Legal Services Board tells CMA: long way to go until law has effective competition

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4 February 2016

CMA: decision by 12 July

CMA: decision by 12 July

There is still a long way to go before there is “effective competition” in the legal market, the Legal Services Board (LSB) has told the Competition and Markets Authority (CMA).

With the CMA currently undertaking an initial market study to decide whether and what action needs to be taken, the LSB urged it not to rule out the possibility of conducting a full market investigation at this stage.

In a letter to the CMA, LSB chief executive Neil Buckley said that “whilst the functioning of the legal services market has without doubt improved since the Legal Services Act 2007, we know from our research and analysis, and from our work as the oversight regulator… that it still has a long way to go before it can be said that there is effective competition”.

He cited findings showing “significant levels” of unmet legal need among both individuals and small businesses, “sluggish” progress on consumer empowerment and an underlying legislative framework that “needs reform”.

Mr Buckley explained: “The scope of regulation is not based on a sound rationale, with blanket consumer protections that apply regardless of activity and that are not risk-based. There is a ‘regulatory gap’ where the same service can be provided within and outside regulation, causing consumer confusion. There is insufficient independence between some lawyers and their regulators.”

He predicted that the “powers and dedicated focus and resources” that the CMA could bring to investigating these issues would be a “significant and effective” complement to the LSB’s own work.

The CMA will announce by 12 July whether it will undertake a full market investigation. The results of the market study have to be published by 12 January 2017.

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