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Regulators “failing consumers” by not cracking down on bad pricing practices


Davies: disappointed by the approved regulators

Frontline legal regulators have failed to involve consumers when designing their policies and must in future target resources on improving “bad pricing practices”, according to the Legal Services Consumer Panel (LSCP).

In its second annual report on the impact of the Legal Services Act 2007 on consumers, published today, the LSCP said it was “extremely disappointing” that the approved regulators published only two consumer research reports during 2011/12 – one on deaf consumers led by the panel and funded by the Solicitors Regulation Authority (SRA), and the other on will-writing, led by the Legal Services Board and also SRA funded.

The report said: “The almost complete absence of consumer engagement is a serious omission in a period defined by massive market change and transformation in approaches to regulating legal services. It casts doubt both on the legitimacy and quality of regulatory decision making, as the approved regulators have not tested the likely impact of their proposals directly with the people they are designed to protect.”

Also in the report, the panel revealed that consumer satisfaction with the transparency of lawyers’ pricing fell by 10% to 70% in the past year. It noted that the Legal Ombudsman (LeO) had received almost 1,400 complaints about “deficient cost information” in 2011/12, the first year for which data is available.

However, it found almost six out of ten consumers were satisfied with value for money and that 38% of transactions overall were carried out on a fixed-fee basis. Fixed fees were most prevalent in wills (just under 70%) and conveyancing (over 60%).

The report also detected small increases in the number of consumers willing to ‘shop around’ for legal services (up 3% to 22%) and that consumers are reportedly finding it easier to compare providers (up 6% to 57%).

Declining consumer satisfaction over transparency connects with concerns raised in the Legal Ombudsman’s annual report, published earlier this month [2], that “there are signs that some lawyers are seeking to promise price certainty that they are then unable to deliver”.

LSCP chair Elisabeth Davies said: “Consumers are slowly starting to vote with their feet when choosing legal services but unclear pricing and a lack of confidence continues to hold them back. We want to see regulators help to unleash consumer power by targeting their resources on tackling bad pricing practices during 2012/13…

“It’s disappointing that the approved regulators are still failing to involve consumers in policy design, especially at a time when the pace of policy change is so rapid and when key decisions about regulation are being made. It’s good to see the Legal Services Board has recognised the importance of effective consumer engagement as part of its regulatory standards work, but this largely isn’t being delivered at present”.

In other findings, the report discovered that public trust in the trustworthiness of lawyers fell since last year’s report, by 4% to just 43%. Doctors (80%) and teachers (almost 70%) were felt to be more truthful than lawyers. Among black and minority ethnic consumers, the level of trust in lawyers was below the average, at less than 40% among most ethnic sub-groups compared to nearly 50% among white British.

Ms Davies commented: “As in too many other areas of life, poorer consumers and certain ethnic groups are worse off when using legal services – they trust lawyers less, are less satisfied with the service they get, and are less likely to complain. It’s particularly important in this arena that regulators work hard to reduce inequalities.”

The report found fewer than half of people believed their consumer rights would be protected when using lawyers, down by 2% to 49% compared to last year. However, while lawyers came second to supermarkets in this regard, they generated greater confidence than accountants, banks or estate agents, among others.

“This statistic is… worrying as it reflects confidence both in law firms and their regulators. We do not see that the second position of lawyers in this table is any consolation,” the LSCP concluded.

Overall consumers’ satisfaction with the level of service they receive from providers remains high at 79%, said the report. But on the specific issue of “personalised service or empathy”, satisfaction fell by 5% since last year’s survey, to 70%.