Shah: Narrowing the gap
The Legal Services Board (LSB) has reversed its plan to reduce its budget and instead approved a small increase, amounting to an extra £1.79 on every authorised lawyer’s practising fees.
The potential need to look at the Solicitors Regulation Authority (SRA) over the collapse of PM Law was cited as one of the reasons.
The oversight regulator has also signalled its intention to develop a three-year plan to address issues such as the list of reserved legal activities.
The consultation on the LSB’s business plan for 2026/27 proposed a budget of just under £5.7m, a 0.5% reduction. It is paid by the practising fees of all authorised lawyers.
But issuing the final plan yesterday, the oversight regulator said developments since last December “have caused us to reassess the budget required to deliver against the regulatory objectives” and instead the budget would be just over £5.8m, a 1.7% increase.
These included the SRA’s intervention into PM Law and confirmation of a potential fraud.
“This comes after the SRA’s intervention into Axiom Ince and the collapse of SSB Law in recent years,” the consultation response paper said – both events led to the LSB commissioning an independent review of the SRA’s approach.
The LSB said it agreed with both the Legal Services Consumer Panel and the Access Group in their responses that “effective regulatory oversight could not be delivered with declining resources”
The increase was below inflation, helped by the LSB reducing its budget in other areas, such as halving its external legal spend.
“The increased budget will enable us to progress a number of important strategic objectives in the coming year,” it said.
“This includes investing in our regulatory oversight function, including the recruitment of a new director of regulatory oversight.
“Given the pace of change in the wider market, and the increasing consumer use of unregulated service providers, we also now need to examine the evidence for the current boundary between reserved and unreserved legal activities, and consider whether greater oversight of the unregulated sector is needed.”
It would also need to address the recommendations of the ongoing review of the LSB commissioned by the Ministry of Justice.
The LSB received 16 written responses to its consultation and also held an online stakeholder discussion event.
“Overall the responses indicated broad agreement with the four objectives we identified in our draft business plan,” it said.
These included a revised approach to its oversight of the frontline regulators, replacing annual performance assessments with scrutiny that was “more proportionate, risk-based, targeted and informed by intelligence”.
This would “reduce burdens on high-performing regulators”, a policy described as “‘right touch’, not ‘light touch’”.
Both the SRA and Bar Standards Board are working to meet specific expectations set out by the LSB and the business plan said it would closely monitor their performance.
“We expect to see improvements from both regulators, in order to better protect consumers and maintain public confidence in the regulation of legal services.”
The three-year plan will be developed over the coming months for consultation and will cover issues such as the adequacy of the current list of reserved legal activities, the unregulated sector and whether frontline regulators have the powers they need.
“The Act provides mechanisms through which voluntary standards may be developed and applied to the unregulated sector, and given the changing landscape of legal services we intend to consider all regulatory levers to ensure regulation is fit for purpose for the current market.”
Relatedly, the business plan said the LSB would also explore safeguards in the AI-powered unregulated sector.
Monisha Shah, the new chair of the LSB, commented: “The legal services sector is evolving rapidly, and effective oversight has never been more important. The changes to our oversight model will focus on proportionate, targeted regulation that protects consumers, supports innovation, and maintains public confidence.
“As a new chair, I will also dedicate time to deepen my understanding of the challenges faced by consumers and by legal service providers.
“This will help to further inform the crucial role that regulation can play in narrowing the gap between a thriving legal sector and better access to justice for the public.”
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