Clementi: fears that proposed structure could become an 'interventionist and bossy' body

Senior lawyers last week cast doubt over the Lord Chancellor's claim that the proposed legal services board (LSB) will be a 'light-touch regulator'.


Under the Clementi reforms being implemented by the government, the LSB will assume all regulatory powers and delegate them back to the professional bodies. Speaking at the St Paul Travelers On Risk conference in London, Lord Falconer said: 'The aim of the board is not to increase the regulatory burden. Quite the opposite. Light-touch regulation will be the experience of most.


'Our energies must be focused: targeted where regulatory attention can do good, and where it can improve outcomes for the consumer. In many cases, I would hope this would mean less red tape... We must have the powers to deal with extreme cases. But this does not mean all should receive the same level of attention.'


However, during a later panel discussion, David McIntosh, chairman of the City of London Law Society, said the reforms would give the government 'the tools to control' the profession and predicted it would not lead to light-touch regulation.


'There's a controlling agenda,' he claimed. 'This is a government that, even if it means well, still wants to interfere.'


He suggested the structure could easily be turned into an 'interventionist and bossy' regulator like the Financial Services Authority (FSA). Describing it as 'supervised self-regulation', he said that because the LSB could call in the professional bodies' rules, it could become an FSA-type body 'if a heavy hand is placed on the rudder'.


In a rallying call, Mr McIntosh said lawyers needed to recognise the danger: 'If enough of us stand up shoulder to shoulder with the Law Society, we may be able to shame people out of being heavy handed.'


Peter Martyr, chief executive of top-ten City firm Norton Rose, said he sympathised with Mr McIntosh's view, adding that he found the concept of variable regulation 'astonishing and difficult'. He was also troubled by how little consideration had been given to the potentially negative reaction to the reforms abroad.


Bar Council chairman Guy Mansfield said he too was cynical about the light touch as the people recruited to the LSB 'are going to look for something to do'. When draft legislation is published, 'we have to ensure that it provides for true delegation and oversight', he said.


Law Society President Edward Nally agreed. 'If the government enables what Clementi recommended and no more, it will be light touch,' he said, but added that this will not be the case if the LSB becomes 'a burgeoning bureaucracy.'