LSB ‘lost its way’ and failed consumers, scathing review finds

An independent review of the body tasked with overseeing legal services regulation today concluded it ‘lost its way’ in recent years.

The assessment by lead independent reviewer Richard Lloyd also recommended that the government start a complete overhaul of legal regulation ahead of reform in the next parliament.

Lloyd said the interests of consumers have not been properly protected by the current system and that the LSB needs to bring its focus back onto overseeing frontline regulators.

‘This review finds that the LSB has lost its way in recent years,’ said Lloyd. ‘It has lacked strategic clarity and has struggled to have the impact intended by parliament. It has not sufficiently prioritised in a pragmatic and proportionate way among its strategic objectives. Its oversight of the performance of frontline regulation has fallen short of what the government and parliament could reasonably expect.’

The review was announced by the Ministry of Justice in February and billed as opportunity to consider the LSB’s statutory remit, management and current capabilities.

But after a two-year period in which regulators such as the Solicitors Regulation Authority and Bar Standards Board have been criticised for their performance and governance, the review has gone further than expected in lambasting the LSB and demanding significant change.

Lloyd found a strong perception among stakeholders that the LSB has devoted a disproportionate amount of time to policy development that has not translated into effective action. He highlighted the focus on Strategic Lawsuits Against Public Participation which illustrated a ‘tendency to pursue initiatives with limited practical impact’ and which should be left to parliament to deal with.

The review recommended that within a year the LSB should clearly show the legal sector how its oversight policy translates into effective action and demonstrable outcomes.

Lloyd, who is the chair of the Independent Parliamentary Standards Authority, said that in the longer term the MoJ should carry out a comprehensive review of the regulation of legal services, with consideration also given to what activity should sit within or outside the current regulatory perimeters.

This new system should be developed by 2029 with a view to implementing reform during the next parliament, with the LSB and existing regulators working closely together in anticipation of a ‘more integrated regulatory framework’.

The review also said the rising number of consumer complaints about legal services deserves particular attention by the LSB, and it called for a ‘reset’ in how the regulator deals with the Office for Legal Complaints, which runs the Legal Ombudsman. The LSB should tackle the root causes of complaints as a strategic priority and direct most of its resources towards strengthening consumer protection through its relationship with frontline regulators and the OLC.

There is no suggestion that the LSB needs more money to achieve these goals: instead the review suggests it should ‘urgently rethink its organisational design and rebalance its use of existing funding requirements to ensure it has the necessary capabilities’.

Lloyd added: ‘Improvement will require not only identifying new priorities but also making choices about what to stop doing.

‘Given the expectation that change should be delivered within existing resources, the LSB will need to be explicit about which activities add the greatest value to the system, and which could be reduced, streamlined or discontinued.’

Monisha Shah, LSB chair, said: 'This is an important moment of reflection for the Legal Services Board about our impact in protecting and promoting the interests of consumers in a rapidly changing legal services market. 

'This report gives us a clear, independent basis for a major reset. We will introduce a sharper regulatory focus and a more dynamic, risk-based approach to oversight, directing our work and resources towards issues which present the greatest risk to consumers. This work has already begun. Planned changes include separating our enforcement and oversight function from our regulatory policy and engagement work.'