Foundations of ABS, CFAs and other key legal regimes under microscope of govt red tape exercise

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By Legal Futures

1 June 2012

Red Tape Challenge: 170 regulations up for review

Many of the regulations underpinning the regulatory regime for legal services – including those designating the Solicitors Regulation Authority and Council for Licensed Conveyancers as alternative business structure (ABS) licensing authorities – are under the microscope as part of the government’s Red Tape Challenge (RTC), it has emerged.

The full list of 170 regulations which are open for review was published yesterday and also includes those around conditional fee agreements (CFA), damages-based agreements, legal expenses insurance, pro bono costs orders and land registration.

All of the key regulations that shape the regime for regulating claims management companies are up for grabs as well.

The RTC website seeks views on what users think should happen to these regulations. It asks specifically: can their purpose be achieved in a non-regulatory way (eg, through a voluntary code)? Can they be reformed, simplified or merged? Can their bureaucracy be reduced through better implementation? Can their enforcement be made less burdensome? Or should they be left as they are?

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The RTC is a public consultation exercise through a website launched by Prime Minister David Cameron last year. The government has agreed to scrap or improve over 50% of the 1,500 regulations reviewed so far.

The scale of the exercise will come as a surprise to many, but to scrap some of these regulations would require fundamental policy shifts that the government has not flagged up to date.

As well as ABS designation, the Legal Services Act regulations on the list include those setting the limit that ABSs can be fined and the periods within which ABSs have to notify changes of ownership, allowing the Legal Services Board to levy its cost on the profession, and approving various regulators to undertake reserved legal activities.

The CFA regulations of both 2000 and 2005 – which in turn started and stopped the costs war – are included, as are the 2010 regulation which for the first time prescribed the limits of damages-based agreements (contingency fees).

The 1990 Insurance Companies (Legal Expenses Insurance) Regulations have long caused arguments over when a policyholder’s freedom to choose their solicitor kicks in, and campaigners may use its inclusion in the RTC exercise as a way of reopening this debate.


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