Allow not-for-profit agencies to charge, says LSB as it delays date for them to become ABSs

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6 December 2012

Kenny: early end to existing and unnecessary regulatory controls needed

Not-for-profit (NFP) advice agencies should be allowed to charge for providing legal services soon, the Legal Services Board (LSB) said yesterday, while also announcing a delay in the creation of an alternative business structure licensing scheme until at least April 2015 because no regulator is ready to provide it.

The extension of existing transitional protections for the so-called ‘special bodies’ providing reserved legal activities was welcomed by the advice sector. The LSB concluded that licensing special bodies would “provide beneficial consumer protections to users”, including recourse to the Legal Ombudsman.

A consultation on the matter ended in June, with 23 organisations responding, including a variety of NFP agencies.

The LSB also called for bans on special bodies charging for legal services, and on separate businesses, to be lifted “well before the end of the transitional period” but did not specify a date. The Solicitors Regulation Authority (SRA) is understood to have granted waivers to a number of agencies wishing to charge, despite having earlier raised concerns about the regulatory risk.

The current regulatory framework is too complex and potential licensing authorities would have to “do significant work” to create an appropriate regime, the LSB said. However, it envisaged they would be ready to receive licence applications in April 2014 and grant licences no sooner than a year later, although it has not yet set a date in stone.

Meanwhile, the LSB said it has seen “no evidence to support the SRA’s current ban on charging by not-for-profit bodies”, and any risks arising from lifting the ban on separate businesses “can be adequately managed on a case by case basis without the damping effect that a blanket ban has”.

Ann Lewis, policy director of the Advice Services Alliance, said she thought most agencies would be happy with the delay as it “gives them time to sort out a regime that will actually work and be proportionate”.

She said some agencies had been concerned that if a licensing regime was established too quickly, “they might just create something that’s incredibly burdensome and expensive and that people can’t afford”. She added: “Things are bad enough already.”

AdviceUK’s head of policy and campaigns, Phil Jew, also welcomed the delay as “good news” and “sensible” on the grounds that his network’s members were having to adapt to the upcoming legal aid changes.

However, he expressed disappointment that the LSB had not specified an immediate lifting of the “antiquated” ban on charging fees, which many of his members “are having to think about as an option to sustain their services”. The SRA agreeing waivers was positive but “we could do without people having to go through that sort of bureaucratic process”, he said.

Chris Kenny, the LSB’s chief executive, said: “Special bodies are a vital component of the justice system. They need a regulatory framework that is proportionate and reflective of the needs of consumers and organisations alike, but does not generate unnecessary cost and complexity…

“By confirming that transitional protections will not end until at least April 2015, and not before a licensing authority is in place, we hope to provide certainty to special bodies and incentives to regulators to develop the necessary proportionate controls in the course of 2013-14.

“But if the sector is to be able to seek new opportunities to help meet the inevitable challenges ahead, it also needs to see an early end to existing and unnecessary regulatory controls.”

Legal Futures reported recently on efforts by some NFP bodies to innovate in the face of the forthcoming legal aid cuts, with Islington Law Centre in north London applying to become an ABS.


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