The oversight regulator has pledged that new rules and guidance covering how money levied by regulators is spent will make the process more understandable.
The Legal Services Board on Friday published a new framework for how regulators and representative bodies are held accountable for expenditure. The new rules are an adaption and extension of existing rules, and followed a consultation with the profession last year.
The LSB says it will create a more ‘meaningful debate’ on the purpose, benefits, costs and value of regulation, improving standards across the sector and promoting the regulatory objectives.
Regulators can collect a practising certificate fee from individual lawyers and firms only if the LSB has approved the level of the fee. In future, regulators will have to outline more criteria and supporting material before the LSB gives its approval, and they must also show they have ‘sufficient funds and financial resilience’ to regulate and operative efficiently.
Matthew Hill, chief executive of the LSB, said: ‘As we work with regulators to reshape legal services to better meet the needs of society, the changes will help those who pay the PCF hold their regulators to account and have a more meaningful debate on the purpose, value and benefits of regulation.
‘This should, in turn, result in improved standards across the legal services market, which will benefit the thousands of small businesses and consumers who need legal services each year.’
New rules include regulators being more open about how the fee will be used to address specific issues. Those collecting the fees must also consider the impact on equality, diversity and inclusion.
The practising certificate fee can be spent only on specific ‘permitted purposes’ set out in the Legal Services Act 2007 and LSB rules. These include regulatory activities as well as non-regulatory functions such as the promotion and protection by law of human rights and fundamental freedoms.
The consultation itself received just 10 responses: two from the approved regulators (Law Society and Bar Council) and eight from regulatory bodies. New rules and guidance came into force from 29 January.