LSB reveals “stream of disagreements” as it begins review of regulatory independence rules

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10 November 2017


Buckley: Independent regulation gives confidence

A “steady stream of disagreements” between legal regulators and representative bodies means the rules governing their relationships may need to be rewritten, the Legal Services Board (LSB) said yesterday.

The oversight regulator said it had been notified of 30 disputes over the past three years, mainly differences about governance but also strategy and resources.

In February 2017, the LSB launched a formal investigation into whether the Solicitors Regulation Authority (SRA) has sufficient independence from the Law Society.

It is not known when this will conclude, but the LSB said the outcome would provide more evidence for the review and consultation it published yesterday.

The Legal Services Act 2007 requires the LSB to make internal governance rules (IGR) to ensure that approved regulators (ARs) – bodies like the Law Society that are named as regulators in the Act – do not improperly influence the independent bodies, such as the SRA, to which they have delegated their regulatory responsibilities.

The Act not allow the LSB to require structural or legal separation, although it does support such a move, as does the SRA and Bar Standards Board.

This is the first full review of the IGR since they were first put in place in 2010 and has been prompted by various developments, including the Ministry of Justice in July telling the LSB to do more within the current framework to ensure independent regulation.

The consultation said: “This document explains that the evidence we have obtained to date suggests there are issues with the current IGR. This includes the steady stream of disagreements about independence matters that have been raised with the LSB since 2010.

“Many of these issues appear to stem from a lack of shared understanding about what residual functions remain with an AR where it has delegated the discharge of its regulatory functions to another body.”

These disputes, it continued, consumed management time and resources, adding: “We have been told by regulatory bodies that there may also be an anticipatory chilling effect on reform of regulation, where policies are diluted or not pursued, in the knowledge that these will be contentious and/or that it will be disproportionately resource-intensive to deliver change.”

The LSB is canvassing views on options ranging from no change to the IGR to ripping them up and starting again.

It hinted at support for more radical reform. The evidence of the ongoing disputes “may suggest that the current IGR generate rather than reduce regulatory uncertainty”, while “some ARs and regulatory bodies have told us that they would prefer starting afresh with entirely new IGR, rather than amending the existing IGR”.

One way to change the regime would be a series of ‘gateways’ – relating to issues like finance, governance or regulatory performance information – which would be the only permissible channels for information and assurance to flow between regulatory bodies and the ARs.

The LSB said this would reduce the AR’s discretion to oversee its regulatory body and could also improve its ability to carry out representative functions “since policy positions could be vigorously pursued without being compromised by concerns about risks of ‘overstepping the mark’ in relation to regulatory independence”.

The consultation also seeks views on how compliance with the IGR should be monitored – the LSB has not required dual self-certification since 2013 – including possibly introducing “third-party assurance”.

LSB chief executive Neil Buckley said: “Independent regulation gives confidence to consumers, providers, investors and society as a whole that legal services work in the public interest and support the rule of law…

“The LSB’s view is that regulation should ideally be structurally, legally and culturally independent of the professions and government. A review of the legislative framework by government for the regulation of legal services, however, is unlikely for the time being.

“We are, therefore, interested to understand stakeholders’ experiences of operating under the current IGR, including whether the IGR might be improved within the constraints of the Act and, if so, how.”



One Response to “LSB reveals “stream of disagreements” as it begins review of regulatory independence rules”

  1. The SRA needs to be completely independent and publicly funded if ii is really believed that properly informed consumers of legal services are still not getting enough protection.

    In the run up to the Legal Services Act, a string of weak leaders of The Law Society sold the Profession’s soul to the Devil in a desperate bid to preserve self-regulation and shore up the Society’s crumbling image.

    They were too easily persuaded to ‘delegate’ the Society’s regulatory functions to the SRA, previously one of the Society’s own departments involved with disciplinary matters under another name. To sugar the pill, the Society was granted ‘oversight’ powers that in practice have never been properly exercised for fear of being revealed for what they always were; of little or no consequence and the use of which would, in any event, have been politically incorrect.

    What took place in reality was a totally ring-fenced transfer to the SRA of all the Society’s powers in relation to the regulation of the Profession. A transfer to a self-acclaimed body for the protection of Consumers from all naughty solicitors. As the old joke goes, ….. ‘lawyers can be safely used for experiments because there are more of them and no one gets emotionally involved’!

    Instead of counting their blessings and accepting their ‘delegated status’, the SRA are now impertinently seeking complete independence from that body of Professionals that spends an awful lot of money to keep them going and blaming it on the Law Society.

    If the general public is really demanding a still higher level of protection than it already has, its willingness to pay for it will surely be proof of the pudding.

    In spite of the SRA’s 10-year-in mandate to respond to that perceived need at the time, if, as the SRA would have it, that need is greater now than it was before, they are clearly failing miserably and it is quite wrong to suggest that this is because they are being prevented from doing a good job by their overseers.

    Whatever the true position of your average consumer of legal services might be, it is becoming painfully clear that the Profession too needs to be adequately represented. We need a Law Society with some teeth in its mouth. Perhaps it may be the moment to revisit some views I expressed a few years ago about revitalising and empowering local Law Societies. Their future role might be to oversee and, in proper cases, to chastise the conduct of solicitors who operate in their geographical jurisdiction and where they are more visible and accountable to clients, colleagues and other professionals they have dealings with on a regular basis.

    In a healthy society, to my mind, there can be no comfortable middle ground in matters of conduct regulation between what professionals MUST do and what they SHOULD do. The former is essentially a matter for the Courts and the latter for the judgment and effective chastening of one’s own peers.

    John Brebner
    Senior Lecturer English Law
    University of Malaga

  2. john brebner on November 10th, 2017 at 5:40 pm

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Legal Futures Blog

How best to achieve independent regulation under the Legal Services Act?

Craig Wakeford LSB

Independent regulation gives confidence to consumers, providers, investors and society as a whole that legal services work in the public interest and support the rule of law. The Legal Services Act 2007 does not require all approved regulators to be structurally separate from representative bodies. Instead, the Legal Services Board is required by the Act to produce internal governance rules (IGR) which apply the principle of regulatory independence in legal service regulation. We are currently running a consultation on the IGR which continues until 9 February.

January 19th, 2018