Hayhoe: Regulatory failure had devastating consequences for consumers
The collapse of SSB Law and the Solicitors Regulation Authority’s failures in supervising it demand “decisive reform” to restore public confidence, the Legal Services Consumer Panel has warned.
It also raised questions about the Legal Services Board’s oversight of regulators.
The panel was reacting to the LSB-commissioned report which concluded last week the SRA missed several opportunities to step in at the Sheffield-based law firm much earlier than it finally did in October 2023.
The LSB is now to take enforcement action in the form of a public censure of the SRA and imposing performance targets.
The panel’s statement said the findings “reveal systemic shortcomings in consumer protection and regulatory responsiveness that must be urgently addressed to restore public trust in legal services”.
It continued: “The SSB case is not an isolated incident. It reflects deeper vulnerabilities in the legal services market that have been repeatedly highlighted by the Competition and Markets Authority, the panel and other stakeholders. Without decisive reform, consumers will continue to face unacceptable risks and barriers.”
Chair Tom Hayhoe added: “This report lays bare a regulatory failure with devastating consequences for consumers. The SRA’s inaction over five years enabled a pattern of misconduct to escalate unchecked.
“The legal services sector must now confront the reality that its regulatory framework and oversight does not prevent harm to consumers, especially the most vulnerable.”
The panel welcomed the enforcement action but said it must be part of “a broader cultural and structural shift across the sector” – including an assessment of “how robust the Legal Services Board is at identifying risk and preventing harm to consumers”.
It said the SRA must overhaul its complaints-handling and risk-assessment processes “to ensure timely and effective action”, and introduce “clear safeguards” for clients involved in high-risk legal arrangements, including litigation funding.
More generally, regulators had to improve transparency and communication by proactively informing consumers about their rights, risks and avenues for redress.
Finally, all legal service providers and regulators “must adopt a culture that prioritises consumer outcomes and access to justice”.
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