GOVERNMENT WHITE PAPER - "Putting Consumers First"

Putting consumers first in modernised legal services is at the heart of a package of proposals for reform of the legal services market published by the Secretary of State for Constitutional Affairs.

Background

The current regulatory system governing the legal profession involves Front Line Regulators, like the Bar Council and the Law Society, as well as higher level regulators, such as the Secretary of State for Constitutional Affairs, the Master of the Rolls and the Office of Fair Trading.  The front line legal professional bodies generally seek to regulate their members and represent their interests at the same time. This can lead to concerns by the public and government that they are not putting the interests of consumers first, particularly in handling complaints.

The anti-competitive effects of some of the rules of the legal professional bodies have also caused concern.

In July 2003, the Government appointed Sir David Clementi to carry out an independent review of the regulatory framework (the TSG response to this can also be found on this website by clicking here). He recommended:

• the creation of a new Legal Services Board (LSB) to provide oversight regulation

• statutory objectives for the LSB

• that regulatory powers should be vested in the LSB, with powers devolved to Front Line Regulators where they meet its standards

• that Front Line Regulators should be required to separate their regulatory and representative functions

• the establishment of a new Office for Legal Complaints to handle consumer complaints

• the facilitation of legal disciplinary practices, to allow different kinds of lawyers and non-lawyers to work together.

The Proposals

The Government has accepted Sir David Clementi’s recommendations. The Government’s main proposals cover:

 • putting consumers first: the objectives of the regulatory framework and principles of the legal profession will be set out in legislation. Consumers will be clear about the system, and will be able to hold all partners in the framework to account for delivering these commitments. Front Line Regulators will be required to separate their regulatory and representative functions. These steps will increase confidence in the regulatory system and in legal professionals.

• simplifying regulation: the new structure will be simpler, ensure consumers are protected and ensure that regulation is proportionate. A new Legal Services Board will have clear powers and responsibilities. It will authorise Front Line Regulators to carry out day to day regulation where they meet its standards.   Sector expertise will be maintained in the regulatory system through the Front Line Regulators.

• new ways of delivering for consumers: the White Paper sets out how consumers will benefit from the development of alternative business structures. These will enable legal and certain other services to be providedto high standards and in ways that suit different consumers. The arrangements will ensure competition and innovation can continue to flourish.

• protecting consumers: because the legal services market will continue to change, the White Paper describes how safeguards for consumers will quickly be put in place where new gaps in protection open up.

• complaints: a new Office for Legal Complaints (OLC) will be created. This will enhance consumer confidence by creating a single, independent complaints handling service. The OLC will provide quick and fair redress where things go wrong.

• costs: the costs of the new system will be met by the sector.  Legislation will be needed to make most of these changes. The Government will publish a draft Legal Services Bill for pre-legislative scrutiny in the current Parliamentary Session. After that, legislation will be introduced as soon as Parliamentary time allows.

These changes are aimed at delivering a "simpler, more consistent regulatory framework that puts the needs of consumers at the centre of the system".

The TSG Response

The TSG is broadly supportive of the views expressed by both the public and the Government.  However, there were still a few concerns which needed to be addressed. 

Please see the full text of the response by CLICKING HERE.

The comments within the TSG Response do not set out all of the policy position of the TSG arising from the White Paper. The comments focus on the main issues which the TSG believe have direct impact on its membership. These issues require further discussion and resolution prior to the introduction of legislation through Parliament.
 
In summary, the TSG position is as follows:

 a)         Equality and diversity in both the provision of legal services and access to them has not been considered by the framework.
 
b)         Training needs of the profession have not been considered, and the opportunity to control standards across the board has been missed.
 
c)         The TSG supports the implementation of a light touch regulator, which delegated powers to front line regulators.
 
d)         The TSG supports the idea of risk based regulation.
 
e)         The Legal Services Board should be separate from Government and open and transparent in both its appointments and approach.
 
f)          The Legal Services Board should not have the power to interfere or intervene in the actions or conduct of front line regulators as a matter of course.
 
g)         Those setting the regulations and rules for each of the sectors of the legal services industry should have direct experience of those sectors - essentially, that front line regulators should have the powers to set their own standards.
 
h)         The TSG supports the creation of the Office for Legal Complaints, and believes that it should be entirely separate from the regulators.
 
i)          The costs of the transitional period should not be borne by the industry, although it should make a contribution to the running of the Legal Services Board and the Office for Legal Complaints.
 
In its response to Sir David Clementi’s Review of the Regulatory Framework for Legal Services in England and Wales, the TSG was supportive of the general considerations to the reform of legal services. Namely:
 
(i)            Maintenance of the rule of law;
 
(ii)         Access to justice;
 
(iii)            Consumer and competition considerations;
 
(iv)        A confident, strong and effective legal profession; and
 
(v)         The promotion of public understanding of citizen’s legal rights.
 
The TSG remains supportive of these aims, laid out on page 20 of the White Paper. The TSG is of the belief that strong pubic support and confidence in the profession is key to access to justice. Without public confidence, the rule of law is undermined. “Putting consumers first” is therefore a laudable aim, which strikes to the heart of the current issues with the legal profession.
 
The TSG believes that confidence in the profession is crucial to effective training of solicitors. It is crucial to attract candidates into the profession and maintain standards.

CURRENT POSITION

The Draft Legal Services Bill has been published by the Government. 

To see the TSG Response to the Draft Legal Services Bill, please visit the Clementi section of this website.

Briefly, the TSG feel that the Draft Legal Services Bill has not gone far enough to implement the Clementi reforms.  The aims of the Clementi review were clear and certainly indicated drivers which the profession should use moving forward.  In the Draft Bill, these have become diluted.