Escaping from the regulatory maze

Posted by Neil Rose, Editor, Legal Futures

Maze: complaints over difficulty of navigating the legal landscape

I suspect there is no coincidence that the Legal Ombudsman’s website is publicising its first annual report under the banner headline “Regulatory maze”. Those of you with long-ish memories may recall that this was the phrase used in 2003 by the then Department for Constitutional Affairs in the scoping study that paved the way for the Clementi reforms. Sir David himself adopted it to describe the confused regulatory infrastructure which his reforms were supposedly going to untangle.

So here we are, eight years later, with the ombudsman – himself a creature of the Clementi report – complaining that a regulatory maze still exists. “Consumer confusion is exacerbated by the difficulties in understanding the increasingly complex structures involved in the delivery of legal services,” explains chief ombudsman Adam Sampson in the report.

In fairness the context is slightly different. In recommending the creation of the Legal Services Board (LSB), Sir David sought to thin out the myriad of oversight regulators that existed at the time above the frontline regulators such as the Law Society and Bar Council. Of course, by also recommending that the frontline regulators should formally separate their regulatory functions from their representative work, he created a whole new raft of organisations and acronyms, so the overall size of the maze is not that much smaller.

I have that the further away one gets from the Clementi compromise, the messier it looks.

By contrast, yesterday, in his many media appearances, Mr Sampson was focusing on the problems consumers have in knowing whether the person from whom they are buying legal services is actually regulated.

This comes back – as do most of the big issues facing the market – to our old friend reserved legal activities. As a reminder, these are those few areas of legal work which only authorised persons (ie, the various types of lawyer) are allowed to do. Otherwise anyone can set themselves up as “Joe Bloggs, Legal Adviser” and start advising on, say, employment or commercial law.

Will-writing is the area of unreserved practice currently in the spotlight following the Legal Services Consumer Panel’s that it should become reserved, now under formal investigation by the LSB. Alongside this we have the LSB’s wider project to rationalise the scope of regulation, as part of which, as I have reported several times, it is looking at whether the list of reserved activities should be modified, extended or reduced, with the help of Professor Stephen Mayson.

It strikes me that with his comments and even his reference to the “regulatory maze”, Adam Sampson has ramped up the pressure on the LSB, proving – if proof were needed (which I don’t think it was) – his independence from the board that oversees the ombudsman.

While not explicitly saying it, he seemed to be favouring the Solicitors Regulation Authority’s preferred approach to reserved activities, which would be to include on the list anything that would normally be seen as “solicitor services”.

This would not mean that only solicitors could do them – that simply would not be tenable in a post-Legal Services Act world. But it would mean that only authorised persons – properly trained and regulated people – could do them. This would ensure protection for consumers who understandably struggle to tell the difference between a regulated and an unregulated provider.

In his work, Professor Mayson identified two justifications for reserving a legal activity: to secure a “public good” or to protect consumers. Adam Sampson has just made the case for extending the list that much more convincing.


    Readers Comments

  • Louise Restell says:

    I agree that consumers don’t understand the difference between reserved and unreserved activities and I don’t think we should expect them to (most of us have better things to do). So regulation has to come from the perspective of protecting the consumer. But I don’t think we should always assume that regulation is the answer to all ills – I could list numerous examples of where regulation has failed. And, of course, it costs money.

    I think even more important than regulation is ensuring there is effective redress for consumers (one of the reasons why Which? accepted we would not get full regulation of estate agents and settled for a mandatory redress system instead). Without this, regulation is meaningless.

    However, I don’t think consumers particularly care (nor should they ahve to ) about the regulatory maze so long as their path through it is clear. I am not sure that is the case when it comes to regulating the activities of ABS (and I said so when the then Legal Services Bill was under scrutiny).

    I agree with Charles Plant, there is definitely a case for reviewingthe whole regulatory structure of legal services (AGAIN) and this time not shying away from the obvious – one overarching, independent legal regulator with teeth.

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