[1]Purpose of regulation is to protect consumers, says SDT
The Legal Services Board (LSB) gives the impression that it values innovation and market development above all things, including “the necessary protective role of regulation” when it goes wrong, the Solicitors Disciplinary Tribunal (SDT) has said.
In a rare intervention, the SDT said the board’s draft business plan left “the overriding impression that innovation is viewed entirely positively and regulation entirely negatively”.
Responding [2] to the consultation on the 2016/17 plan, the SDT said: “The LSB’s emphasis is on innovation and increasing choice, as if both were ends in themselves, which they are not. They are just two of many possible means by which a purpose can be fulfilled.”
It even criticised the way the LSB phrased its statement that “legal services underpin our civil society, our economy and our democracy”, saying it would “change the hierarchy of these key foundations” to place ‘democracy’ before ‘economy’.
The SDT said: “The basic and vital purpose of regulation is to protect consumers. There is value in finding innovative means to achieve that purpose (such as increased use of technology, in which the tribunal has invested appropriately and effectively with great success). However the purpose itself must never be lost in the excitement of innovation, which of necessity involves the taking of risks…
“Disproportionate focus on market developments and innovation without focus on effective regulation is the equivalent of running a country without effective governance – potentially damaging to civil society, democracy and the economy of all citizens.”
The tribunal said there was an essential place for “realistic optimism” when innovating, meaning that there was “efficient and effective regulation to manage the inevitable failures arising as the price for every innovative success”.
Noting the LSB’s vision of a legal services market characterised by well-informed consumers, the SDT said it was struck by the fact that there was no reference to those who need the protection provided by regulation “precisely because they are less well-informed”.