The Legal Services Board will expect to see greater clarity and transparency from regulators on practising certificate fees, it said today, publishing revised application rules.

The board outlined changes to two of its rules, in relation to assessment criteria and evidence required from regulators wishing to raise fees.

Front-line regulators must also provide clarity and transparency on the use of financial resources ‘to ensure the board has all the information it needs to assess impact on the level of the fee’, it said. 

LSB chief executive Neil Buckley (pictured) said: ‘The practising certificate fee (PCF) rules are there not just to help the LSB assess applications relating to the level of the [fee] but also to contain requirements that ensure approved regulators are clear about the proposed fees and the budgets that determine them.

‘We believe that the emphasis in these revised rules on providing clarity on financial resources is an important factor in helping the LSB make decisions on fee levels.’

Supporting guidance published by the board states that applications will need to include an analysis of spend against ‘permitted’ purposes.

The board will expect to see total PCF income and expenditure allocated to the ‘regulatory arm’ budget and from the ‘representative’ budget allocated to permitted purposes, as well as total fee income and expenditure on central or shared services where relevant.

The guidance states: ‘Given that the regulated community have no choice but to pay the fee, we consider it important that they know how income and resources will be allocated, and whether they are from permitted or non-permitted activities and sources.

'This applies to any funds where there is an intention to use commercial income arising from PCF-funded permitted purposes (so-called "derivative income") for non-permitted activities.’

Should a regulator wish to increase its fee, the budget should show expected income from all sources and its allocation to the permitted purposes for the current application and, where available, for the next three years.

The guidance states: ‘Where the information is not available, it would help our assessment if the approved regulator could explain why. The approved regulator will also need to show fee estimates for the next three years, where the fee level is increasing in the current year (though we appreciate that these may not be precise estimates and may be subject to caveats).’

The board says it encourages regulators to conduct ‘regulator’ and ‘periodic’ consultation with their regulated communities ‘to ensure they keep in touch with stakeholders’ views on the approach to setting the fee and fee levels’.

The board says the gap between consultations should be no more than three years ‘and there should always be consultation if the proposal is to increase the fee, regardless of by how much, or if the basis for the calculation is changing’.

Law Society chief executive Catherine Dixon said the Society ‘is committed to being clear and transparent about how the practising certificate fees for solicitors are set and how that money is used, whether by the Solicitors Regulation Authority for the purposes of regulation or by the Society in its capacity as the professional body for solicitors and in fulfilling our public interest responsibilities on behalf of the profession’.

She said that this year’s PC fee consultation, due this month, ‘will include more detail than ever before about the work undertaken by the Law Society – including more information about the Law Society's public interest work which it discharges on behalf of the profession’.

Dixon pointed out that the average cost to individual members of the Society’s work is around £105 per year, adding: ‘The Law Society also generates income of around £15m to help fund our work. We are committed to delivering value for money for the profession and being clear about how monies received from the profession are used.’