There is “no conclusive evidence” to show that consumers who use unregulated services obtain worse outcomes than those using regulated firms, the Legal Services Consumer Panel (LSCP) has said.
The LSCP also said in its strategy for 2021-4 and work programme for the next year that it would be pushing the legal regulators to embrace a consumer-focused culture.
On unregulated providers, it said: “There is no conclusive evidence to show that consumers who use unregulated services achieve a worse outcome than those who use regulated providers, though they do have different rights with respect to the use of these services
“We have expressed concern, consistently, that it is not right that consumers who use unregulated providers do not have access to redress, and are often unaware of the differences between regulated and unregulated providers.
“In this regard we proposed some time ago that the Legal Ombudsman should have its remit widened to accommodate unregulated providers.”
The LSCP said the debate had “moved on” with reports last year from the Competition and Markets Authority and Professor Stephen Mayson, which both backed extending redress in this way.
“Therefore, we fully support the proposal to develop a register for unregulated providers, with access to redress for those who use them.”
The strategy highlighted too concerns over the disparities between how minority ethnic consumers and White British consumers experience legal services, as well as “the lack of any clear regulatory strategy around how to deliver good outcomes for vulnerable consumers”.
The panel said the road to recovery from the pandemic, including a “renewed definition of normal” would demand “perseverance, patience, collaboration and innovation”.
For the first time in its history, the LSCP said it would align its strategic objectives with those of the Legal Services Board, but this would not stop it from challenging the board or any of the legal regulators if they were “failing to match up to our expectations.
Over the next three years the panel said it would focus, along with the oversight regulator, on “helping to ensure that regulation delivers fairer outcomes, stronger confidence and better services to consumers”.
The LSCP said it did not consider that a consumer-focused culture “currently permeates” legal services regulation.
“The paucity of good-quality consumer research and engagement by many of the regulators, and the slow pace of progress in areas such as quality indicators and price transparency is evidence of the resistance to change which still exists.”
The panel said regulators needed to do more to “understand the nuances of the consumer interest” and to “weave” it into all their activities, whether policy development, implementation, evaluation, supervision or enforcement.
“Regulators already have a statutory obligation to promote the consumer interest. Translating this obligation into the cultivation of a culture where the consumer voice shapes policy ideas has not yet been fully achieved.”
Outlining its work programme for the year ahead, the panel said it would, among other things, “promote a co-ordinated sector response to meet the issues exacerbated by Covid-19” and propose a “regulatory response to the problem of advice deserts”.
It would encourage regulators to “develop and entrench” a more consumer-focused approach to regulation.
Panel chair Sarah Chambers said: “The legal services market is set to change in response to a perfect storm of economic, technological and policy changes accelerated by Covid-19.
“Our challenge is to help the regulators identify and respond to these changes in an agile manner and through policies that strike the right balance between improving access to justice and enhancing consumer protection.
“The panel will continue to hold the regulators to account, but we will also strive to provide practical tools to help them become more consumer-focused organisations.”