Legal regulators can reduce the amount of enforcement work they need to undertake if they can build enough trust that lawyers will approach them before things go wrong, an event hosted by the Council for Licensed Conveyancers (CLC) has heard.
Speaking on how much legal regulation can be about prevention rather than enforcement, Sarah Debney – a practitioner with experience of working at firms overseen by both the CLC and the Solicitors Regulation Authority (SRA) – said a two-way relationship was vital.
“You need to feel confident that you can ask if you’re not sure without a fear of opening a can of worms. That’s particularly helpful in an outcome-focused regulation environment because the rules are less prescriptive, and so ultimately, they are more open to interpretation, which potentially leads to uncertainty or inadvertent mistakes.
As to how you establish trust enough to have a relationship with your regulator, ultimately they’re not your friend, but I think it does require an assumption on the regulator’s part that very few people set out to deliberately flout or ignore the rules and, on the regulated community’s part, that the regulator isn’t there to catch them out or to set traps for the unwary. An effective regulator should need to take disciplinary action relatively rarely. The majority of things can be brought into compliance.”
Paul Bennett, a legal regulation specialist solicitor at Bennett Briegel, urged all regulators to move to an “assisted compliance” model like the CLC operates:
“We have focused too much over the last decade on enforcement… we should be focused on high standards of consumer protection through information, prevention, and building confidence in the regulators.”
Close working between regulator and those it regulates “really empowers businesses to thrive and their clients to get what they want from them. That ultimately is the purpose of legal regulation”.
Stephen Ward, the CLC’s director of strategy and external relations, said “assisted compliance”, in which the regulator seeking to collaborate with those it oversees to achieve compliance, was sometimes misunderstood as the CLC being a light-touch, or even a soft-touch, regulator:
“If there is persistent non-compliance or if actual harm has occurred, then we do use our disciplinary tools – assisted compliance isn’t a free pass to go on as you wish. In fact, our approach to regulation is quite intensive.”
At the same time, this approach is aided by the size of the CLC’s regulated community – some 230 firms who each have a named relationship manager, albeit that between them they represent about 15% of all conveyancing activity in England and Wales. Mr Ward said:
“We calculate that we cover double that level of activity and still operate the same intensive and collaborative model. It is scalable.”
Chris Handford, the SRA’s director of regulatory policy, said it was not just the size of its community (10,000 law firms, 150,000 solicitors) that made such an approach tough:
“It’s… also the differences between them, the different business models, size, provider types, the different areas and categories, activities, client types.”
Though the SRA tries to maintain a balance between preventative and enforcement activity, it receives more than 10,000 reports about potential problems a year and has to deal with them, sometimes urgently. But he said the SRA took a “much more sophisticated” approach, using horizon scanning, risk targeting and proactive visits or desk-based reviews, alongside enforcement work. Like the CLC, he said:
“We will try and work with firms to bring them into compliance. Where we really go down the enforcement route is where there’s will for non-compliance, or there’s a really big mess.”
Though the largest firms have relationship managers, Mr Handford said there were no plans to extend the programme.
Speaking afterwards, Stephen Ward said:
“There are always going to be occasions when a regulator has to come down hard on an individual or a firm but the aim of ‘assisted compliance’ is to minimise them. Trust between the regulator and the regulated can be fragile and so we are pleased that our approach is bolstering it and encouraging others to move over to CLC regulation.
There is no single right answer, however, and of course we operate on a different scale to the SRA. Whether a regulator is a specialist or more generalist is another factor but, even if we get there in different ways, I am confident that we are all working to the same end.”