The Legal Services Consumer Panel (LSCP) has published “key criteria for success” which it hopes will lay the foundations for the new price and transparency regime for lawyers demanded by the Competition and Markets Authority (CMA).
The panel warned against “information overload”, with law firms providing so much information that it made decision-making by consumers worse.
At the same time, the LSCP advised regulators to “work hard not to create a risk that firms, and even themselves, adopt a ‘tick-box’ approach to their disclosure regimes”.
The CMA’s call for law firms to publish prices and complaints records in its final report at the end of last year prompted the Solicitors Regulation Authority (SRA) to announce in January that it was working on plans to require law firms to publish prices for conveyancing, divorce and private client work.
This was followed by the first meeting of a ‘remedies programme implementation group’, chaired by the CMA and including senior figures from all the legal regulators.
In advice to the Legal Services Board on information requirements or ‘remedies’ for lawyers, the LSCP said that “even with the best will and intention”, remedies could be ineffective.
The panel cited lawyers’ client-care letters as an example of ineffective compliance, because research published by the LSCP last year had shown that “intentionally or inadvertently” they had become a ‘tick-box’ exercise.
“Although information was routinely given, its effectiveness was found wanting under evaluation due to the manner of compliance.
“Similarly, all the regulators we assessed place a requirement on their regulated communities to provide clear estimates and even accurate costings, yet the CMA found a widespread lack of transparency in this area.”
The LSCP cited a rule requiring shops to warn customers if their store cards had annual rates of interest of over 25% as an example of an effective information remedy, since it resulted in the proportion of these cards falling greatly.
As an example of an ineffective remedy, it cited care homes, where requirements to publish prices and provide inspection reports did not lead to downward pressure on fees.
Among the criteria set by the LCSP for lawyers were consumer testing of information requirements, which the CMA has already insisted on outside the legal world.
Some remedies should be targeted at “specific groups”, such as vulnerable consumers, and the LSCP gave the example of pre-payment customers in the energy market and banking consumers with regular overdrafts.
The panel suggested that consumers who did not or could not use comparison websites could also be at a disadvantage, since those sites might drive up offline prices.
The LSCP said regulators should develop a system to monitor compliance whilst designing and developing information remedies, and build in an evaluation stage which allowed them to assess effectiveness.
“Regulators, including the oversight regulator, will need to work hard and together to ensure that the CMA recommendations truly deliver good outcomes for consumers.”
Dr Jane Martin, chair of the consumer panel, added: “We know that information can empower consumers and encourage them to make informed decision, and that this is good for competition.”