Kenny: LSB will identify risks to independent regulation being delivered
The Legal Services Board (LSB) is set to probe how independent the Solicitors Regulation Authority (SRA) truly is from the Law Society.
In letters to both bodies, LSB chief executive Chris Kenny said its focus would be on ensuring that “independent regulation is being delivered in practice”.
He added: “This is important as obstacles to the regulatory body’s ability to determine and deliver its own strategy may be un-designed and cultural as much as systemic.”
The board will be “pro-active in identifying areas of risk to the delivery of independent regulation in practice… employing intelligence on real issues”, Mr Kenny explained. “We will also consider how risk is monitored and managed on an ongoing basis.”
The investigation will form part of the annual dual self-certification of compliance with the LSB’s internal governance rules (IGR) that the Law Society and SRA will have to undertake next April.
Mr Kenny said the LSB’s initial assessment raises theoretical risks to independence from particular arrangements. “The SRA and the society accept that current arrangements may appear complex but are confident that they will provide appropriate safeguards in practice and this will be tested by periodic review.
“It is argued that on top of this the regulatory body may alert the LSB if it considers a problem to have arisen in practice and this provides adequate further safeguard. The board does not think it sufficient to wait for the regulatory body to report problems and to react to these. This is particularly so in these early days and when full compliance with the IGR has not yet been achieved.”
The process of examining this year’s certificate has only just finished, and while the LSB has concluded that the Law Society and SRA’s arrangements are not yet compliant with the IGR, “given your progress and the commitments that you have made going forward, we are willing to accept your position this year”.
This includes not delivering a lay majority on the SRA board – required by 30 October 2010 under the IGR – until January 2013.
The LSB will also look to test the governance arrangements at the other regulators where regulation and representation has been split.
We spent a long time at Which? during the debates around the Legal Services Act arguing that the Law Society and Bar Council should not remain as the legal regulators. You were always going to have these issues (e.g. getting a lay majority) when the professional associations hold the purse strings and are still designated as regulators, although with the requirement to separate the representative and regulatory functions.
I could say ‘I told you so’ but that would be churlish…