The ACL has expressed concern after the Costs Lawyer Standards Board (CLSB) was criticised by both the oversight regulator, the Legal Services Board (LSB), and the Legal Services Consumer Panel.
The issue arose from the publication of the LSB’s first assessment of the performance of all the regulatory bodies following the introduction of a new performance framework in December 2017. It measures each regulatory body against five standards and 26 underpinning outcomes.
The CLSB received the worst report by some way and has been ordered to submit an “overall action plan” to the LSB by the end of the month. This should set out how the CLSB will address the assessment feedback and the actions it has been set, all of which have to be completed by 31 May 2019.
The LSB highlighted eight areas where action was needed. They included: the CLSB being “not aligned” with the LSB’s education and training guidance; the “very limited” evidence base about the market that the CLSB uses to inform its regulatory approach; the absence of a power to suspend a Costs Lawyer’s authorisation, for the purposes of protecting consumers or others, during a complaints process; the CLSB’s failure to review its enforcement or appeals regime; an incomplete risk register; and a lack of transparency over the decisions the CLSB makes or how the board holds the executive to account.
The LSB specified the series of actions it expected the CLSB to take as a result, including providing “an updated contingency plan explaining the ongoing risks and mitigations associated with a single member of staff support and the provider of contingency support if needed”.
The LSB noted that the Bar Standards Board has offered to provide interim support, “but it is not clear why this is considered to be the most appropriate regulator to step in”.
This was followed by a blog on the Legal Services Consumer Panel’s website, in which chair Sarah Chambers said the LSB’s performance review framework indicated “a subtle but significant shift away from giving smaller regulators unmerited leeway where evidence suggests that they aren’t delivering on their statutory objectives”.
She continued: “The situation with the CLSB calls into question the continued existence of regulators whose competence is found wanting. At what point should the LSB begin to call into question a regulator’s fitness to regulate?”
Ms Chambers said she understood why the LSB may have prioritised the performance of larger regulators, but added that “the regulated communities of smaller regulatory bodies are not always small, and failures could have significant impact on users of their services and on wider market confidence”.
She said: “While we applaud the LSB’s directive approach, we hope that it has started to consider options for remedial action beyond those stipulated in the report, including calling into question the position of the small regulator in the market and the stability of the market should it fail.”
ACL chairman Iain Stark (pictured) said: “We are concerned and disappointed by the findings of the Legal Services Board, which has led to the chair of the Legal Services Consumer Panel questioning the fitness of our regulatory body.
“We anticipate that the CLSB will respond constructively to the oversight regulator and work with the LSB both to comply with its requirements and ensure it is fit for purpose.
“While independent regulation remains important, as the approved regulator we are conscious of our ultimate responsibility. For now, we will reserve judgement on what, if any, action we may need to take.”
As is the case with the Law Society/Solicitors Regulation Authority and others, the ACL is named in the Legal Services Act 2007 as the approved regulator of its profession and delegated it to an operationally independent body.
The CLSB was unable to provide any comment in time for this newsletter, but we hope to cover its reaction in a future edition.