News focus: Judgment week for the regulators

It is judgment time. The Legal Services Board super-regulator last week published its 70-page assessment of the performance of eight frontline legal regulators. Each was scored red, amber or green for being ‘well led’ and with an ‘effective approach to regulation’.

Handily for the LSB’s budget application – it is expected to seek a 14% increase in funding next year – only two frontline regulators score straight runs of greens. One is the tiny Costs Lawyer Standards Board, which has a regulated population of 702 practitioners. The other, with 157,000 individuals on its books, is the Solicitors Regulation Authority.

The SRA is commended for demonstrating ‘good practices which other regulators may wish to emulate’. They are: requiring its external lawyers to help develop staff expertise; keeping its board posted on its performance against the LSB’s ‘regulatory performance standards’; and its approach to equality, diversity and inclusion. The SRA is ‘striving to understand the reasons behind inequalities and then introduce ways to overcome them’.

However, the LSB’s verdict that the SRA’s performance ‘raises no concerns’ comes with a caveat. The report observes that the assessment period, the eight months to May 2023, misses what may turn out to be three key events: the Daily Mail’s ‘sting’ against immigration practitioners, the intervention into Axiom Ince and what it calls ‘the coming to light of the potential scale of involvement of legal professionals in the miscarriages of justice at the heart of the Post Office scandal’.

Law Society president Nick Emmerson was quick to point out that the SRA’s handling of the Axiom Ince debacle is currently under the super-regulator’s spotlight. ‘If the LSB’s review were to identify any failings by the SRA before the intervention, it would be appropriate for the ratings given to the SRA to be reviewed,’ he said.

What of the other regulators? All received double amber ratings, apart from the Institute of Chartered Accountants in England and Wales, which was rated green for ‘well led’. Because the assessment is the first to be carried out under a new ‘performance framework’, the results are not directly comparable with the last round of ratings, in November 2022.

One notable change, however, is that the Bar Standards Board, which in 2022 was the only regulator to receive a red ‘insufficient’ rating, is no longer on the naughty step. Its twin ambers are in line with the Council for Licensed Conveyancers, and even the embattled CILEx Regulation, currently facing abandonment by its representative body.

'Several regulators need to do more to show how they use evidence to make decisions and evaluate the impact of their work'

Legal Services Board

‘It is a matter of public record that we have, in the past, found the BSB reluctant to co-operate in certain areas, and in raising emerging issues of concern in a timely manner,’ the report states disapprovingly. But the barristers’ regulator seems to have changed its ways: it is commended for adopting ‘a comprehensive action plan for transformational change’ and ‘its signalling of an intention to improve co-operation with the LSB’. The latter is exemplified by its decision to rejoin the Legal Choices website project.

Some shortcomings persist, however. ‘Challenges remain in respect of the timeliness of investigations and in authorisations work.’ In particular, the BSB is rapped for setting its threshold for regulatory intervention too high. ‘We are pleased to see that the BSB has explicitly acknowledged these issues and has started to take steps to address them.’

Overall, the LSB identifies three common themes that frontline regulators need to address:

• Transparency: some regulators are not open enough ‘about how they make decisions affecting consumers, the public and their regulated communities’;
• Skills: some regulators ‘need to do more to ensure they have the right skills, expertise and systems in place’; and
• Use of evidence: ‘Several regulators need to do more to show how they use evidence to make decisions and evaluate the impact of their work.’

The LSB ‘expects to see progress on these areas before the next round of assessments’, the report states. ‘In particular, regulators need to demonstrate they have sufficient capacity and capability to deliver for consumers and the wider public, as well as ensuring they are able to identify and respond to emerging risks in a timely way,’ Richard Orpin, director of regulation and policy, said. ‘The LSB will continue to hold regulators to account for their performance.’

Over the next year, for example, the SRA will be expected to provide its overseer ‘with further assurance’ about the progress of work to meet its standards. In particular, ‘the SRA needs to ensure that it can provide evidence that it fully assesses and acts to mitigate risks throughout all its work’.

One question remains, however: who assesses the assessor?

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