The Legal Services Board (LSB) has been told by its own consumer panel that it has to share the responsibility for ensuring that consumers do not suffer at the hands of solicitors working for unregulated firms.
The LSB yesterday approved the Solicitors Regulation Authority’s rewritten Handbook, including the controversial proposal to allow solicitors to deliver unreserved services from unregulated businesses without having to give up their practising certificates.
The change had been opposed by the Legal Services Consumer Panel, which said the reduction in consumer protection was “tilted too far against consumers, without any quantifiable benefits”.
Responding to the LSB’s decision, the panel said it was now up to the LSB and the SRA to ensure that users of legal services “understand any accompanying reduction in consumer protection”.
Its statement continued: “Consumers must be clear that they will not have access to the compensation fund or insurance pay-out, should anything go wrong.
“While the Legal Ombudsman is able to accept complaints about regulated solicitors, it must also be clear that their ability to investigate complaints by solicitors embedded in unregulated businesses may be affected by practical challenges.
“There must be no ambiguity in the communication to consumers prescribed by the SRA, to ensure consistency in messaging and standardisation.”
The panel said the LSB should take an “active role” in evaluating the reform within two years. “We would also expect the LSB to monitor the consumer impact of these changes through its intelligence gathering exercises.”
Chair Sarah Chambers said the SRA would need “a clear communication strategy, informed by consumer testing”.
She added: “More importantly, the practical obligation of crafting the message that will be presented to consumers must fall on the SRA, not unregulated businesses. The SRA must also stipulate clearly and unambiguously, the points at which consumers must receive this information.
“It is also imperative that the oversight regulator who has granted permission for the establishment of this framework takes some responsibility for monitoring this shift in regulatory policy, to minimise the risk of consumer detriment.”
The Law Society, which was vehemently opposed, accused the LSB of sacrificing public interest “on the altar of SRA’s deregulatory agenda”.
President Christina Blacklaws said: “We believe the rule change is a serious error. The regulators… have ignored unprecedented levels of opposition from consumer bodies, legal experts and the extensive evidence of the risks of deregulation of this kind in this market.
“The door is now open for practitioners to cut their costs by slashing essential client protections that until today have provided cast-iron reassurance for clients.
“A high street where different tiers of solicitor, with different levels of protections offer the same services to passers-by will make it more difficult for people who need legal advice to reach informed choices often at very traumatic moments in their lives, such as divorce and bereavement.
“Flexibility for practitioners should never come at the expense of protection and clarity for consumers.”
Ms Blacklaws said neither the LSB nor the SRA had “any strategy” to mitigate the risk that multiple solicitor brands would result in consumers and the public, particularly the most vulnerable, “being confused and losing confidence in the system”.
SRA chief executive Paul Philip said: “We are pleased that the LSB have approved in full our application to introduce a new rule book for the firms and individuals that we regulate.
“Our reforms focus on what matters: the high professional standards that offer real public protection rather than unnecessary bureaucracy that generates costs, constrains solicitors’ career choices and hinders access to legal services.
“This is a major step towards developing an open, competitive and modern legal sector, providing accessible, affordable legal services to those who need them. We will now work closely with solicitors, law firms, the public and consumer groups to implement the changes in spring next year.”
Meanwhile, the SRA revealed yesterday that executive director Crispin Passmore – who joined the SRA from the LSB in 2014 – had decided to leave the organisation at the end of the year.
Mr Passmore will be taking some time off before deciding what he will do next.
As the SRA moves into the implementation phase of its policy and education reform programmes – both of which Mr Passmore has been heavily involved in crafting – Richard Collins will lead on its policy, education and anti-money laundering work, while Robert Loughlin will oversee enforcement work.
Mr Philip said: “Over the last five years, Crispin has played an invaluable role in making sure we regulate in a way that maintains trust in the profession, while helping create a modern, open legal market that benefits the public.
“I would like to thank Crispin for all his work, particularly helping shape our reform programme.”