New rules for establishing dividing lines between representative and regulatory bodies should provide greater clarity, it has been claimed. The oversight regulator the Legal Services Board has amended the Internal Governance Rules which dictate how bodies such as the Law Society and Solicitors Regulation Authority work together to regulate the profession.
The rules, set under the Legal Services Act, have not been substantively changed since 2010. But concerns about the blurring of boundaries between representative and regulatory bodies have prompted revision. The new rules will come into effect immediately, but bodies will have a 12-month transition period in which to comply.
The SRA has long advocated complete separation from the Law Society. This would, however, require legislation, and the government has shown little inclination to amend or redraw the Act. This has left the LSB trying to find ways within the existing framework to ensure regulatory independence.
LSB chief executive Neil Buckley said his organisation had listened carefully to consultation responses in deciding what action to take.
‘Independent regulation gives confidence to consumers, providers, investors and society as a whole that legal services work in the public interest and support the rule of law,’ added Buckley. ‘Regulatory independence also gives the providers of legal services the certainty they need to grow and innovate. The final IGR reflect our commitment to setting a new framework which delivers the highest level of regulatory independence within the current legislative framework.’
The revised rules include a duty on the part of approved regulators, such as the Law Society, to put in place arrangements to separate its regulatory and representative functions that are as 'effective as is reasonably practicable'. The IGR state that the act does not require full legal and structural separation, but an approved regulator should, for example, consider whether to give regulatory bodies the ability to into contracts without the approved regulator's involvement.
ARs are required to ensure it delegates duties to allows regulators to work independently. Following delegation, the AR’s role in regulatory functions ‘should go no further than is reasonably necessary’.
Regulators must cooperate with representative bodies to provide the information they need.
Law Society president Simon Davis said: 'The new rules are intended to strike the right balance between regulatory independence and regulatory assurance. Clear, targeted IGRs can support both approved regulators and frontline regulators to discharge their roles effectively, which will in turn underpin public confidence in legal regulation. We look forward to continuing working with the LSB and the SRA with this aim in mind.'