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CLC Responds to Competition and Markets Authority Report on Legal Services

15 December 2016

The Council for Licensed Conveyancers (CLC) has reacted to the release today of the Competition and Markets Authority’s (CMA) Market Study on the legal sector.

The CMA’s key recommendations for front line regulators are:

  1. Action to deliver a step change in standards of transparency to help consumers (i) to understand the price and service they will receive, what redress is available and the regulatory status of their provider and (ii) to compare providers.
  2. Promote the use of independent feedback platforms to help consumers to understand the quality of service offered by competing providers. Regulators should provide guidance to providers on how they should engage with public reviews.
  3. To facilitate the development of a dynamic intermediary market through making data more accessible to comparison tools and other intermediaries.
  4. Development of a consumer education hub.

In relation to recommendations (a) and (b), the CLC is shortly to issue consultations on increasing the transparency of prices and how consumers can be helped to compare providers following consideration of the issues by the governing Council. It has already announced a Smart Badge scheme that will increase online security for firms and their clients and help inform clients about the regulation of Licensed Conveyancers and routes for redress. This will roll out from January 2017.

The CLC has made available basic information about the regulated community for two years now (recommendation (c)). It is open to be used by operators of price comparison websites.

In relation to (d), the CLC is part of the group of front line regulators that operates the Legal Choices website and will contribute to its further development.

The CMA also made two short-term recommendations about the regulatory framework that are relevant to the CLC:

  1. The MoJ should undertake a review of the independence of regulators.
  2. Regulators should take action to reduce regulatory costs.

Taking (b) first, the CLC this year cut entity licence fee rates by 20% and its routes to qualification as a lawyer (Authorised Person in terms of the Legal Services Act 2007) remain the best value and most accessible route to a career in the law and are under new, independent provision. Those regulated by the CLC say it delivers value for money and helps their supports innovation and growth in their businesses (see here). The CLC is committed to keeping costs under review to keep the direct financial burden as well as the compliance burden of regulation to the minimum compatible with effective consumer protection.

In relation the (a) the CLC is of the view that widely understood and serious concerns about the lack of independence of some front line regulators that are part of larger representative bodies require more practical and immediate action than a review by the MoJ. The LSB has powers from the Legal Services Act 2007 that allow it to take action to secure independent regulation and it should now use those powers.

Commenting on the CMA’s report, Chair of the CLC Dame Janet Paraskeva said: “We are grateful to the CMA for moving forward the conversation on price and service transparency and comparison. The Council of the CLC has already debated these issues and we will begin consultations soon on a range of possible ways forward.

“We are also pleased that the CMA shares our view of the need for a review of the scope of legal services regulation and a move to a more rational, risk-based approach. We have been pressing for this for some years and so we also welcomed the LSB’s publication of its ‘Vision’ for the future regulation of legal services that sets out a similar approach.

“Before we can move forward though, it is vital that the other front line regulators of legal services enjoy the same regulatory independence that we do. That is in the public and consumer interest. The CMA recommends the MoJ undertake a review of independence, but this is unnecessary in our view. The LSB has powers to secure independent regulation. Its Chair has publicly acknowledged the case for action, as the CMA now does. With the government under a great deal of pressure on other fronts, we urge the LSB to take action now to establish regulation independent of representation and so continue the process of reform to fulfil the purpose of the Legal Services Act. To do so would be a profound and fundamental step that would increase public and consumer confidence in the legal professions.”