The Legal Services Board (LSB) has told the government that if it wants to appoint ‘small business appeals champions’ for legal services, it should appoint them to the eight front-line regulators rather than the super-regulator.
Responding to a Department for Business, Innovation and Skills (BIS) consultation, LSB chief executive Chris Kenny said the board did “not consider that the government’s policy aims will be achieved if the requirement for a champion is applied to the LSB”.
In his foreword to the consultation paper, Michael Fallon, minister of state for business, said that poor decisions by regulators were left to stand “because businesses do not know how to challenge them or because challenging them is simply too expensive or time-consuming”.
Mr Fallon said small business appeals champions – senior part-time appointees – would scrutinise the way appeals and complaints were handled by regulators and make recommendations for improvements.
Departments and regulators would be expected to consider any recommendations and either implement them or explain publicly why they had decided not to do so. The champions would have no role in intervening in individual cases, nor any power to do so.
Mr Kenny agreed with “the desirability of addressing shortcomings in regulators’ appeal mechanisms” but argued that only front-line regulators, such as the Solicitors Regulation Authority or Bar Standards Board, had the power to take enforcement action.
“The LSB cannot take action against individual lawyers or businesses,” he said. “Therefore we do not consider that the government’s policy aims will be achieved if the requirement for a champion is applied to the LSB.
“For appeals champions to be effective in legal services, the obligation needs to include all the front-line regulators because their actions directly affect small businesses.”
Mr Kenny also took issue with the idea that the role of champion could be, as BIS put it in the consultation paper, “independent of their regulator” while they were also a non-executive director (NED) of it.
He said that one of the responsibilities of a NED was to be collectively responsible for decisions about the organisation.
“It seems unlikely that an individual NED would be able to exercise sufficient independence from that role to also carry out the functions of a champion,” Mr Kenny said.
“We therefore suggest that BIS may want to reconsider this issue to ensure that the champion is of sufficient seniority and able to carry out their role independently.”
Mr Kenny asked whether BIS had considered testing the whole business champion as a concept in a few regulators, which could help identify practical problems and highlight good practice.
He added that any obligation to provide a public explanation in the event of a disagreement with a small business champion should apply to BIS, as well as the regulator.