Reviewing the cost of regulation
The LSB is reviewing a project looking at the cost of legal services regulation and its impact on the regulated community. Their initial phase of the project had two strands.
- Investigating the costs of regulation faced by legal services providers.
- Exploring the costs of the regulators, including the LSB.
The first phase has now concluded. The next phase of the project will focus on increasing transparency around the costs of the regulators.
The aims of the initial phase of work were to gather information about the regulatory costs that providers face and perceptions of these costs; and to provide greater transparency around the costs of the regulators by publishing analysis of their historic costs.
The next phase of work is focused on putting more information about the regulators' costs into the public domain. Specifically the next steps are as follows:
- We will carry out a desk review looking at how oversight is used to apply pressure to the costs of regulators elsewhere in the economy.
- We will initiate a discussion with regulators to agree an approach that will make a greater level of information about their costs publicly available. After there is resolution on what further information about regulatory costs will be put into the public domain and this is made available, LSB will undertake a further exercise reporting on the transparency of regulatory costs.
- We will be scrutinise closely the approval process for practising certificate fees.
- We understand that improvements in the quality of regulation can lead to additional regulatory costs being incurred. If costs increase following agreed action plans from our ongoing regulatory standards work, this should be visible within the information that regulators publish about their costs.
- If anticipated Government reforms to fully separate the regulation and representation functions of the regulators are implemented, in due course we will work closely with the regulators on transitional arrangements and seek to embed build greater financial transparency within the new structures.
Effective, well-designed regulation plays a vital role in protecting consumers, businesses and employees. However, some regulations may be unnecessary, overcomplicated or out of date. These regulations can waste providers’ and consumers’ time and money, and damage economic growth.
The research we have undertaken found that the many lawyers assessed their practising certificate fees and compliance costs as being poor value for money. However, the research also uncovered a lack of awareness of what is paid for by practising certificate fees. The LSB's analysis of the historic costs of the regulators suggests that regulators account for their costs in different ways and overall we consider levels of transparency are mixed.
Increasing transparency by regulators about their costs could help to address low awareness among providers about how the practising certificate fee is spent and offer assurance around value for money. This is why our next phase of work is focused on improving transparency.
We are grateful that many have taken the time to contribute to this project.
We ran an online survey in 2014 which nearly 1,000 legal service providers completed. The results of this survey, together with a report on the findings, can be found here.
Building on this online survey, the LSB commissioned ICF International to undertake a study into the costs of regulation for legal services professionals. The study focuses on the incremental costs of regulation – costs that are incurred solely to comply with legal services regulation and that do not serve any other business or wider regulatory purpose. 64 authorised legal services professionals have participated in this research and told the LSB about the ‘real world’ cost of regulation that they face. The results of this study can be found here.
We are also holding regular stakeholder meetings to allow regulators, representative bodies and the Legal Ombudsman to input into this project. The slides from our stakeholder meetings can be found below.
The overarching report:
The individual regulator's reports:
The Legal Services Board report: