Edmonds: an independent body to oversee frontline regulation is needed
The Legal Services Board (LSB) has hit back at continuing criticism of its role and work by insisting that it has a legal duty to take positive action – and that turning the clock back to a pre-Legal Services Act world is not an option.
With the Ministry of Justice last week issuing a call for evidence for its legal services review – which will consider the current regulatory regime for the sector – the LSB has published a short paper outlining how it sees its role in overseeing regulation.
Pointing to the many powers it has in the 2007 Legal Services Act, the LSB said: “Whilst there is no doubt that the Act demands approved regulators consider how best to deliver their objectives, this must be seen in the context of the LSB being statutorily required to oversee what they do.
“The scope of our oversight is wide. Our judgements are not limited to considering simply whether a decision of an approved regulator is Wednesbury reasonable. It can be open to the LSB to impose a different solution, if we reasonably form a judgement that the regulator’s decision is harmful when considered in the broader context of our oversight of the entire sector, or that a more proportionate, effective means of implementation is possible.
“We understand that approved regulators would prefer a hands-off approach from us. But the legal constraints on our ability to be proactive are light. Our role at the apex of regulation, arrived at with legislative intent, means we are able and indeed bound
to take positive, but proportionate, action to deliver the regulatory objectives. Choosing not to act is not an option for us.
“To do otherwise would be to ignore the single most important rationale for the regulatory model – that without oversight, the self-governing nature of regulators may mean that best regulatory practice could be ignored, that barriers to entry could be maintained and that self-interest would drive regulation to the exclusion of the interests of the public and all who need to use legal services.”
The theme was also taken up yesterday by LSB chairman David Edmonds on the publication of the board’s annual report.
“This has been the year we have seen emerging evidence of the LSB’s impact,” he said. “Almost 200 alternative business structures are in place, innovation is gathering pace across the market and regulators are committing themselves to challenging programmes of change.
“Importantly, policy developments are increasingly underpinned by hard evidence of where business and individual consumers alike are seeing both excellence and problems in their legal services.
“It demonstrates why, in this sector and at this point in its development, an independent body to oversee frontline regulation is needed.
“We are happy to reflect on how to further reduce cost and complexity in regulation. Winding the clock back to a pre-Legal Services Act world of unfettered, unaccountable professional self-regulation is not, I believe, an option.
“The LSB will persist in challenging barriers to entry and regulatory frameworks which, in design and operation, confused the public and consumer interest with professional self-interest. This approach will continue to be vital in ensuring that legal services regulation keeps pace with the needs of the wider economy and best practice.”
In an early sign of support from the government for the continuing existence of the LSB, justice minister Helen Grant said: “Proportionate and well-targeted regulation plays an important role in protecting consumers, underpinning the law and enabling firms to efficiently meet clients’ needs.
“The LSB is championing these objectives and continuing to challenge approved regulators to raise standards as they modernise their approaches. This was recognised by Ministry of Justice’s 2012 triennial review of the LSB, which reported that it was well-governed, delivering its remit and helping to reinforce the worldwide reputation of the legal sector in England and Wales.”
What if not having the LSB is actually the best solution? The LSB would never actually come to that conclusion.
Self-Regulating bodies that restrict supply are really not the optimum solution. Having or a body that lowers the asymmetry of information by certifying practitioners would be a better solution.
Some fear that not having Self-Regulation would lead to detrimental results. But look at other vital occupations that are not regulated by a body other than the government, such as software developers or IT professionals. They affect nearly every industry yet where is the body regulating their industry? Will the world suddenly fall apart because they are not regulated? No. Let the market decide. If mistakes are made and the market can’t correct it then use the court system. Is the legal industry claiming that the courts are insufficient to properly seek damages and discourage repeat offenses?