A consumer watchdog has criticised ‘fundamental flaws’ in legal regulation and questioned why professional titles such as solicitor are still necessary.
The Legal Services Consumer Panel said there had been too little progress in recent years to ensure the public have access to information about lawyers and redress when something goes wrong.
In a submission to the House of Commons justice committee for its review of legal regulation, the panel’s chair Sarah Chambers said the ‘antiquated’ regulatory system exacerbates problems for consumers and should be reassessed – particularly the different way lawyers are described.
‘Consumers have to find their way around a labyrinthine maze, which has an in-built mechanism to add further twists and turns over time. Even the regulators and ombudsman can be unsure what regulation covers,’ said Chambers. ‘A regulatory system based on professional title (solicitor, barrister, legal executive etc.) is derived from the history of the legal sector but does not constitute a risk-based and targeted regulatory regime focused on legal activities and entities.’
The panel said existing reserved activities are narrowly drawn and not based on consumer protection. It also cited ‘worrying gaps’ in regulation but also areas where lawyers are subject to multiple regulatory regimes.
Smaller regulators ‘lack the capacity and capability to deliver adequate consumer protection’ and competition between regulators ‘risks a race to the bottom and inhibits cooperation’.
The panel said it had previously made recommendations that consumers have access to first tier complaints data and ombudsman decisions in full, as well as that regulators explore mystery shopping exercises, but none had been progressed.
Chambers added: ‘Regulators in the legal services sector need to do more to understand the nuances of consumer interest, and to ensure that regulation is delivering good outcomes for all categories of consumers.
‘Therefore, regulators must weave the consumer interest into all their activities ranging from policy development, implementation, evaluation, supervision and enforcement.’
The panel told MPs that a single scheme joining up professional indemnity insurance and compensation funds across the whole legal services market should be actively explored. This could work by setting minimum terms and conditions for all lawyers’ indemnity insurance and allowing premiums to be based on the type of legal work carried out rather than professional title.
The committee heard evidence from representative and regulatory bodies this week and is expected to report its findings in the new year.
