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The changing shape of legal services regulation

The Legal Services Act 2007 (the Act) permitted significant developments in how legal services are regulated in England and Wales. A number of the options made possible by the Act have been taken up and there are now more regulators designated to regulate more activities and more business models than when the Act was commenced. As a result, some legal services providers now have a choice of regulator.

Why we are looking into this area

Having a choice of regulator is unusual in statutory regulation and introduces a number of potential benefits and risks. The Legal Services Consumer Panel has called on regulators to work together to avoid creating consumer detriment as they help providers to switch. Through this project, we aim to increase our understanding of the issues created by the changing shape of regulation and, in particular, assure ourselves about the risks and benefits for consumers when providers have a choice of regulator.

What we have done

We have completed an assessment of the differences between the relevant regulatory arrangements of the legal services entity regulators. We have also spoken to them, as well as other stakeholders, to establish the scale of regulator switching activity in this area, and if there are any patterns or emerging risks.

We found no clear evidence of substantial risk to the protection of consumers' interests. However, data on switching activity was captured in an inconsistent manner. In order to assure ourselves about the level of risk, it is important that the scale of switching activity is monitored, and data collected, in a more consistent manner. We also identified a need for greater assurance about information sharing between the regulators during authorisation processes.

What we are doing

We have written to all of the legal services entity regulators requiring under Section 55 of the Legal Services Act, that they provide us with more robust evidence. The regulators need to provide this information to us by 30 December 2017. We are also monitoring any developments that may influence switching, for example changes to regulators insurance requirements or compensation arrangements.

This information will help us identify any changes or risks as a result of developments in this area. As well as informing any future decisions on related areas of work.

Further information

For more information on this project, please contact the project manager Tom Peplow.