LSB gets clean bill of health but idea of ‘super regulator’ remains on the horizon

Djanogly: excellent standards of corporate governance

The Legal Services Board (LSB) and Office for Legal Complaints (OLC) were today given a clean bill of health by the government, although it acknowledged that in the long term transforming the LSB into a ‘super regulator’ is an option.

The LSB and OLC – which oversees the Legal Ombudsman – were among the first public bodies subject to a new series of triennial reviews, prompting sharp criticism of some of the LSB’s work by several legal regulators and representative bodies.

However, the Ministry of Justice’s (MoJ) conclusions, published today, found that there is a continuing need for both bodies.

The report said: “Although there is a mixture of views in relation to the LSB, the general theme that has emerged from the responses to the call for evidence and the view of the MoJ is that the functions of the LSB are still required.

“Whilst it is appreciated that respondents are not always happy with the way in which the LSB carries out its functions, it is not for this Triennial Review to comment on the performance (good or bad) of the LSB. It is only to look at the functions of the LSB and determine if they are still required.”

On the OLC, it said: “The overwhelming evidence is that the OLC is operating well and that the functions are still required.”

The MoJ said the Legal Services Consumer Panel still has a role to play in ensuring that consumer issues are raised with the LSB, “but the panel could consider how it could improve its communication with approved regulators”.

In a written statement to Parliament, justice minister Jonathan Djanogly also praised the LSB and OLC for their “excellent standards of corporate governance”. The review made recommendations for minor improvements to strengthen the openness and transparency of each body, including possibly having open board meetings.

LSB chairman David Edmonds said: “I welcome the conclusions of the review. The LSB will continue to implement the ambitious work programme set out in our strategic plan for 2012-15.”

However, the review said the introduction of alternative business structures (ABSs), as well as changes to the scope of legal regulation and ongoing legal education and training review, may “alter the legal services arena sufficiently to necessitate a new form for the LSB and OLC”.

The review identified two alternatives, although neither was seen as viable at the moment. One would be to create a new public body, with three possible forms, one of which would be for the LSB to transform into a new legal services regulator. There is a significant school of thought among some stakeholders that this is the ultimate direction of travel.

This could see the approved regulators remain as a way to retain specialism within the market; the LSB would authorise a person to act as a ‘lawyer’, but the individual approved regulator would grant the person the right to be a ‘conveyancer’ or other specialism, and would also retain any skills or training requirements.

“There has been an acknowledgement in some of the response that this could be a workable model in the future, but would not be appropriate at present.”

The other option would be to abolish the LSB and allow the approved regulators to regulate alone, either individually or by merging.

“There is a risk that this would be seen as a return to the situation before the Legal Services Act, where consumers had a perception of professional bias,” it said. “There would also be no regulatory oversight. If approved regulators were to prove their independence and accountability, whilst maintaining an effective redress scheme, this option might be feasible in the future. The market is insufficiently mature at the present time. It would also be difficult to ensure that a joined-up view was maintained between the regulators to address changes in the sector…

“Whilst the option of abolition appeals to some of the respondents, most have accepted that there is a continuing need for the LSB to operate as an independent body, particularly in its oversight of the legal market. This might be lost if approved regulators were left to regulate on their own.”



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