respect of alternative business structures will not extend to financial services activities where the firm in question is already FSA authorised. Because of the way current exemptions and modifications work, this means there would be a gap in regulation of these firms that would undermine consumer protection. FSA is looking at how to address the immediate gap that will arise from October, and also how to anticipate its response if professional bodies extend their approach to traditional law firms. It proposes to remove the exemptions and modifications in its Handbook that apply to professional firms that are authorised professional firms, where the relevant professional body does not apply rules covering the activities. Separately, FSA has published a draft Memorandum of Understanding between it and the SRA in respect of exempt professional firms and authorised professional firms. FSA asks for comment by 12 August. (Source: Consultation paper 11/13: Authorised Professional Firms and Legal Reform and draft Memorandum of Understanding between the FSA and the SRA)