The Legal Services Consumer Panel has today challenged regulators including the SRA to make the new compliance regime work, or face being replaced by a single regulator independent of the profession.

In its response to a Legal Services Board consultation on the boundaries of regulation, the watchdog also calls for the Legal Ombudsman’s jurisdiction to be extended to unregulated businesses such as will-writing firms.

The panel says flaws in the existing framework are a legacy of a compliance regime that has evolved in an unplanned way and was not designed from the perspective of consumer needs. ‘Market developments are exposing these flaws in sharp relief, creating an urgent imperative to build a modern regulatory framework suitable for the newly liberalised marketplace,’ it says.

The panel backs a shift to risk-based regulation based on activity and entities, and stresses that the Legal Services Act provides the flexibility to achieve this. But it warns: ‘Much depends on the appetite, capacity and capability of the approved regulators to achieve this. Their response will influence views on the sustainability of the current model as opposed to starting afresh with a single regulator which is entirely independent of the legal profession.’

In order to close consumer ‘redress gaps’ arising from the narrow list of reserved activities, the panel wants the Office for Legal Complaints, which established the legal ombudsman service, to make use of its power to establish a voluntary scheme.

This would enable it to extend redress across a wider range of activities and unregulated providers, such as will-writers.

Read the response.