The Solicitors Regulation Authority (SRA) has “substantial work” to do before it can consider its performance satisfactory, including making its rules less prescriptive, the Legal Services Board (LSB) said today.
The assessment – which is the baseline from which the SRA’s future regulatory performance will be judged – followed a self-assessment submitted by the SRA, which in places the LSB judged to be over-optimistic.
The LSB also revealed that it had to invoke statutory powers under the Legal Services Act to procure information the SRA had not supplied.
The LSB said the SRA is “stepping up” to the challenge of regulating a very diverse community and has achieved much in recent years.
This includes introducing a new outcomes-focused code, moving to a single site and changing the way it supervises firms, and developing a greater understanding of the risks in the markets it regulates and the needs of consumers.
“However, there are significant areas where it has not yet fully met the high standards it has set itself and more needs to be done to rectify this,” it continued.
The LSB said the SRA’s top-level commitment to outcomes-focused regulation needs to be fed through to all aspects of regulation. “The revised handbook is a step forward but it continues to include a large number of rules without clear evidence to justify the restrictions they impose and thus their retention.
“There are also areas where outcomes and rules are unhelpfully elaborated in detail and/or by very detailed guidance, which may have the effect of limiting innovation.”
The development of risk identification and supervision, while a step forward, has been hampered by recruitment and IT delays, and remains “sub-optimal”, while the LSB was critical of the SRA’s submission on its enforcement work, “which did not contain the levels of self-reflection and detail present in the other sections” of the self-assessment.
The LSB also urged the SRA board to do more to hold the executive to account for operational performance, and focused in particular on the delays in approving applications for alternative business structure licences. As we reported recently, the SRA is changing its approach to dealing with them and the LSB said “it expects the SRA board to prioritise holding its executive to account for delivery of this work”.
LSB chairman David Edmonds said: “The SRA should be proud of the progress it has made so far… Our assessment of the SRA’s own performance review shows that, despite the distance travelled so far, there is still a great deal to be done in building an organisation that meets demanding quality standards in all parts of its operations.
“Our conclusion – which we will be discussing with the SRA – is that it needs to focus its efforts not only on the development of policy and procedures, but also, and rather more sharply, on performance and the opportunities and risks in the market place.
“The SRA has done more than the other regulators to meet the challenges set by the introduction of the Legal Services Act. We believe that the SRA has gathered the building blocks to create a legal services regulatory framework that has the potential to meet the standards required, but there is a lot of construction to do.”
SRA chairman Charles Plant responded: “In our strategic plan published in December 2012, we were explicit that we are part way through a major programme of modernisation and improvement to become a modern, risk-based, public interest regulator. At a strategic level, the LSB’s overall assessment of the SRA is consistent with our own published assessment. And we agree with the LSBs press statement summary, ‘much done, much to do’.
“We disagree with some of the detailed conclusions reached by the LSB in its report, particularly in relation to our enforcement activity. We will be discussing these with the LSB, and our concern that the LSB’s approach is sometimes too narrowly focused on certain regulatory objectives without proper regard for the wider picture, or to the respective roles of the LSB and the frontline regulators.”
All of the legal regulators are going through this process. The LSB’s assessment of the five ‘smaller’ regulators was published in December, with the assessment of the Bar Standards Board due in the spring.