Three-quarters of CLC [1] lawyers think that regulation by the CLC provides value for money and supports innovation and growth in their business. Now the CLC has launched a consultation on the objectives and principles that should govern the setting of licence and practice fees. This follows a 20% reduction in entity fee rates in 2016.
A key proposal is to maintain consistency in regulatory fees year on year, so that firms are able to plan with confidence that rates will not see-saw. But we are committed to making reductions in rates whenever that is possible in a way that we can be certain is sustainable.
The CLC’s fee rates are calculated on the turnover of firms. As the turnover of CLC firms continues to rise, the CLC believes it will be able to reduce fees. Our tight control of the cost of delivering tailored regulation of specialist property lawyers will also help.
There could be exceptional circumstances, such as a prolonged economic downturn, when a different approach is required. If the CLC’s minimum reserves were not able to absorb the impact of such an event, then rates might need to increase.
The CLC is committed to delivering proportionate, targeted regulation and that includes keeping the financial burden of regulation to a sustainable minimum. It’s a commitment can also be seen in changes we propose to make to the process for licensing new specialist conveyancing and probate firms.
We’ve been licensing Alternative Business Structures (ABS) since October 2011. In that time, we’ve gained a great deal of experience in the different regimes for ABS firms and Recognised Bodies (RB) – often called traditional firms.
It has become clear that, contrary to fears expressed by some at the time the Legal Services Act introduced ABS, the new type of firm poses no greater risks to the public and consumer interest than the traditional model. Experience shows, though, that there are aspects of the ABS regime that it would be sensible to extend to Recognised Bodies.
The CLC is now consulting on proposals to streamline and strengthen the policies and processes for licensing entities to carry out conveyancing or probate work. We are seeking views on our intention to:
- Require all firms (not just ABS) to appoint a Head of Legal Practice and Head of Finance and Administration.
- Issue entity licences for RBs for an indefinite period (as is already the case for ABS firms)
- End differential application fees for new RB and ABS entities
- Make improvements to the authorisation process, simplifying the information to be submitted and revising the ‘fit and proper’ test for managers, owners, HoLP, HoFA and CLC Lawyers to ensure it is proportionate and targeted
The first proposal will bring greater clarity to accountability for compliance in Recognised Bodies without significantly increasing the regulatory burden. Our other proposals will reduce the regulatory burden and lower barriers to entry to the market with no reduction in our high levels of consumer protection.
Read and respond to the CLC’s consultations on setting fee rates and authorising regulated entities [2]