Posted by Anna Bradley, chairman of the Council for Licensed Conveyancers
At the Council for Licensed Conveyancers (CLC), we are keen to see more change in the regulation and delivery of legal services before we see a reduction in the number of regulators. But there is one area that we do think is ripe for simplification now and that is in the arrangements for compensation. A single compensation fund across all regulators would bring real consumer benefits and reduce regulatory costs.
The legal landscape remains a patchwork of bespoke regulatory and consumer protection arrangements. This patchwork generally reflects the history of the sector and the development of professional groups rather than being designed to meet the expectations of today’s consumers of legal services, whether individuals or businesses.
The Council for Licensed Conveyancers was created 25 years ago as a driver of innovation and competition in conveyancing services clearly focused on consumer need and protection and not professional interest. This makes us fundamentally different from other players in the field of legal services regulation, all of which have been born of professional representative bodies.
We believe that our existence has helped to bring about radical changes in conveyancing, with prices dropping, access improving and quality being maintained – licensed conveyancers have a reputation for very effectively managing risk in the high risk field of conveyancing.
Our experience shows that alternative regulatory approaches can foster change and innovation in a sector that has generally been slow to respond to consumer need. We think there is more change required and think talk of the simplification of regulation, if it means a single Financial Conduct Authority-style regulator of legal services, is premature. The process of liberalisation and innovation set in motion by the Legal Services Act has only barely begun (but that’s another article).
There is an area where simplification, or perhaps more accurately rationalisation, is desirable; financial protection for the consumers of legal services whether they are individuals or institutions. We were therefore delighted to see the Legal Services Consumer Panel support the CLC’s view that there should be centralised protection arrangements for all regulated legal services providers. That’s to say, a sector-wide compensation fund.
The CLC’s compensation fund offers financial protection to institutions as well as individuals because our scheme does not apply a hardship test to claims. It also compensates in cases of negligence. We would want to ensure that any sector-wide fund met that same standard. With that proviso, we believe that a centralised solution offers very considerable benefits:
- Simpler access for consumers to a standard scheme;
- Extension of financial protection to the clients of those legal services providers currently without such a scheme (that is to say all, but licensed conveyancers and solicitors);
- Independence of decision-making, divorced from funding considerations; and
- Removal of a barrier to switching regulator for those who are minded to do so because their compensation arrangements could continue unchanged.
We look forward to working with others to explore in more detail this important idea.