The prospect of a single regulator for the legal market has dimmed after the new chief executive of the Legal Services Board (LSB) distanced himself from the idea.
In his first interview since taking over from Chris Kenny in February, Richard Moriarty also told Legal Futures that though the LSB was told last year by then Lord Chancellor Chris Grayling to work towards its own abolition, “I don’t think we are close to that point yet”.
Under the chairmanship of David Edmonds – whose term ended just over a year ago – the LSB was pushing the idea of a single regulator, and it remains one of the options under consideration by the frontline regulators as part of work on ways to reform the regulatory regime being co-ordinated by the LSB and run for it by Professor Stephen Mayson.
Mr Moriarty said: “To anyone coming fresh to this they probably look at the sector and think you have got a high number of legal services regulators – is that optimal? And I know that there has been long debates about whether there should be consolidation of regulations of a single regulator.
“I actually think the answer is ‘not necessarily’… The public doesn’t care about whether there is one, two or 11 regulators. They want regulation done well and the profession wants it done in a value for money and a proportionate way. The actual architecture behind it I think people are less focused on. It is more of a question for the regulatory village.
“I have worked in sectors where regulators have merged in energy, in housing. But equally if you look at other complex professions like healthcare and accountancy, they do have oversight regimes. And they have frontline regulators.
“For me the priority, if people are looking at this, ought to be less on the organisational form and more on what is the ‘it’ that deserves to be regulated? What is the public interest that should be regulated? And then work out the organisational form after you have answered those questions.”
Putting the principle of ‘function before form’ to the fore of his philosophy, Mr Moriarty took a similar approach to whether the frontline regulators currently tied to representative bodies – such as the Solicitors Regulation Authority and Bar Standards Board – should have structural independence they want on top of the operational independence they now enjoy as a result of the LSB’s internal governance rules.
He said: “The public expects some independence, but the public also expects, and the profession rightly expects, regulation to be informed by the profession. What we have got in the 2007 [Legal Services] Act is something that addresses both those issues.”
While it is for the LSB to ensure that the internal governance rules are being observed, “I think again the public will not really be that concerned over the particular regulatory model, providing it works. It is important to have independence, and it is important that the regulators act independently. But the actual degree of that separation, whether it is full legal separation or what we have got at the moment, I think it is an open question.
“If what we have got at the moment works, is seen to work, and is effective and commands the confidence of the public and the profession, then you may find that actually this regime is a bit more enduring than most people perhaps thought. If that doesn’t happen and the profession lose confidence, or the public lose confidence, then there will be undoubtedly greater demands for a different model.”
Of course, there are more than a few people who would like to go the other way from a single regulator and instead simply have the frontline regulators with no LSB looking over their shoulders. Speaking a year ago, Mr Grayling said there were too many “layers” of the regulators.
He said: “I have said to Sir Michael Pitt [the then new chairman of the LSB] that during his time at the LSB, success means creating an environment where that organisation is not necessary in the long term. This won’t happen overnight but I am clear that this should be the direction of travel.”
Mr Moriarty said that nobody at the LSB thought it had “a God-given right to exist”. He explained: “Regulators exist to serve a purpose and when that purpose is served or when costs exceed benefits, they should really think about whether they are needed. I certainly don’t come into this job thinking it is a job for life.
“And I am quite attracted to the dual purpose of the LSB, which is to provide that public trust and confidence in the frontline regulators, but also to act as a bit of an agent for change, particularly around economic growth and deregulation and innovation.
“I can certainly imagine a set of circumstances where the need for oversight regulation would be less needed than perhaps hitherto. But I don’t think we are close to that point yet.”
The second part of this interview will be published tomorrow