Slow off the blocks? BSB regulates fewer firms than expected as ABS launch date slips further
BSB: applications “fewer than estimated”
The Bar Standards Board (BSB), which predicted at one point last year that it would authorise 400 firms in 2015, has approved only 32 in its first four months as an entity regulator, it has emerged.
Meanwhile, the planned launch date of 1 June 2016 for the licensing of alternative business structures may now be in doubt.
In papers for last month’s board meeting, the regulator said that “due to Ministry of Justice consultation periods, this may not be achievable”, before adding: “Timeframes for implementation are currently under review.”
The BSB said in the annual report that the go-live date of 8 April 2015 for regulating firms was “later than originally planned”, because preparing the application for the LSB took longer than intended.
“There were a number of complex issues to resolve in order to ensure that we have sufficient regulatory powers should we ever need to ‘step in’ and take over an entity to protect its clients.
“Another issue involved seeking the permission of the Administrative Court in relation to possible appeals against entity authorisation.”
A BSB spokeswoman added: “We estimated interest in entity regulation based on research and expressions of interest during the development of our new approach to regulation.
“The number of applications has been fewer than estimated hence the lower than expected number of authorised entities.”
She said the BSB’s application to become a regulator of ABSs was “awaiting approval” from the LSB.
“That statutory process takes time and we will not be in a position to regulate ABSs until it has concluded.”
Speaking at last autumn’s annual Bar conference, Patricia Robertson QC, vice-chair of the BSB, described the regulator’s progress on entity regulation as “inordinately slow” and apologised to delegates.
In a separate development, the BSB decided at last month’s board meeting that the single-person firms it regulates, which make up teh large majority, must get their indemnity insurance from the Bar Mutual Indemnity Fund (BMIF).
Papers for the meeting showed that all of the single-person entities, including solicitor Mark Johnson’s Elderflower Solutions, have taken out their insurance with BMIF.
The regulator argued in a consultation paper launched in April that continuing to allow firms the option of insuring themselves on the open market could have an impact on the “sustainability” of Bar Mutual.
Multi-person firms were not included in the restriction, on the grounds that the issue would require “further analysis and research” and more evidence.
The BSB board meeting heard that all 16 responses to the consultation – which came from barristers, chambers and the BMIF itself – believed that single-person firms should be required to get their primary layer of indemnity insurance from the BMIF.
Keith Baldwin, a special adviser to the BSB, referred to the need to get any rule change approved by the LSB.
“We focus a lot on presenting the benefits of the mutual model, but not very much on the potential benefits of allowing entities to find insurance on the open market. If I was the LSB, I might question that.
“We’re trying to argue for a monopoly provider, but I’m not sure that we’ve got a full and unbiased case.”
Tags: Alternative business structures, bar standards board, entities, Indemnity insurance
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