Pitt: LSB is an agent for change
The Legal Services Board (LSB) is set to make encouraging comparison sites to enter the legal market one of its goals for the next year, along with telling regulators to be clearer about how they spend the profession’s money.
A consultation on its 2016/17 business plan, published yesterday, also highlighted the oversight regulator’s push to drive down its own costs.
The business plan said: “Consumers need reliable information to help them compare legal services before they can decide which to buy. LSB and the LSCP [Legal Services Consumer Panel] have both championed the publication of regulatory data and encouraged comparison websites to consider entering the legal services sector.
“In 2016/17, we will work with market intermediaries to understand whether there are barriers, regulatory or otherwise, preventing them from entering the legal services sector. Based on advice from the LSCP, we will challenge regulators to unlock additional regulatory data to improve the choice environment for consumers.”
Last year the LSB examined the cost of regulation. “Our emerging conclusions are that the regulators need to improve their published data,” the draft plan said. “Unclear and incomplete data prevents effective benchmarking and hinders efforts to identify potential cost reductions.
“In 2016/17, we will report on the information regulators publish about their costs and ask the regulators to improve the quality and transparency of data. This will allow the LSB (and providers) to have the right information to challenge inappropriate regulatory costs.
“We will also look at how regulators treat any underspend of the practising certificate fees they collect, including analysis of the distinction between money raised for regulatory and non-regulatory activities. Improvements are needed in this area in the interests of better regulation.”
The LSB’s own costs have fallen every year since its inception in 2009 and the plan said it would reduce them by £150,000 in 2016/17 to £4.15m, meaning that the cost to each person authorised to undertake reserved legal activities and holding a practising certificate has fallen in that time from over £34 to less than £23 in the current year. The LSB intends to reduce its annual operating costs by a further £450,000 by the end of this Parliament.
The plan said: “This is a challenging target, which will mean a refocus of some activities in 2017/18 to 2019/20. We have consistently been clear that our size, what we need to do and how long we need to exist for, depends ultimately on the performance of the approved regulators in delivering regulation that is fit for purpose.”
Other activities planned for the next financial year include:
- Dealing with expected applications from the Institute of Chartered Accountants in England and Wales to regulate more reserved activities than just probate as at present, and from the Chartered Institute of Legal Executives to regulate alternative business structures;
- Working with Professor Stephen Mayson to develop the LSB’s vision of an effective and ‘fit for purpose’ future legislative framework to support the government’s review of the Legal Services Act 2007;
- Analysing investment in the legal sector to “identify current sources of capital and establish how the investor community views the market and any barriers to investment”;
- Identifying the reach, benefits and risks of unregulated services, and what measures – such as voluntary regulation or voluntary access to the Legal Ombudsman – may be open to enhance consumer protection;
- Responding to emerging market risks: “For regulators more used to regulating professional misconduct rather than trading behaviour, they will need to consider carefully whether their existing supervision and enforcement mechanisms are sufficiently agile to deal with these emerging risks”; and
- Identifying the benefits and risks of the choice of regulator that some legal services providers now have.
In his introduction to the draft business plan, LSB chairman Sir Michael Pitt wrote: “I was asked recently ‘what exactly does the Legal Services Board do?’ My answer was clear: the LSB acts as an agent for change, it drives regulators to modernise, deregulate and holds them to account.
“As this draft plan explains, we intend to pursue rigorously a modern and efficient legal services sector: one that better meets the needs of consumers, citizens and practitioners.”
In principle no harm in having comparison websites but the LSB need to bear in mind the work of the FCA and the shortcomings it identified in comparison sites for financial services. Also, comparison sites don’t operate for free so there is a risk of bias driven by what players are prepared to pay to appear on a comparison site