LSB: regulators making progress – but not on understanding users of legal services

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26 February 2015


Pitt: there is more to do

Pitt: there is more to do

The profession’s regulators are not doing enough to understand the consumers of lawyers’ services, the Legal Services Board (LSB) has warned.

But in an update report on the eight regulators’ performance, the LSB said there has been progress since the first assessment in 2012/13.

The LSB has set regulatory standards relating to outcomes-focused regulation, risk assessment, supervision, and enforcement, and is also concerned to ensure that the regulators have the “capability and capacity” to carry out their work.

The regulators were each required to undertake a self-assessment in 2012/13 and produce an action plan to make improvements, and the report published yesterday updates the progress made since then. It is a precursor to the LSB conducting a full review of their performance in 2015/16.

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The LSB said that in the main it was “pleased with the progress” made, with the regulators delivering “substantial aspects” of their action plans.

“Many have made efforts to improve their understanding of those that they regulate and the services they provide,” the report said.

“They have, on the whole, improved their risk assessment processes and most have moved to a risk-based approach to supervision. A number of positive initiatives have also been undertaken to address significant failings identified by the LSB and to improve overall capacity and capability.”

However, the LSB said that most regulators’ evidence gathering has focused on the practitioners they regulate – “very little appears to have been achieved in engaging and understanding consumers of legal services”, so as to help them understand the impact of the rules they impose and whether those rules are delivering the outcomes consumers can expect.

The LSB was also critical of the “detailed and complex rules” that some regulators maintain “without any evidence to support their retention”. It supported the Solicitors Regulation Authority’s approach that rather than justifying the removal of rules, the rules had to be justified in the first place.

“We expect substantial improvements to be made in these areas,” the LSB said.

LSB chairman Sir Michael Pitt said: “I’m pleased to say that, taken as a whole, the regulators have made good progress.

“They have improved their understanding of, and accountability for, their performance levels. They have improved their ability to identify and assess risks. They know more about their role and their impact; and they have better information about those they regulate… But there is more to do. We have made specific recommendations to each regulator about where it has to raise its game further.

“A common shortcoming across all the regulators is that none of them have got a firm grip on understanding the users of the legal services they regulate. For example, not one of the regulators has published new research into the needs of consumers since the publication of the first our reports on regulatory standards in 2012 and 2013. We expect to see changes in this and the other highlighted areas in the coming months and years.”

The SRA self-assessed itself on its supervision work at a lower level than in 2012, which was attributed to an ever-growing workload and the failure to deliver improved technology to the expected timetable.

But otherwise, “while there is still work to do, the SRA has successfully delivered programmes related to risk and consumer empowerment and has also addressed issues in the authorisation process,” the LSB noted.

“The SRA has set itself a challenging reform project, both in terms of regulatory reform and developing its organisational capacity. There are very real execution risks to the regulators plans and its commitments.”

The specific goals the LSB set for the SRA for the 2015/16 assessment were to:

  • Report on the implementation of new IT systems and the extent to which new systems and processes are improving the consistency of risk assessment and supervision;
  • Maintain work to hold the executive to account for the regulatory performance of the SRA; and
  • Increase the transparency of the SRA’s performance and the accessibility of information on the activity of the SRA board (including a reduction of board papers being discussed in private).

The Legal Services Board does not hold any meetings in public.

Other areas for improvement highlighted by the LSB included the time it takes for the SRA and Bar Standards Board (BSB) to investigate potential misconduct, and the need for the BSB to improve its governance structure.

It said: “There are currently over 130 BSB board and committee positions, with the majority of these occupied by barristers, or those with an interest in the commercial success of the sector. This current dominance may be compliant with the LSB’s internal governance rules. However, it is unlikely to improve consumers’ confidence in the independence of its regulation.”

The LSB highlighted initiatives from ILEX Professional Standards (IPS) to improve its understanding of consumers. It has developed a feedback questionnaire that CILEx fellows are encouraged to provide to their clients to assess whether consumer outcomes are being met. Feedback is then assessed on a quarterly basis to see how the regulated community can improve outcomes for consumers.

Entities will be required to provide this survey to all clients once IPS begins regulating them.

IPS also gathers information from fellows on the service complaints made against them. A report on the findings is produced annually to identify where practitioner education is needed or where regulation may need to be altered.

Legal Futures is holdings its first Regulation and Compliance conference on 28 April in London, at which all of the main regulators and a host of other leading figures will be speaking. Click here for details.

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