Clementi review let loose

REGULATION: banker given blank sheet to consider complaints handling and price controls

Nothing will be out of bounds for the review of regulation of legal services, from complaints to price controls, the government confirmed last week.

The terms of reference given to banker David Clementi, who qualified first as an accountant, allow him maximum leeway.

They are: 'To consider what regulatory framework would best promote competition, innovation and the public and consumer interest in an efficient, effective and independent legal sector.

'To recommend a framework which will be independent in representing the public and consumer interest, comprehensive, accountable, consistent, flexible, transparent, and no more restrictive or burdensome than is clearly justified.'

The Department for Constitutional Affairs released a scoping study, which set out the options for the breadth of the review.

The government selected the option that puts every aspect of regulation under the microscope.

The focus will be on nine broad heads, and the study gives examples of the minimal, modest and radical options that could be considered under each one.

On self-regulation and professionalism, the radical options include taking regulation to external bodies and ending professional ethics in favour of external rules.

On complaints handling, reform could range from a minimal 'process change' at the Office for the Supervision of Solicitors, through new oversight of the office and rethinking the solicitors' complaints regime, to an independent common complaints regime across services and sectors.

The study identified a 'maze' of 22 regulators of legal services at different levels, ranging from the Lord Chancellor and Law Society to the Legal Services Commission and insurers as providers of professional indemnity insurance.

Radical options to reform institutional structures and the maze include the creation of an overarching Financial Services Authority-type body, multi-sector regulators - such as solicitors and accountants regulated together - regulating services rather than providers, and fusing the legal professions and introducing common training.

Price controls will also be considered.

Those at the radical end include extensive compulsory use of fixed fees, price tendering by all publicly funded service purchasers for all services, abolition of the recoverability rules, and making contingency fees generally available.

Under other heads, the study raises the possibility of currently unregulated providers being subject to controls equivalent to the regulated professions; mandatory disclosure by all suppliers of their 'consumer service performance', such as sending an audited complaints log to their regulator; and mandatory and harmonised benchmarking for all providers and aspects of legal service.

Neil Rose