Legal Services Board approves CLC’s plans to cut cost of practising
The Legal Services Board has approved the Council for Licensed Conveyancers’ (CLC) application to reduce its regulatory fee rate.
The reduction supports the CLC’s strategic goal to reduce the regulatory cost burden on CLC practices in a way that is sustainable for the foreseeable future.
Practice fee rates will now be reduced by 30% for the new licensing year which starts on 1 November 2019. This follows a 20% cut made in 2016 and 10% in 2018. At the same time the CLC will make a 60% cut in Compensation Fund contribution rates.
The CLC’s analysis shows that these lower rates will be sustainable for the foreseeable future and so provide firms with a new fixed basis for forward financial planning.
CLC’s Council will review the regulatory fee rates in 2020 year to consider whether a further reduction is achievable taking account of market conditions at that time. Any changes will only be proposed if the Council is confident that they are sustainable over the long term as a lack of consistency in fee rates would itself be damaging to the market.
In making this decision, the CLC made a detailed analysis gained through the annual regulatory returns and annual accountants’ reports received from regulated practices, along with turnover data received in parallel with the professional indemnity insurance renewal process. This analysis allowed for the ongoing uncertainty in the housing market, and the potential for further impact from changing economic conditions and the CLC is confident that given this it can make significant and sustained reductions to regulatory fee rates.
The CLC also used Land Registry data to ascertain how the housing market is affecting regulated practices’ work volumes.
The CLC’s base Compensation Fund contribution has been stable at 0.4% of turnover since 2011, but will also reduce to 0.16% following the Legal Services Board approval.
The individual licence fee charged to CLC lawyers providing conveyancing and/or probate services will remain unchanged at £400.
The Council of the CLC found that it could safely consider reducing the cost of practising further while maintaining high standards of consumer protection for three main reasons:
- The CLC’s proactive approach to securing compliance minimises the number of failures that result in harm to clients and expensive corrective work.
- As a result of cost management and the sale of properties owned in the past by the CLC, reserves are now at a level that should be reduced closer to the minimum level of £1m set by the Council.
- Despite uncertainty in the housing market, CLC-regulated firms have been performing well in business terms, so the CLC does not need the current levels of reserves in hand to deal with the potential impact of wider economic instability on the firms it regulates. The CLC is able to run a deficit budget for a period to reduce those reserves.
Sheila Kumar, CEO of the Council for Licensed Conveyancers, says:
“With the Legal Services Board’s approval we are now able to reduce the cost of regulation bringing real benefit for all, particularly consumers. Our approach, as a risk-based independent regulator, enables us to pass on regulatory savings in the form of lower fees. Following our detailed analysis we know that we can prudently reduce fee rates while assuring our primary role of protecting the public.
“Our focus on prevention, rather than what can often be a very expensive cure, means that good regulation does not have to come with an onerous price tag. We know the firms that we regulate and the market they operate in so we can reduce fee rates based on insight and intelligence.
“This means we take the action that is needed to ensure licensed conveyancers deliver a high-quality service, while not burdening them with unduly costly and burdensome regulation. And the community we regulate has responded positively, saying that they value this approach and the reduction is in line with our ambition to be the regulator of choice in our specialist areas.”
Kindly shared by Council for Licensed Conveyancers (CLC)
