Westwood: Reshaping market
The Legal Services Board (LSB) has proposed a 14% hike in its budget as it looks to strengthen direct oversight of the frontline regulators, which may include active monitoring of the Solicitors Regulation Authority (SRA).
The oversight regulator is currently going through its enforcement process against the SRA in the wake of October’s Axiom Ince report. The procedure runs in private until the outcome is announced, which could yet be some months.
The LSB this week published a consultation on its business plan and budget for 2025/26, with the latter up £757,000 to just over £6m, or a further £3.84 onto the practising fees paid by authorised persons – the LSB currently receives around £25 per authorised person. It would have been more but for £54,000 in savings.
A large proportion of the rise is due to the need for the LSB to move office next year, while it needs an extra three staff, taking it to 45 full-time equivalents, “to achieve the outcomes set out in the business plan”.
It has also lifted its legal budget by £79,000 after a year that saw “a significant increase in the requirement for the LSB to seek external legal advice”.
The business plan identified several “systemic challenges” faced by the legal sector, “including barriers to diversity and inclusion, professional ethical failures, and increasing unmet legal needs”.
It went on: “The market is changing through consolidation of law firms, increased third-party litigation funding, and poor practice in bulk litigation claims, some of which have contributed to some high-profile firm collapses and consumer harm.
“These issues raise questions about the adequacy of existing regulatory frameworks across both legal and financial services and require closer examination to ensure effective policy solutions are put in place.”
There were also issues with regards to the frontline regulators’ “transparency, capacity and capability, enforcement and supervision, and risk management”.
As a result, the LSB planned to “focus on strengthening our direct regulatory oversight of regulators’ performance and seeking assurance against our expectations”.
It also said that, depending on the outcome of the enforcement process against the SRA, “we may need to undertake monitoring activity in 2025/26 in relation to this matter”, and it also has to conclude the related review into the regulatory events leading up to the SRA’s intervention into SSB Law.
The consultation said the LSB has prioritised five key policy work programmes to complete and implement during the year, starting with ensuring regulators uphold high standards of professional ethical conduct.
“Our longer-term ambition… is to drive a cultural step-change to support and empower professional ethical decision-making.”
The other four were implementing new policy on equality, diversity and inclusion; implementing principles to underpin effective disciplinary and enforcement processes; identifying where and how regulation can improve access to justice; and exploring the balance between encouraging a thriving market and consumer protection.
LSB chief executive Craig Westwood said: “The LSB is committed to reshaping legal services to meet the evolving needs of consumers and providers, and has proposed a detailed business plan for 2025/26 to support this.
“As part of this, professional ethics and consumer protections will be two priority areas for our continuing work, responding to recent high-profile failings and ongoing changes in the legal services market respectively.
“We want to make sure that regulators and the regulatory framework foster innovation, maintain high standards and promote public confidence in legal services across England and Wales.”
The LSB will be hosting an online consultation event on 15 January 2025. The consultation closes on 3 February.
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