Regulation: profession irate as government 'washes its hands' of launching LSB and OLC

Lawyers claimed the government has 'washed its hands' of the £13 million set-up cost of the regulatory regime it is expected to impose, following the release of a White Paper on the future of legal services this week.


Under the proposals, the cost of a new legal services board (LSB) and office for legal complaints (OLC) will in part be met by the professions.


The LSB will oversee regulation of the profession, but will delegate day-to-day regulation to 'front-line regulators' (FLRs) such as the Law Society - with the power to strip them of their authority to regulate if they 'are not exercising their powers in a way that puts consumers first'.


It will cost £4 million to set up, and £4.5 million a year to run. These costs will be paid for by the Law Society, Bar Council and other FLRs 'in proportion to the LSB's effort in exercising oversight of FLRs'. The LSB will comprise a majority of lay members rather than legal professionals.


The OLC will handle all complaints by consumers in relation to the provision of legal services. It has a £9 million predicted set-up cost, with an annual operating cost of £23 million.


Depending on what proportion is set by the LSB, it is likely that around a third of the OLC set-up cost will be met by a 'general levy' on lawyers. It will be up to the professional bodies to agree the split of the general levy between lawyers, barristers and legal executives, with the LSB given powers to adjudicate if they cannot agree. The remaining two-thirds will be funded through a 'polluter pays' mechanism.


Law Society chief executive Janet Paraskeva said: 'The government currently pays for the supervisory functions carried out by the Lord Chancellor and Master of the Rolls, and there is no reason why that should change when the LSB, is established. The government also pays for the supervisory regulators in accountancy and health care.


'Good regulation benefits the public interest as a whole and the economy. Solicitors will continue to pay for the Society's regulatory work, which benefits the reputation of the profession and helps maintain consumers' confidence. The government should also meet all the start-up costs of the new arrangements.'


Bar Council vice-chairman Stephen Hockman QC said it was 'wrong in principle' that the government will not contribute to the cost of the LSB and OLC. He added: 'Indeed, Sir David Clementi [whose review formed the basis of the White Paper] suggested that government should contribute. Any costs which fall on the professions will inevitably be passed on to the consumers of legal services. Government cannot wash its hands of this.'