Regulatory Performance– room for improvement for all.


Sarah ChambersLast week, the Legal Services Board (LSB) published its regulatory performance report.

It is an insightful and comprehensive read. More than that, it signals a necessary change of tone and focus in an area that is crucial to LSB’s existence: providing oversight to ensure regulation delivers good consumer outcomes. It does, however, raise questions for me about both minimum competency requirements and availability of information to aid consumer vigilance.

The report assesses each legal services regulator against the LSB’s regulatory standards.Regulators appear to be meeting the minimum standards in most of the areas evaluated,but the Costs Lawyer Standards Board (CLSB) has more work to do than the others. As a consequence,the LSB has called for an additional overall plan covering all the actions required by the CLSB,with timescales that signal an urgency commensurate with the LSB’s findings.

Those who follow regulatory matters closely will recall that the LSB revamped its performance review framework in 2017. This is the first assessment under the new framework and it certainly delivers on focus.Beyond focus, this new approach may well signal a welcome move towards tackling regulatory shortcomings more robustly. There is a subtle but significant shift away from giving smaller regulators unmerited leeway where evidence suggests that they aren’t delivering on their statutory objectives.

The LSB’s new regulatory performance framework delivers on clarity. There is no ambiguity around where improvements need to be made and no vagueness about what needs to be done. The timescales for improvement reflect the serious nature of the shortcomings. But even so, the situation with the CLSB calls into question the continued existence of regulators whose competence is found wanting. At what point should the LSB begin to call into question a regulator’s fitness to regulate?

For sure, the issues with the CLSB did not materialise overnight. Yet I am sympathetic to the pressures on an oversight regulator, with finite resources, that may have steered it towards the prioritisation of performance of larger regulators.Ultimately, larger regulators have more consumer reach. That said, the regulated communities of smaller regulatory bodies are not always small, and failures could have significant impact on users of their services and on wider market confidence.

While we applaud the LSB’s directive approach, we hope that it has started to consider options for remedial action beyond those stipulated in the report, including calling into question the position of the small regulator in the market and the stability of the market should it fail.

Leaving the shortcomings of the CLSB aside, the LSB also found that most of the regulators, including the Solicitors Regulation Authority, do not meet the requirements to provide a list of those they regulate, and include information about their disciplinary record. The Panel raised concerns about this as far back as 2016. In our report on Open Data in Legal Services ,we said that consumers have the right to know about the shortcomings of the firms with whom they deal, so that they can protect themselves.We said there should be a presumption that all enforcement data would be published at the end of an investigation that leads to a sanction.

Given that this non-compliance has been an ongoing concern, we expect the LSB to escalate its planned response beyond an initial conversation with individual CEOs and Chairs. The LSB says it is choosing this option because it is ‘less onerous for both the LSB and regulatory bodies’. Well yes, but if the situation does not seem to be improving, does that indicate the conversations are not working? Could the regulators benefit from a thorough review and analysis of transparency around sanctions now rather than later?

Making enforcement data available to consumers is an area that will particularly benefit from consistency in approach, as far as practicable. It is even more urgent at a time when the flagship consumer-facing website ‘Legal Choices’ is being redeveloped.That site plans to link consumers to disciplinary records. As it stands, consumers will find a complicated web of inconsistencies.Therefore, merely hinting at the possibility of a future review is arguably less action than is required at this stage. Why not do it now?