Following calls for increased regulation of the wider legal services industry, the Legal Services Board (LSB) has announced it will not pursue a full statutory review of the sector at this time.
In a draft report published this week outlining the LSB’s in-depth examination of the unregulated sector, the LSB cited that its findings do not provide a “compelling case” for statutory review.
Approximately one in 10 services operating mainly in the areas of are provided for individuals by unregulated firms, with LSB findings also reporting that unregulated firms cater for 9% of the total market for individuals’ legal needs and up to 39% for small businesses, with areas such as will-writing, online divorce and intellectual property occupying a much higher market share.
But the LSB also found that the scope of the unregulated sector is “unlikely to be wide enough to prompt a full statutory review into its impact on the market” and that although the market share of the unregulated sector is “sizeable” a full statutory review would not be pursued at this time. Instead, further work will be focused on targeted reviews for specific, identified, “problem areas” of the industries concerned. The LSB also proposes voluntary arrangements for unregulated firms such as becoming registered on a list of accredited providers, and will encourage the use of alternative dispute resolution within the sector.
Commenting on the announcement the LSB said:
“We propose to engage with other regulators (such as the Professional Standards Authority) to discuss their approaches to similar powers. We also propose to engage further with those in the unregulated sector to test whether there is appetite for the LSB to provide assistance in the development of voluntary arrangements funded by unregulated providers.”
Anthony Belcher, Director, The Society of Will Writers, commented:
“The Society of Will Writers is pleased to see these findings published by the LSB. Having been involved in their research, with much input from SWW members as part of a shared survey we conducted, we’re glad to have a clear understanding of the direction they plan to move forwards in. With our complaints figures remaining near-zero thanks to the strong self-regulatory framework we have in place, we feel a statutory review would have been unnecessary at this time, and it’s great to see that the hard work and compliance of SWW members has been taken into account here.”
Emily Deane TEP, STEP Technical Counsel & Head of Government Affairs, commented:
“STEP is disappointed that the LSB has decided not to undertake a statutory review of the unregulated sector. The absence of training, qualifications and oversight in the wills and trusts sector can have a seriously detrimental impact on families when they are at their most vulnerable and it has the potential to undermine the profession as a whole. It is therefore vital that competence is assured at a specialist level, not generic.
However, we support the LSB’s proposals to establish an accreditation system, that would recognise the qualifications and quality assurance mechanisms already in place within specialist membership organisations. This would also ease any significant additional regulatory costs which would be associated with developing and implementing their own additional internal schemes. In the meantime, regulators could also provide further assistance to consumers through increased education on what a ‘good advisor looks like’. Regulators can be a valuable source for raising awareness and supporting consumers to make appropriate choices when seeking legal advice.”
Michael Culver, Chair of SFE, the membership body setting the standards for older client law, and founder of Culver Law, said:
“We are utterly dismayed at the LSB’s decision not to carry out a full statutory review of the unregulated sector. Whilst not surprised at the announcement, to say the findings do not provide a ‘compelling case’ for review is misguided. Older and vulnerable people are being financially and emotionally impacted by unqualified salespeople with no specialist expertise, without the right training and qualifications or the right levels of insurance in place.
The system leaves them wide open to making decisions which can have irreversible consequences on families across the UK. There must be more protection in place.
Whilst proposals for voluntary arrangements for unregulated firms could be deemed a positive step, it relies on firms choosing to do the right thing rather than holding them to account. Other countries have put greater regulation in place for important transactions on property, wills, litigation, and succession but it seems we are determined to make our legal system open to anyone willing to advise rather than those qualified to do so. It’s time for a full statutory review and our hope is the LSB will change their stance on this to ensure the protection of people’s legal needs.”