Legal regulators such as the Solicitors Regulation Authority can expect to come under greater scrutiny in the next year, the oversight regulator has warned.

The Legal Services Board has outlined plans to be ‘proactive’ in its approach to frontline regulators in 2024 and take formal action for under-performance.

The LSB said lawyers who fund these regulators had given feedback that they want greater regulatory oversight. An assessment of regulators, due to appear in January, has identified ‘several areas’ where they need to improve, particularly in leadership and their approaches to regulation standards.

It would be a surprise to see any significant criticism of the SRA in the assessment: earlier this month the LSB said the organisation was the ‘most sophisticated, mature, best-resourced and arguably most effective regulator in our sector’.

The issue of regulators’ performance has been hotly debated in the past year, particularly in light of how a £66m hole in the client account of national firm Axiom Ince was not picked up sooner before the SRA intervened to close it down.

An LSB consultation on the next year’s work states that the organisation will ‘step up our oversight and ongoing monitoring to seek assurance that the expectations in our existing policies are met’.

The document adds: ‘Enhancing our oversight function in this way will help us to respond more promptly and dynamically to issues in the public interest and protect and promote the regulatory objectives effectively.’

But increasing investigative powers will need to be funded: the LSB has already revealed proposals for a 14% increase in its annual budget to £5.33m, adding £3.40 onto the practising fees paid by each regulated lawyer. This increase will be decided upon early next year.

The budget rise ‘reflects the resources we need to meet the scale of the challenges facing the legal sector’, says the LSB. It has already been confirmed that this work includes an independent review of the events leading up to the SRA’s investigation into Axiom Ince. The LSB will also follow up its investigation into the representative-regulator dispute between CILEX and CILEx Regulation.

But while the LSB plans to increase its oversight of regulators, it will also consider in the next year whether to hand them much greater fining powers.

The proposed work includes reviewing whether disciplinary and enforcement tools available to regulators such as the SRA are sufficient to tackle serious misconduct. The solicitors’ regulator has made clear it wants unlimited fining powers and that its current £25,000 threshold is not a sufficient deterrent to serious misconduct.

 

This article is now closed for comment.