The Council for Licensed Conveyancers (CLC) is set to cut its fees for the firms it regulates by 30%, having originally planned a 20% reduction.
In its application for approval by the Legal Services Board, the CLC said this was part of its longer-term strategy to manage a reduction in the level of reserves in the practice fund – the money which covers the cost of regulation – and reduce the regulatory cost burden on practices.
In the current year, for example, CLC-regulated firms turning over £500,001 to £3m have to pay a fee of £5,100 plus 0.9% of turnover over £500,000. If the change is approved, next year they will be paying a fee of £3,750 plus 0.63% of turnover over £500,000.
The projected total funding requirement for 2020 is £2.9m – made up of £1.7m from practice fees, £600,000 from individual licence fees (which are staying at £400) and other income and £600,000 from reserves.
Running a deficit budget will reduce the CLC’s reserves to £3.35m – in 2015, the regulator’s board agreed to maintain a minimum reserve on operations of £1m.
The practice fee reduction follows a 20% fall in 2016 and 10% in 2018. At the same time the CLC has proposed a 60% cut in compensation fund contribution rates.
The base compensation fund contribution has been stable at 0.4% of turnover since 2011, but will change to 0.16% if approved.
The CLC said it could safely make the reduction because its “proactive approach to securing compliance minimises the number of failures that result in harm to clients and expensive corrective work”.
Further, cost management and the sale of properties owned in the past by the CLC had pushed reserves higher than required, while CLC-regulated firms have been performing well in business terms, “so the CLC does not need the current levels of reserves in hand to deal with the potential impact of wider economic instability on the firms it regulates”.
CLC chief executive Sheila Kumar said: “There are real benefits for all, particularly consumers, when our approach as a risk-based independent regulator, working with our regulated community, enables us to pass on regulatory savings in the form of lower fees.
“Our focused approach means we are in close touch with those we regulate, with regulatory supervision managers who understand not only the regulatory but also the business risks the regulated community faces.
“This means we take the action that is needed to ensure licensed conveyancers deliver a high-quality service, while not burdening them with unduly costly and onerous regulation.
“It is especially pleasing that we are able to go further than initially indicated, in line with our ambition to be the regulator of choice in our specialist areas.”