Lack of evidence for CILEX to switch regulators, consumer panel says

Hayhoe: Panel disappointed

CILEX switching regulator to the Solicitors Regulation Authority (SRA) may be a good idea but both have failed to provide the evidence to prove it, the new chair of the Legal Services Consumer Panel (LSCP) has said.

While the switch from CILEx Regulation “could lead to good consumer outcomes”, Tom Hayhoe said that “good principles or approaches” were an insufficient basis for “seismic regulatory decisions”.

“The panel has been disappointed with the quality of evidence and information from both CILEX and the SRA.”

He was responding to the SRA consultation on whether it should regulate non-authorised CILEX members as well as authorised members (ie, chartered legal executives), among other details of how the regime would work were it to go ahead.

In a strongly worded letter, Mr Hayhoe, who succeeded Sarah Chambers last month, said the panel had “noted the challenges posed by an archaic regulatory framework”, including fragmentation, complexity and consumer confusion.

“Intellectually, we recognise that redelegation of regulatory powers to the SRA, offers a level of consolidation and simplicity that could lead to good consumer outcomes.”

However, “good principles or approaches are not enough to base seismic regulatory decisions on” and the panel had been “disappointed with the quality of evidence and information from both CILEX and the SRA”.

He said that the LSCP published a research report on consumer-focused regulation in September last year which “noted that the quantity and quality of research and engagement in the sector needs to be raised” – and the consultation fell short of what it expected.

The panel had raised concerns about the sequencing of events, such as conducting consumer research after a consultation paper has been published.

He went on: “Also, the low quality of research and analysis done means that the impact of these proposals cannot be properly assessed, and much of the content in the regulatory and equality impact assessment sections of the consultation is based on assertion rather than evidence.

“This goes against the principles of good policy making noted in our consumer-focused regulation report.

“Unfortunately, this consultation paper has not assured us that any of our previous comments or concerns have been properly addressed.”

Mr Hayhoe said the panel warned last November, in response to the SRA’s first consultation on how it could regulate CILEX lawyers, that it “lacked evidence of consumer engagement or research, so there is insufficient evidence on which to base any judgement”.

Despite this, Mr Hayhoe said the LSCP “unequivocally agrees with the outcomes that CILEX is seeking to achieve with redelegation” and consolidation of regulators “may be a good thing”.

Having criticised the lack of detail in both SRA consultations, the panel was “forced to conclude that a decision was taken to ignore this feedback, consequently handicapping us from being able to assess the proposals based on evidence”.

Mr Hayhoe said the LSCP would consider writing to the Legal Services Board should CILEX decide to submit a rule change application.

“We will note our concerns about the quality of evidence gathered, analysed, and explained.”

Responding to detailed questions on the SRA’s latest consultation, Mr Hayhoe said the panel was not satisfied with the proposals for appealing decisions on enforcement.

“In our view, everyone subject to disciplinary action must be entitled to some form of appeal, with independent scrutiny built into it, especially where the outcome impacts on individuals’ ability to earn a living.

“The process should be simple and easy to comprehend. The panel is uncomfortable with a process that does not involve any independent scrutiny of SRA’s enforcement decisions.”

The panel was also “dissatisfied that in some circumstances parallel disciplinary action may be undertaken by the SRA and CILEX”.

Further, there was “insufficient detail to make an informed decision about the cost” of the SRA regulating unauthorised CILEX members.

“We raised this same issue in response to CILEX’s own consultation. We are perturbed by the scanty detail, lack of evidence or rigorous analysis in this area.

“Assertions and principles are not financial facts or estimations on which projections and risks can be gauged or mitigated against.”

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