An increasingly bitter stand-off between the representative body for 20,000 legal executives and their regulator flared into open civil war this afternoon. CILEx Independent Regulation (CRL) has condemned as illegal plans by the Chartered Institute of Legal Executives (CILEX) to switch oversight of members to the Solicitors Regulation Authority – and threatened to sue.
The regulator also declared its intention to ringfence its own cash reserves, taking aim at what it called the ‘rapidly deteriorating financial position’ of CILEX.
CRL maintains that the power to effect a switch of regulators lies not with CILEX but with the regulator itself. CRL chair Jonathan Rees said: ‘It is our role as regulatory body to decide independently of CILEX whether changes to the existing regulatory arrangements are needed. The course on which the CILEX board has embarked is an unhelpful and costly distraction from tackling the real issues facing CILEX fellows and consumers.’
He added: ‘We have done all we can to avoid a public dispute which we believe causes concern to those we regulate and disrupts our work. We have a positive agenda to improve regulation, and reduce costs, and will be bringing forward will be bringing forward proposals after the summer. In the meantime, we will continue to do our job whilst we consider a further response, including possible legal action, to CILEX’s announcement.’
CRL insists CILEX’s plan, unveiled yesterday, is not compliant with the Legal Services Act 2007, which established the present regulatory settlement across legal services. The regulator also rebuffed a report by former LSB chair Chris Kenny (pictured) upon which CILEX is basing its plan to defect to the SRA.
‘There is no basis to suggest, as [the Kenny report] does, that CRL has ”viability challenges” and will have a higher unit cost than other regulators,’ CRL said. ‘The cost to those CILEX represents is, in any event, only one element of the public interest for which CRL is responsible.’
CRL insists its financial position remains ‘robust’ and said its reserves are at a record high. It intends to hold the PC fee at its current rate for this year, ‘notwithstanding inflationary pressures’.
The regulator added: ‘In order to preserve our strong financial position, we have notified CILEX of our intention to hold our reserves independently following the identification of CILEX’s rapidly deteriorating financial position.'
It declined to comment further on the latter claim. CILEX told the Gazette that allegations of a ‘rapidly deteriorating’ financial position were 'simply untrue'.
According to LSB documents, total uncommitted reserves in CRL control amounted to £542,619 in 2021 - four times monthly operating expenses. On 1 January this year CILEX also held a contingency reserve on behalf of CRL of £700,000.
The regulator added: ‘We are disappointed that throughout its attempts to advance its chosen approach CILEX has failed to engage in meaningful consultation either with us or the regulated community. We agree that there is merit in considering changes to the current regulatory arrangements and based on 10 years’ experience we have previously announced that we will be moving shortly to consult on properly considered proposals. It is also a shame that Mr Kenny made no serious attempt to engage with us as the independent regulator in his review and it is not surprising, therefore, that his report contains several unsubstantiated assertions, and is in places just wrong.’
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