The Legal Services Board is to formally investigate whether the Bar Council breached rules to interfere in a controversial decision affecting the cab rank rule.

The investigation follows information provided earlier this year about the council’s role in representing its members.

Chris Kenny (pictured), LSB chief executive, has now written to the Bar Council after the information suggested ‘potentially significant involvement’ in an application made by independent barristers regulator the Bar Standards Board.

The BSB applied in October 2011 for a change in relation to the cab rank rule, which the LSB granted in July 2012.

The change enforced standard contractual terms between solicitors and barristers. Under the BSB scheme, if a solicitor seeks to instruct a barrister on its new contractual terms, the cab rank rule will apply.

The LSB investigation will ask if the Bar Council has undermined the principle of independent regulation and had an adverse impact on the public interest.

It will query whether the Bar Council failed to comply with internal governance rules (IGR) to ensure regulatory functions are kept separate from representative functions.

The LSB will also want to know if the Bar Council has been involved in any other actions which are relevant to regulatory independence.

The cab rank decision was closely scrutinised by the overarching regulator, with Kenny writing in January 2012 to BSB chair Lady Deech to raise concerns about the change. But the LSB could find no reason to refuse the application and it was approved.

It is unclear how long the investigation will take or what action might be available to the LSB.

In a statement, the Bar Council said it will fully co-operate fully with the investigation.

It added: 'The Bar Council denies that it has undermined, or at any time has sought to undermine, the regulatory independence of the BSB in relation to the BSB’s application to the LSB for approval of changes to the Code of Conduct.

'The changes, which were approved by the LSB in July 2012, arose out of the Bar Council’s long-standing wish to introduce standard terms of business to enable barristers to recover fees for work they have done but for which they have not been paid. The rule change was the result of protracted negotiations and a regulatory approval process covering more than 10 years.'