The Legal Services Consumer Panel has shared its critical response to the Ministry of Justice’s review of the Legal Services Board, claiming its “fragmented and outdated regulatory design” make it impossible to meet its statutory objectives.
The Panel – an independent arm of the Legal Services Board – says the LSB is constrained by the “complex, fragmented system it seeks to regulate,” which undermines its ability to protect consumers and deliver access to justice.
The LSB is expected to coordinate and hold to account multiple frontline regulators with different cultures, inconsistent protections, different appetites for risk, limited staff resources and an incoherent regulatory landscape, the Panel said.
“Any assessment of the LSB cannot be divorced from an assessment of the framework it is required to operate within,” Tom Hayhoe, chair of the Legal Services Consumer Panel (pictured), said.
“The LSB is being asked to deliver coherence, consistency and consumer protection across a regulatory architecture that is fragmented by design.”
This “structural incoherence” weakens oversight and contributes to “persistent failures” across the sector including the collapse of SSB Law and Axiom Ince, the Panel said.
“No oversight body can fully succeed in a system that is structurally incapable of acting as a single system,” Hayhoe warned.
“The failures we see, from transparency gaps to inconsistent protections to delays in redress, are symptoms of a failing model.
“That said, the LSB has an opportunity to lead more assertively, particularly on compensation arrangements, disciplinary processes, vulnerability and use of technology.”
The Panel argues for a mixed regulatory approach, using outcome or risk-based regulation. The Law Society of England and Wales agrees; in its own response to the MoJ, it said the LSB should focus on its core role and take a risk-based approach while verifying performance information from frontline regulators.
Law Society president Mark Evans explained:
“The LSB should prioritise its core regulatory oversight role by setting expectations, gathering and evaluating independent evidence, and intervening where standards are not met or where new risks are identified.”
The LSB’s “light touch” approach relies on frontline regulators self-reporting their own performance, Evans said, which led to the LSB forming a positive view of the SRA’s regulatory abilities based on information the regulator provided, while major regulatory failures were taking place.
The Legal Services Consumer Panel has identified several areas in which it says the LSB could take a stronger leadership role within its existing powers, including developing a coherent strategy for consolidating compensation arrangements, exploring a single disciplinary process across the legal sector, and coordinating a sector-wide approach to innovation and technology.
“Consumers deserve a regulatory framework that is coherent, modern and facilitates delivery of the statutory objectives,” Hayhoe concluded.
The government’s review, launched in February, will consider the LSB’s statutory remit, its strategic clarity, governance and accountability arrangements, and the LSB’s current capabilities. It will also assess how the LSB and the Ministry of Justice should work together to deliver value for money and ensure sufficient focus is maintained on the evolving priorities of legal services consumers and the wider sector. The open call for evidence closed on 9 March.
The last review of the LSB was completed in 2017.
