The Legal Services Board wants to set in motion plans for a single, independent regulator that will cover the entire legal profession.
The oversight regulator today said the new entity should be unrelated to any existing regulator, including the LSB itself, with full independence from the profession.
In its response to the Ministry of Justice’s call for views on legal services regulation, the LSB says there is growing evidence the conservatism of the profession and its regulators is holding back innovation.
The 2007 Legal Services Act is ‘living on borrowed time’ with the ‘cracks beginning to show’, it states.
In its place should come a body created from scratch focused on public interest, consumer rights and market efficiency. ‘It should be organisationally, statutorily and culturally fully independent of both government and representative bodies’ vested interests,’ the response concludes.
‘In turn, its own rule book should start from a blank sheet of paper – informed, but not constrained, by current requirements with no passporting in of old rules.’
The regulator says ‘incremental but significant’ change is in order, with short-term changes to simplify regulation over the next three years, alongside an independent review to create a long-term plan.
That will mean the LSB remains ‘essential’ to changing the regulatory culture in the short term.
LSB chair David Edmonds, introducing the response, said he ‘accepts entirely’ the argument that the post-Legal Services Act regime can be reorganised and simplified.
‘There is no doubt that the current regulatory framework is over-engineered and exceptionally complex,’ he said. ‘The result is a situation where firms face a common regulatory cost base unrelated to the risk they present, a cross-subsidy of bad firms by good.
‘That leads to unnecessary costs for law firms, but also costs to UK plc through reduced competition, innovation and consumer choice.’
Lower costs and entry barriers can be achieved, the report suggests, through a new ‘fit and proper’ test for alternative business structure owners, with entrants allowed to provide most legal activities unless there is ‘clear evidence’ of likely potential harm.
There should also be fewer restrictions on in-house solicitors acting direct for the public.
The LSB also wants a changing role and structure for professional bodies such as the Law Society.
The regulator says these bodies could continue to represent and promote both the interests of their members and the public but without enjoying statutory regulator status and benefiting from guaranteed income. Businesses and individuals, the LSB says, should be able to decide whether they wish to join a representative body.
The LSB’s full response is published here.