HOW MANY REGULATORS MIGHT WE GET?

regulations and rules

 

By Trevor Hellawell

In a recent blog I asked:

 

“Is the time soon arriving where we can reduce the number of regulators to say two – one for the unreserved business sector and another for the reserved business sector? That way we can have a clear set of rules depending on the levels of protection clients want – a cheap and cheerful high street ‘property shop’ model, or a better-protected (if more expensive) high-end version. Competition is not always a good thing.”

 

It seems the Legal Services Board (LSB) has a similar view.

 

Last week it published a paper entitled “Delivering better outcomes for consumers and citizens” in which it suggests that simpler regulation (than the confused mass of various bodies with subtly different regulatory frameworks) was ultimately good for clients.

 

Sir Michael Pitt was even moved to comment that if these proposals were to presage the end of the LSB itself, then so be it.

 

In outline, what is proposed is one regulator (without the overarching LSB – a product of the since discredited banking model that Clementi envisaged) for the whole legal services sector.

 

There would thus be clarity and a simpler approach to regulation than the haphazard status quo offers. That said, how will this suggestion fit with the existing SRA consultation on its new rules – will it even exist if the framework changes?

 

The LSB suggestion is that regulation be activity based, rather than by way of professional title, with special regulation for the high-risk activities. This would presumably do away with the current distinction between reserved and unreserved activities, with a new framework being proposed for the activities that are deemed fit for regulation.

 

Further, it would not matter overmuch what the professional shape of the entity was that served the client – their protections would be much the same in any event, no matter who offered the services. So, we may see the end of the traditional professional boundaries between solicitors and barristers – and everyone else.

 

The Law Society has pleaded that now is not the time for such revolutionary reform and that the Legal Services Act needs time to bed down – especially after Brexit – but to tolerate a position where there are 9 different bodies regulating different (and in many cases the same) activities is equally illogical.

 

As things stand, there would appear currently to be 2 main ways in which legal services could be offered:

 

  • Reserved business; Regulated entity
  • Unreserved business; Regulated entity

 

No matter what kind of work you do, you need regulation. Often at high cost. Often unnecessarily.

 

This is the rigidity that the SRA are attempting to relax by saying that there should also be a third way, that of the:

 

  • Unreserved business; Non-regulated entity (or lighter-regulated) model

 

This, they say, would enable access to solicitors for a vast range of work without the costly regulatory requirements. The extent of the clients’ rights of complaint and redress should be made clear to them,if they really cared much anyway.

 

The arguments about this short-term approach will rage, but if the LSB is planning on rearranging the apple-cart more fundamentally, where will that leave the SRA?

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