The oversight legal services regulator has asked the Solicitors Regulation Authority to explain why it wants to remove a condition for authorising alternative business structures.
The SRA wants to allow ABSs to keep their status even if they choose not to offer any reserved legal services at any one time.
According to the Legal Services Act, firms must carry out one of the six reserved activities to maintain authorisation.
The SRA has applied to the Legal Services Board to amend the rules, but the super-regulator has issued a ‘warning notice’ – in effect asking for more time to consider the application.
In a letter to the SRA, LSB director of strategy Caroline Wallace (pictured below) said bodies will be able to apply for SRA authorisation without any intention of carrying out reserved legal activities.
She explained this raises concerns that the SRA is introducing ‘accreditation rather than authorisation’ and that this could have a detrimental impact on consumers and the public interest.
‘The making available of authorisation by the SRA to firms undertaking non-reserved legal activities only and with no intention of undertaking reserved legal activities, whatever the SRA’s intentions, could be seen as a significant shift in the regulation of legal services,’ said Wallace.
‘The LSB must consider if it has the legal authority to facilitate the regulation of legal services that do not currently need to be regulated under the 2007 act.
‘The LSB also needs to ask itself if, through approving the alterations, it is implementing a substantive policy that ought instead to be the subject of public debate and primary legislation.’
She stressed the LSB has not decided to refuse the proposed alterations, but will extend its decision period until the end of October 2016.
The SRA has said the majority of respondents to a consultation on the change supported it. Reforms are likely to allow new and existing firms the flexibility to develop services to meet their needs.
Crispin Passmore, SRA executive director for policy, said: ‘We are working with the LSB on the queries they have raised. This is a normal part of the rule approval process, with the notices giving the LSB more time to consider the proposal we have made.’