The Legal Services Board has today set out its stall for the immediate future – ahead of two external reviews of legal regulation.
The board, which oversees legal regulators in England and Wales, has opened a consultation on its draft business plan for 2016/17.
In a foreword to the plan, LSB chair Sir Michael Pitt (pictured) acknowledges the two upcoming reviews:
- The government will consult this spring on removing barriers to entry for alternative business models in legal services, and on making legal service regulators independent from their representative bodies;
- The Competition and Markets Authority will examine how regulation and the regulatory framework impact on competition for the supply of legal services as part of its market probe into the legal services sector.
Pitt said the board ‘look forward’ to the government’s consultation and expect results from the CMA’s probe ‘will help us to understand better what should be done to unlock growth, increase productivity and address unmet demand’.
Pitt said: ‘These reviews will all rely on robust and reliable evidence. This remains one of the LSB’s most important contributions to the legal services sector.’
According to the draft plan, the board will work with Professor Stephen Mayson next year ‘to develop our own vision of an effective and “fit for purpose” future legislative framework to support the government’s review of the [Legal Services Act 2007]’.
This will include developing a ‘risk-based rationale’ for regulation. The board will also ‘engage with and share our knowledge’ with the CMA for its market study.
The board will review transitional protections for special bodies such as not-for-profit organisations and independent trade unions that are allowed to conduct reserved legal activities without authorisation by an approved regulator.
The draft plan states: ‘In 2016/17 we will review whether there are any licensing authorities with arrangements suitable for authorising special bodies as alternative business structures before concluding whether or not to recommend the ending of transitional protections.
‘We will update our research on whether there are any risks to the regulatory objectives posed by these bodies.’
The board will explore measures to enhance consumer protection for those using unregulated providers.
‘These may include use of our powers under section 163 of the act to assist in the development of voluntary arrangements or, working with the Legal Ombudsman as necessary, exploring the scope for redress to cover unregulated legal services,’ the draft plan states.
The board plans to work with 'market intermediaries' to understand whether there are barriers preventing them from entering the legal services sector.
The draft plan states: 'Consumers need reliable information to help them compare legal services before they can decide which to buy.
'The LSB and the Legal Consumer Services Panel have both championed the publication of regulatory data and encouraged comparison websites to consider entering the legal services sector.
'Based on advice from the [panel], we will challenge regulators to unlock additional regulatory data to improve the choice environment for consumers.'
Discussing the designation of new regulators, the board expects to receive a designation application from the Institute of Chartered Accountants for England and Wales, ‘which is looking to build on its experience of regulating probate by expanding the range of reserved legal activities its members can offer’.
The Chartered Institute of Legal Executives (CILEx) Regulation also intends to submit an application seeking designation as a licensing authority, the draft plan states.
The LSB, born out of the 2007 act, was established in January 2009. Pitt said it had reduced its running costs in real terms each year and that 2016/17 ‘will be no exception’.
The board proposes to reduce its budget by a further £150,000 in cash terms, from £4,298,000 in 2015/16 to £4,148,000 next year.
It plans to reduce its operating costs by a further £450,000 by the end of this parliament.
Pitt admitted this was a ‘challenging’ target. The draft plan states it ‘will mean a refocus of some activities in 2017/18 to 2019/20’.
Law Society chief executive Catherine Dixon said: 'We appreciate the need to remove unnecessary regulation so solicitors can innovate, grow their businesses and compete within the domestic and international legal markets, especially as increasingly they are competing against unregulated providers.
'Consumers also benefit from a vibrant legal services market but any perceived benefit of deregulated/unregulated services must be carefully balanced against the potential to increase risks to consumers by removing their regulatory safety net.
'There is no silver bullet: there must be clear evidence that deregulation will assist in meeting unmet legal need. We need to ensure that regulation is fair, proportionate and is targeted to be in the public interest; without that, consumers may simply be open to greater risk and cannot make informed choices.
'We are keen to ensure that professional standards, which are distinct from regulation, are owned and driven by the legal profession which understand their client needs and act in their best interest.'