Shah: Major reset
The Legal Services Board (LSB) accepts responsibility for its role in “the failure” of the regulatory system to protect consumers, its chair said yesterday.
Monisha Shah acknowledged the oversight regulator’s shortcomings in response to publication of Richard Lloyd’s independent review of the LSB [1], commissioned by the Ministry of Justice.
She said she welcomed the report and the 10 recommendations it made to improve the LSB’s operations.
“Regulatory failures have resulted in significant consumer detriment,” said Ms Shah, who only took over in the role earlier this year.
“We accept our responsibility in the failure of the system to protect the interests of consumers. The public have a right to expect better outcomes from the legal regulatory framework.
“This is an important moment of reflection for the Legal Services Board about our impact in protecting and promoting the interests of consumers in a rapidly changing legal services market.”
Ms Shah insisted that the LSB has “a pivotal role to play to ensure trust and confidence in the sector” and said Mr Lloyd’s report “gives us a clear, independent basis for a major reset”.
As we also reported yesterday [2], the LSB had already set out its intention to replace its existing Reshaping Legal Services strategy – a decade-long vision due to run until March 2031 – with a more focused three-year strategy.
“We will introduce a sharper regulatory focus and a more dynamic, risk-based approach to oversight, directing our work and resources towards issues which present the greatest risk to consumers,” Ms Shah said.
“This work has already begun. Planned changes include separating our enforcement and oversight function from our regulatory policy and engagement work.”
This was a key recommendation of Mr Lloyd’s review.
“The LSB operates in a complex regulatory framework,” Ms Shah went on. “The recommendations in this review will prompt further reflection for the LSB and, more generally, for government, frontline regulators, and the professions, all of whom have an important role to play in ensuring the effectiveness of the wider system.”
Tom Hayhoe, chair of the Legal Services Consumer Panel, said he was pleased the report recommended that the LSB prioritise protecting and promoting the interests of consumers ahead of its other statutory objectives.
“We endorse its recognition of the role of the panel in providing insight to inform the how the LSB prioritises consumer interests in its work.
“We also agree with the need for a comprehensive review to prepare for implementation of a new regulatory framework in the next Parliament, while delivering whatever improvements are possible under current legislation in the meantime.”
Law Society president Mark Evans said the review was “right to conclude that the LSB should focus on its core oversight role”.
He continued: “Effective oversight helps protect consumers, maintain confidence in legal services and ensure frontline regulators are equipped to tackle emerging risks.
“To oversee regulators effectively, the LSB must prioritise improved assessment of sectoral challenges and proper scrutiny of regulators’ performance, and set clear directions when performance falls short.
“We also support the recommendation that the LSB should refocus its policy interventions on those areas within its statutory remit and not seek to duplicate work that might be led more effectively by the frontline regulators and professional bodies.”
Stephen Kenny KC, chair of the Bar Council regulation panel, agreed with the finding that the LSB’s development of policy should be limited to what was necessary to support its statutory oversight function and not duplicate the MoJ’s responsibility for setting system-wide policy and political priorities, nor the role of approved regulators in developing detailed policy, responding to consumer needs, and driving innovation within their regulatory frameworks.
“We stated in our submission to the review that at times the LSB has promoted too broad a programme of work and that it needed greater focus on its own activities by spending less time on activities that are better suited to other organisations.
“In this respect we agree with Richard Lloyd’s findings that the LSB had ‘lost its way’ and we support measures to re-focus its attention on core work.”
Eileen Milner, chair of CILEX, said it agreed that now was the time “for the recommended reset and refocus of the LSB”.
She went on: “As an organisation, it is in a unique position to convene sector players, enable meaningful and respectful improvement focused collaboration, drive clarity and consistency, and provide focus by reducing duplication and harnessing collective effort.
“We hope that, reflecting on this review, the LSB acknowledges that it could do more to listen to those it regulates. We see this as a sign of confidence, not weakness.
“Approved regulators also have a unique position in the system and can shine a spotlight on issues that only the LSB can tackle. This is not special pleading; it is a genuine commitment to improving regulation.”
Ms Milner said CILEX also agreed with the review that the current regulatory framework for legal services was no longer fit for purpose and the call for a comprehensive review on which to base future reforms.
“This is not only critical to protect and meet the needs of consumers but also to ensure that effective regulation is an enabler rather than a drag on the economy.”
Sheila Kumar, chief executive of the Council for Licensed Conveyancers (CLC) said: “The CLC’s mission has always been to protect consumers, but also to drive innovation, competition and growth in the legal sector.
“Mr Lloyds’ recommendations for changes to how the Legal Services Board operates, when implemented, will mean that we are able to focus even more of our resources on that mission as the burden of oversight regulation – which ultimately falls on the users of legal services – is reduced.”