Sackman: Significant change is needed
The government is to undertake a “comprehensive review” of whether legal services regulation remains fit for purpose, the Ministry of Justice (MoJ) revealed today.
Legal services minister Sarah Sackman said she agreed with the conclusion of the Lloyd review earlier this year that “significant change is needed to strengthen the effectiveness of legal services regulation”.
She was writing in the MoJ’s formal response [1] to the independent public bodies review of the Legal Services Board (LSB) that it commissioned from Richard Lloyd, a former executive director of Which? and current chair of the Independent Parliamentary Standards Authority.
In his report, published in July [2], Mr Lloyd said the LSB has “lost its way” in recent years and a reset was needed while work began on a wider review of regulation.
The MoJ has accepted all of his recommendations, saying it recognised that “the complexity of the current regulatory framework can make it more difficult for regulators to identify, manage and respond to risks, that it contributes to duplication across the regulatory system and makes accountability for regulatory outcomes less clear”.
It said the Legal Services Act 2007 provided scope for the LSB to set “clearer priorities and improve how the existing framework operates” in the short term while the longer-term review of regulation was conducted.
The two core principles behind all reform will be that consumer protection “must be at the heart of legal services regulation” and that the independence of legal services regulation from government “must be preserved”.
Mr Lloyd recommended that a new framework be developed by 2029 with a view to implementation during the next Parliament.
The response said: “The government will undertake a comprehensive review of the regulatory framework to consider whether it remains fit for purpose in a changing legal services market.
“The government will work closely with consumers, regulators and other key stakeholders in the legal sector to consider, among other things, the regulatory boundaries, the structure and complexity of the system, and the implications of developments such as AI and lawtech.”
However, it said that the “scale and complexity” of this work meant it could not “fully commit” to the 2029 timeline at this stage.
While most of the recommendations were aimed at the LSB – and the MoJ said it “encourages progress to be made as quickly as practicable” – two were aimed at the MoJ, LSB and frontline regulators jointly.
The first was to develop “a shared framework for identifying, assessing and managing market and consumer risk, including an agreed statement of sector risk tolerance”.
The second was to clarify their respective policy responsibilities, “with the aim of avoiding duplication and stakeholder confusion”. This included the LSB limiting its policy activity to regulatory oversight.
Mr Lloyd also said the MoJ should consider how it could increase transparency in its oversight of the LSB, including whether aspects of its existing assurance and accountability mechanisms could be made publicly available.
The MoJ said it has already begun implementation of these three recommendations, and would support the LSB and other relevant bodies “in taking forward the wider recommendations, while maintaining clear accountability for delivery”.
See our blog from July: Does the Lloyd review mark the end of the Legal Services Act? [3]