The Legal Services Board (LSB) has rejected a call from the Solicitors Regulation Authority to wrest ultimate control of SRA board appointments from the Law Society.

In its latest consultation on legal services regulation, published today, the umbrella body dilutes an earlier commitment toward a more discrete structure separating Chancery Lane and the solicitors’ regulator.

The ‘decision document’, titled ‘Internal governance and practising fee rules’, outlines measures to ensure that ‘the regulation of lawyers is carried out independently and in the public interest’.

‘Previously, draft rules and guidance suggested that regulatory arms should take control of the process for appointing regulatory boards,’ the document states. ‘After considering submissions, the LSB now considers that it is not essential for regulatory arms to have full control of all aspects of the appointments process. Where they do not have control, there must be compelling evidence that they have a strong voice in the process and that the appointment arrangements put in place satisfy the wider scheme of rules.’

Referring to the latter statement, an LSB spokesman told the Gazette: ‘The [LSB] board has concluded that this will be an effective safeguard.’

One of the submissions referred to came from the SRA, which was critical of the existing arrangements for appointing its board. ‘If a representative-controlled approved regulator [the Law Society] defines and manages the appointments process for regulatory board members, there is a risk that it will be able subtly to influence the outcome,’ the SRA argued. ‘Internal governance rules must guard against the mischief that a representative-controlled body interprets its status as approved regulator to justify the assumption of a quasi-regulatory role.’

The SRA called for its board to be appointed through a ‘public transparent process, under the control of the regulatory arm itself’, a proposal which the LSB has rebuffed.

Elsewhere, the LSB’s amended proposals require the regulatory boards of approved regulators to have a lay majority, while allowing flexibility on whether the chair is held by a lay person or a lawyer. Proposals are also outlined to ensure that the provision of shared services, for example between Chancery Lane and the SRA, is as ‘effective, efficient and fair as possible’.

The proposed rules will come into effect on 1 January next year. LSB chair David Edmonds said: ‘A comprehensive separation of regulatory and representative functions is paramount when it comes to consumer confidence in legal services. A widespread acceptance that self-regulation did not work has underpinned policy in this area and the need for action has been well and truly established. These proposals move beyond policy and shape in practice how separation will look. They are designed to embed independence in all aspects of regulation and in a manner in which the public can have absolute confidence.’

Responding to the LSB’s paper, Law Society chief executive Des Hudson said: ‘This is a very important document which requires careful consideration which we will be doing over the coming weeks.

‘Like the curate's egg some parts seem more appetising than others.

‘We are concerned that the LSB has concluded that the regulatory board should have a lay majority. There is a risk that this may undermine the perception of an independent legal profession, particularly overseas.

‘However we are pleased that the LSB has endorsed the approach taken by the Law Society around the provision of support services to its regulatory arm.

‘Proposals for the role of the LSB in setting budgets of the approved regulators are problematic.’

SRA chief executive Antony Townsend said: ‘We are considering the LSB’s proposals. We are pleased at the LSB’s emphasis on securing the independence and effective resourcing of regulatory bodies, and on the importance of the involvement of non-lawyers in regulatory boards.’