New LSB rules on regulators’ fees will increase transparency for lawyers and raise standards

Regulators’ fees: The Legal Services Board (LSB) has published new Rules and Guidance to increase transparency on how legal services regulators spend practising certificate fees (PCF).

Increased transparency will help empower those who pay the PCF to hold their regulator accountable for its expenditure. The proposals are designed to lead to a more meaningful debate on the purpose, benefits, costs, and value of regulation, improve standards across the sector and promote the regulatory objectives.

Each year individual lawyers and legal firms must pay a PCF to their approved regulator to practise. Regulators can only collect a PCF if the LSB has approved the level of the fee. The new PCF Rules and Guidance are proportionate and they improve the framework for the practising fee application and approval process.

They also outline the criteria and supporting material that regulators must provide before the LSB approves an application. This includes ensuring regulators have sufficient funds and financial resilience to regulate and operate efficiently and cost-effectively.

The LSB has discussed proposals for updating the PCF Rules with regulators since February 2020. Early input was used to develop new draft rules that the LSB then consulted on publicly. The LSB has considered all the feedback received carefully and amended the new PCF Rules and Guidance, as appropriate.

Change to the new PCF Rules and Guidance include:

• Regulators must have a reserves policy in place to ensure they are financially resilient.
• The PCF approval process is now better integrated with the LSB’s performance assessment framework for regulators. When setting the PCF level, regulators must consider specific issues raised through regulatory performance and be transparent about how the fee will be used to address concerns.
• Regulators are now required to consider the impact of the PCF level on equality, diversity and inclusion and consider the regulatory objectives in discharging their regulatory functions.

Matthew Hill, Chief Executive of the Legal Services Board, said:

“We are grateful to everyone who worked with us to devise the updated PCF Rules and Guidance and to those who shared feedback in our consultation.

“Our process for assessing practising fee applications had not been updated since it was first introduced in 2011. In this time, the LSB’s overall approach to regulation has evolved significantly. We have updated the Rules to support a modern regulatory system that delivers benefits for legal professionals, consumers and the public and promotes the regulatory objectives.

“As we work with regulators to reshape legal services to better meet the needs of society, the changes will help those who pay the PCF hold their regulators to account and have a more meaningful debate on the purpose, value and benefits of regulation. This should, in turn, result in improved standards across the legal services market, which will benefit the thousands of small businesses and consumers who need legal services each year.”

Kindly shared by The Legal Services Board (LSB)