Treasury’s regulation shakeup heralds new era for ‘Tesco law’

Topics: Regulation and compliance,Government & politics

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The government is to consult on making regulators independent of representative bodies as part of moves to boost competition in legal services.

In a policy document published today, A better deal: boosting competition to bring down bills for families and firms, the Treasury says the proposal will create a ‘fairer, more balanced regulatory regime’ for England and Wales.

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Ministers also want to make it easier for businesses such as supermarkets and estate agents to offer legal services such as conveyancing, probate and litigation.

But the Law Society warned that the setting of rules and standards for legal services must be independent of government. Any perception that this independence is threatened will damage the standing of England and Wales as a 'jurisdiction of choice', it said. 

The proposals would effectively reform sections of the Legal Services Act which paved the way for alternative business structures - so-called 'Tesco law' - and established the current regulatory arrangements. They pre-empt justice secretary Michael Gove's plans for a review of the act before 2020.

The government plans to consult by spring 2016 on removing barriers to entry for ABSs and making regulators independent from representative bodies.

Sir Michael Pitt, chairman of the Legal Services Board welcomed the reform plan. ‘I believe these proposals will lighten burdens on business and streamline regulatory processes, all in the interests of delivering better services for consumers while promoting competition, deregulation and economic growth.’

The proposals are set out in a joint document signed by chancellor George Osborne and business secretary Sajid Javid. It covers issues ranging from the cost of school uniforms to reforming the dental contract in England. It also promises action to prevent 'exploitative terms and conditions' on contracts. 

The document states: 'The government will continue to look for new ways to promote open and competitive markets. We will continually strive to ensure that the policies pursued by both central government and independent regulators deliver open and effective competition.'

Catherine Dixon, chief executive of The Law Society, said: 'We support the government’s aim to ensure a fair and balanced regulatory regime for legal services. However, public protection demands that setting of rules and standards for legal services must be independent of government and ensure that there is no perception, or otherwise, that government is interfering with the independence of the legal profession.

'Freedom from government intervention is an essential cornerstone of our justice system and of the rule of law.

'England and Wales is recognised as the jurisdiction of choice but that standing is threatened by any suggestion that government is able to fetter the independence of the legal profession. Any such perception, real or actual, would impact on our standing internationally and threaten the direct economic contribution of £23bn made by solicitors.

'The legal profession must be free to set the standards and rules under which it operates, and also own legal education and training so that standards are led by the people who practise law. Enforcement of the rules and standards set by the legal profession, by an independent regulator would also be a further protection of the public and consumer interest.'

She added: 'It is fundamental to any change that competition across the provision of all legal services must satisfy the aim to protect the public,  enable access to services and maintain market confidence.'

Readers' comments (26)

  • I have no objection to this aim PROVIDED that each provider of legal services has the same rules and regulations to follow.

    If solicitors are going to be left as they are, and say, estate agents are going to be allowed to conduct conveyancing with only a fraction of the requirements then clearly that'd going to destroy high street solicitors in particular for no good reason.

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  • Quite worrying that this has been buried and not given sufficient publicity.

    Clearly none of the lessons of the disaster that the 2007 Act has been have been learnt; no doubt in main part by the fact that the Law Society has supported the destruction of the High Street solicitor. Yet again the same old drivel is spouted about removing barriers to entry, and solicitors in a supermarket.

    This could be the most important issue to affect solicitors for the next ten years. Why is it not being given more importance?

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  • This "reform plan" tells us all we need to know about the contempt shown by the government towards the ruined remains of the legal profession.

    Law 'r' us is the inevitable outcome of years of supine acceptance by the Law Society of measures designed to destroy our independent professionalism.

    The Law Society has recently announced its master plan to promote solicitors all too little too late.

    The tragedy is this pitiful state of affairs could all have been avoided.

    What is needed NOW is a SGM or EGM to consult with members with a view to starting something resembling a fight back

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  • I hope the consult with Yvette Cooper, so that they and indeed she, can recall how much money can be wasted on reform of conveyancing, with the likes of HIPS.

    If 'innovation' as opposed to management consultant sound bytes, can really re-design the conveyancing system then lets hear it, because many have had a go including the innovator of Rightmove and failed and of course anyone thinking about it, has to consider how they will deal with our old friends 'the banks' and their massive inefficiency in the process. Good luck with that one.

    And wasn't it only last week there was article highlighting how many ABS had entered the 'market' and found it not to be the pot of gold they thought.

    The reason being is that we have evolved and innovated to being as competitive as we can at this time and a downward spiral in costs as a result of 'consumerism' decreases competition and profit.

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  • In my opinion competition can only be a good thing but why haven't they relaxed the rules for solicitors prior to opening the profession to all and sundry. Let the solicitors (who don't make good business men apparently) have a go at securing their future before you change the rules and allow the "Tesco Lawyers" to come in and decimate the profession. It can't be a level playing field if the new entrants already have lots of other businesses and millions of pounds at their disposal and the existing solicitors have not been able to grow their pactice or partake in any other business interests due to the shackles of previous regulation!

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  • Will this consultation address the PII situation, if indeed anything can be done?

    Many are trapped and the SRA have openly acknowledged it is a big barrier to entry and exit and thus competition.

    Councils having theirs underwritten by council tax payers, Accountants requiring only £500k, there's much to be done and will estate agents even be able to spell 'professional' ? Their lack of regulation has been a significant competitive advantage for decades !

    Level the playing field if you're going to talk about competition.

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  • I keep pointing out that every time I am asked to review a file where work was done by one of these unregulated double-glazing salesmen I find outrageous mistakes.

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  • Frankly the rot set in well before the LSA 2007; it was solicitors who screamed for open market insurance, and undercut each other on conveyancing quotes. Frankly a return to some form of scale fees might be no bad thing, though you'd need to be careful how to devise this. Yes, scale fees did mean that the top end of the market subsidised the bottom end, but first time buyers tend to buy leasehold flats, which are more complicated (and costly) than freehold in conveyancing terms and mean extra financial pressure for cash-strapped clients. But at least the clients could budget on a fixed price, and removing price competition could mean that quality and competence could come to the fore again.

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  • RIP the LS. Exactly what I said was going to happen.

    The LS should have acted like a Union all the way along instead of a rich boys club as they have in my opinion. Now not only have careers in PI and Criminal been destroyed, and Conveyancing fees been reduced to ridiculous levels where many omit searches and take risks to save money, but the fact that the government can do anything it wants to all intents and purposes unopposed, now means the LS's very existence is under threat.

    Who's going to pay fees to remain a part of a representative body that fails to prevent harmful changes? Not many I'd predict. Until Lawyers and the LS realise that the only way to oppose cuts in this day and age is direct action and on the street protests, they will continue to be trampled on. Merely stopping the changes now is not enough, we need a total reversal away from fixed fees for PI and Criminal, Hourly Court rates of £500 p/h not unrealistic levels, and Conveyancing done for a legal minimum percentage of the house price, much like estate agents practice, although here a minimum is necessary to prevent dangerous short cuts being taken and maintain standards eg 2% of the purchase price. We also need to remove legal administrators and paralegals from the profession and get back to using Solicitors and University qualified Cilex alone to ensure we maintain standards. (Nothing here to stop existing paralegals going back to University to sit Cilex). Quick entry to the profession and computer guided advising, doesn't equal quality in my opinion.

    The LS needs to realise as well, the old gentlemanly way of Jeeves making polite representations to the PM in some back office and the PM accepting those recommendations is now back in the Victorian era.

    It appears the PM wants the profession dead, not least in my opinion probably because too many working class people are now employed in it. I personally think that's the motive not costs. The easiest way to kill social mobility and discriminate silently, is to force down wages to prevent social climbing.

    RIP the LS and Social Mobility. The headstones going to read "We brought it upon ourselves..."

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  • As with most solicitors, I have seen the conveyancing market opened to conveyancers and others, without a major reduction in my client base. It has, however become progressively harder to compete on a price basis, whilst maintaining a high quality service. I see this proposal as just another nail in the coffin of professionalism.
    I am in totally agreement, that if "Tesco's" and Estate Agents are to be allowed to provide conveyancing services, they should required to "play" by the same rules and to hold the same level of PII as high street practices.
    Perhaps they should be regulated by the SRA?!!

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