Orpin: In constant dialogue with the SRA about the Post Office
Only the biggest and smallest legal regulators – the Solicitors Regulation Authority (SRA) and Costs Lawyer Standards Board – have ‘passed’ their annual performance assessments, a report from the Legal Services Board (LSB) has shown.
The Bar Standards Board (BSB), which last year was the only one of the eight regulators overseen by the LSB to receive a red rating in the traffic light system, improved but the LSB said there remained “important shortcomings” which had to be addressed.
The assessment regime has changed this year, with the LSB measuring the regulators against two standards – whether they are well led and whether they have an effective approach to regulation – over the period from October 2022 to May 2023.
A third standard, concerning operational delivery, which includes enforcement, will be applied to the next assessment.
The SRA provided ‘sufficient assurance’ that it was well led and had an effective approach to regulation, and so was graded green in both categories.
One area of good performance was the way it identified and took steps to address “higher risk areas”, such as sanctions, SLAPPs (strategic lawsuits against public participation), anti-money laundering and immigration.
An area of improvement was the need for the SRA “to communicate with us promptly, openly and with full candour about the risks and challenges it faces”.
The other regulator graded green or ‘sufficient’ in both categories was the Costs Lawyer Standards Board. The LSB said: “Its approach can be held up as a model for smaller regulators”.
The regulator won particular praise for “using its insights about its regulated community and the market” and using “a range of regulatory levers” in its oversight.
The BSB, which had previously been graded red or ‘insufficient’ for leadership and enforcement, moved to amber or ‘partial assurance’ for leadership and amber for effectiveness.
The LSB welcomed the BSB’s adoption of a comprehensive ‘action plan for transformational change’ and its “signalling of an intention to improve co-operation with the LSB”.
However, there remained “some important shortcomings” in the BSB’s performance, such as on timeliness of investigations and authorisations.
“Capacity and resource challenges are ongoing, over the last year the BSB’s threshold for regulatory intervention has, in our view, been set too high.” It would be of concern, the LSB said, that this was being used to reduce the investigative backlog.
The LSB noted too the “very visible, if not dominant, presence” of Bar Council representatives at the open parts of BSB board meetings and encouraged the regulator to “reflect” on how their presence “affects or stifles full and open discussions in the meetings”.
The Institute of Chartered Accountants in England and Wales was graded green for leadership, amber for effectiveness of its approach.
CILEx Regulation (CRL), the Council for Licensed Conveyancers, the Faculty Office (which regulates notaries) and the Intellectual Property Regulation Board were graded amber or ‘partial’ for both categories.
The LSB said its investigation report into “disputes and disagreements” between the Chartered Institute of Legal Executives and CRL, which “found that there had been failings by both parties” had not been “the dominating factor” in its assessment of CRL.
Despite “significant change”, CRL had been able to provide “assurance that overall, it is maintaining effective regulation during a period of uncertainty”.
The LSB said: “While there are signs of progress, we consider that further assurance will be needed in due course to demonstrate that CRL meets the two standards in full.”
The eighth regulator is the Institute of Chartered Accountants in England and Wales (ICAEW) – which regulates accountants handling probate work – and was the only other to receive a green rating, for the well-led standard.
The assessment identified several common themes that needed to be addressed. The LSB said some regulators were not transparent enough about how they made decisions affecting consumers, the public and their regulated communities and some needed to do “more to ensure they have the right skills, expertise and systems in place to regulate effectively in the public interest”..
“Several regulators need to do more to show how they use evidence to make decisions and evaluate the impact of their work to ensure it is making a positive difference,” it added.
Richard Orpin, the LSB’s director of regulation and policy, said that in particular, regulators “need to demonstrate they have sufficient capacity and capability to deliver for consumers and the wider public, as well as ensuring they are able to identify and respond to emerging risks in a timely way”.
He added: “In the wake of events such as the Post Office scandal, the collapse of Axiom Ince and the and the use of abusive litigation tactics, such as SLAPPs, it has never been more important for regulators to be able to demonstrate that they are able and ready to act decisively in the public interest.”
The LSB said its assessment of the SRA did not cover last summer’s action over immigration solicitors, nor Axiom Ince – over which it is conducting a separate investigation – or the Post Office.
Mr Orpin said the LSB was in “constant dialogue” with the SRA over its position on solicitors involved in the Post Office scandal but that it was not “micromanaging” the regulator.
He said the LSB was being “very clear” with the SRA that it was expected to act “as swiftly as they can” if it had evidence of a risk to the public from one of those solicitors.
The SRA’s position is that it has not and that it wants ideally to wait until the Williams inquiry reports. “We shall see whether that proves to be the right decision,” said Mr Orpin.
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