MPs urge law to grant FCA privileged access

MPs are urging the government to pass legislation that would prevent the High Court’s Carter-Ruck privilege ruling from hindering anti-money-laundering oversight.

Financial Services and Markets Bill centralises AML oversight

The Financial Services and Markets Bill will empower the Financial Conduct Authority to supervise anti-money-laundering activities of lawyers, accountants and trust and company-service providers, taking over from 22 separate professional supervisors. The Lords indicated the transition should start in 2028. The proposal also seeks to create a unified reporting framework that would replace the patchwork of rules currently applied by each professional body.

Phil Brickell, Labour MP and chair of the all-party parliamentary group on anti-corruption, warned that without action “there is a real risk that serious wrongdoing by solicitors involved in money laundering or abusive litigation practices will remain beyond effective scrutiny.”

He highlighted the September High Court decision in the Carter-Ruck case, which held that the Solicitors Regulation Authority does not have the right to require production of privileged documents from law firms without a client waiver—a “significant problem,” he said.

He added that ministers had confirmed the FCA will not have powers to compel disclosure of privileged material, yet the ruling has created uncertainty about the regulator’s ability to access such information when investigating misconduct.

He urged the bill to clarify that the regulator can access legally privileged material where necessary for anti-money-laundering supervision, while still protecting client rights and confidentiality.

Labour MP Joe Powell echoed the call for strong enforcement powers, stating the FCA needs to have the right powers to inspect legally privileged material when that is necessary for anti-money laundering supervision.

He argued that the capacity of individual legal and accountancy regulators “simply does not align with the complexity of modern anti-money-laundering efforts.”

Powell cautioned that shifting responsibilities to the FCA in stages could leave some firms behind, and suggested the government provide a reform roadmap that makes clear existing AML duties will continue to apply.

Scottish National Party MP Kirsty Blackman expressed concern that moving supervision of Scottish solicitors to a single regulator may erode specialised knowledge of Scottish law, creating a single point of failure.

Lucy Rigby, economic secretary to the Treasury, did not have time to address these points before winding up the debate, but they will undoubtedly resurface during the bill’s committee stage, when MPs will go through it line by line.