Kumar: Extremely disappointed by consumer panel
The Council for Licensed Conveyancers (CLC) has issued a sharp rebuke to the Legal Services Consumer Panel for its “inaccurate representation” of the regulator last week.
Chief executive Sheila Kumar said she was “extremely disappointed” by the references to the CLC in the panel’s report, A Regulatory Framework for the Future, which made the case for reform of legal regulation, including having a single regulator.
The report cited the recent CLC review of referral fees as one of three examples where failures in the legal market have been the subject of television documentaries and investigations.
“Each is instructive not merely as a case study in institutional failure, but as a direct illustration of what regulatory fragmentation produces, and why fragmentation leaves those failures unspotted.”
As well as the Post Office scandal and harassment at the Bar, the report talked about last year’s BBC Panorama programme on ‘conditional selling’ by estate agents, where agents are incentivised to encourage buyers to use in-house services, such as conveyancing.
This prompted the CLC to launch a thematic review, the interim findings of which were published last month.
The panel noted that this showed how all 12 practices reviewed “had referral arrangements in place, that record-keeping was inconsistent, and that there was a ‘potential regulatory blind spot’ in how the CLC had supervised these arrangements”.
It linked this to the CLC having “publicly advertised itself to firms as a more ‘supportive’ regulatory environment”, the type of regulatory competition the panel said it had warned about in 2013.
“What Panorama revealed was the consumer consequence: referral fee arrangements in a regulatory blind spot, because a smaller regulator with limited resources and a stated interest in retaining regulated firms had not prioritised proactive oversight of arrangements financially significant to those firms.”
The panel argued that a single regulator “with no institutional interest in competing for firms”, and the scale to conduct proactive supervision, “would not have left this as a blind spot for consumers buying their homes”.
It added: “The CLC’s review was prompted by a television programme. It should have been prompted by the regulator itself.”
Later in the report, the panel again referenced the CLC’s “active recruitment of regulated firms” with disapproval.
In response, Ms Kumar noted that the Panorama investigation highlighted wrongdoing by unregulated estate agents, not by conveyancers.
“Nevertheless, the CLC took the decision that it would again look at this topic in the context of its mandate, the regulation of conveyancers, to see if anything more could be done to improve the situation of consumers in the absence of regulation of estate agents.
“It is perhaps notable that we were the only regulator of conveyancing to do this. Responding to market intelligence is the sign of a proactive regulator with a resolute focus on acting in the public interest and the capability and resources to do so. It is worrying that the panel misread this so badly.”
Ms Kumar said the CLC continued to press for the regulation of estate agents, and in the meantime the review had identified areas “where we can strengthen transparency and consumer protections in our code”.
She continued: “The panel also talks about our ‘active recruitment of regulated firms’. Our conveyancing and probate firms benefit from the CLC’s focused regulation and the high standards we set for entry for both individuals and practices. This means CLC regulation is good for consumers and good for lawyers.
“The Legal Services Act was designed to give both a choice and the CLC is simply demonstrating that it is a good choice to make.
“Our specialism is why we are one of the key organisations leading the work on home-buying reform, ensuring it works for the public and those who advise them.”
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