The Legal Services Board (LSB) has stepped up the pressure on the Law Society’s role as the approved regulator of solicitors by announcing a formal investigation into whether the Solicitors Regulation Authority (SRA) has sufficient independence.
The SRA is meant to have operational independence, but there have been growing calls for complete structural independence – not least from the LSB and the SRA itself.
The oversight regulator said: “Following representations made to us by the SRA in response to a request from ourselves and taking into account the information that has been provided by both the SRA and the Law Society (TLS), the LSB has decided to commence a formal investigation into the internal governance arrangements between the TLS and the SRA.
“The investigation will consider whether the current arrangements between the TLS and the SRA are in line with part 4 of the schedule to LSB’s Internal Governance Rules 2009 which require that the internal governance arrangements must not impair the independence and effectiveness of the performance of regulatory functions.
“In particular we will consider whether the arrangements for the business and oversight board have worked as the parties intended, enabling TLS to exercise appropriate oversight whilst complying with the IGR.”
An SRA spokesman said: “We welcome the LSB’s decision to undertake a formal investigation into the governance arrangements between the Law Society and the SRA. We are continuing to work closely with the LSB and the Law Society, and look forward to the outcome of the investigation.”
Law Society president Robert Bourns said the investigation gave it “the opportunity to clarify the Law Society’s statutory duty of oversight put in place following Clementi’s root and branch review and the Legal Services Act 2007”.
He continued: “We support the LSB’s role of ensuring the system as a whole is working for clients, the wider public and the profession.
“The Law Society does not fetter the SRA’s regulatory activities and responds to consultations as any other stakeholder. On a day-to-day basis, the two organisations maintain good working relations and share support services such as finance and HR systems. We will work closely and collaboratively with the LSB on their review.
“We do note that the Competition and Markets Authority recently concluded that it could find no harm as a result of the current arrangements for regulation and that a full market investigation was not necessary.”
However, the CMA did also call on the Ministry of Justice to carry out its planned review of the independence of legal regulators “as soon as possible”. It supported independence as a “key principle”.