SRA approves plan for regulating legal executives

The Solicitors Regulation Authority will push ahead with proposals to regulate legal executives – but there remain potential political and even legal hurdles to overcome.

The organisation said today it was in the public interest to take on the regulation of CILEX members and simplify the legal regulatory landscape.

Any decision to proceed would be subject to approval from CILEX – largely inevitable, given this was its initial idea – and then the Legal Services Board.

But the SRA acknowledges that the issue would still be unresolved even at that stage, as the Law Society council would have to sign off rules which govern the current regulatory regime. This could be a major stumbling block given the Society has been vocal in its opposition to the move.

A further threat to the proposal would come from the existing regulator, CILEx Regulation, which today said it was ‘extremely disappointed’ by the SRA stance and would consider legal action.

The SRA issued a 19-page statement today outlining why it should be allowed to regulate legal executives.

It believes that such a change would make it easier for consumers to navigate the system, as well as increase efficiency within the profession. Currently some 75% of CILEX members already work in SRA-regulated firms, leading to duplication.

Anna Bradley, SRA chair, said the organisation had reflected ‘long and hard’ on the potential risks and benefits and had taken account of the ‘strong professional interests that are in play’.

‘All the evidence shows that consistency and relative simplicity in regulation matters to the users of legal services,’ she said. ‘This change would result in a simpler system, with more consistent levels of protection for consumers. There will also be efficiency benefits.

‘Most people find the current regulatory landscape bamboozling. This change won’t solve all the issues of complexity, but it would benefit the public.’

The SRA is understood to reject the argument that bringing two professions together would water down the solicitor brand – and stresses that this is not in its remit in any case. The regulator wants parity of regulation rather than parity of the licence to practise, and believes that consumers will still understand what it means when they instruct a solicitor.

The SRA also dismisses the notion that the solicitor profession is united in opposing the move, saying views are ‘mixed’. If redelegation went ahead, the SRA has committed to making sure that its rules, processes and communications would maintain the distinct identities of CILEX members and solicitors.

The CILEX board will meet on 16 July to review the SRA’s proposal and then send the process on to the LSB.

The SRA accepts that the necessary changes would then need the approval of the Law Society board. 

Ian Jeffery, CEO of the Law Society, reiterated Chancery Lane’s opposition to the move. He said on Monday: ‘We are deeply concerned that the SRA board has given the go ahead to regulating CILEX members, despite its own regulated community, and CILEX’s members objecting to the idea of regulatory change, and the Legal Services Consumer Panel stating that the consumer case has not been made.

‘For the last two years, the Law Society has advocated on behalf of our members opposing the proposal and raising concerns at the serious negative impact it will have on regulated communities, consumers of legal services and the wider public interest. The change will cause consumer confusion, as it will be less clear which profession is which, and where different authorisations for practice areas apply. This is likely to be a particular problem for those with complex legal issues, or vulnerable consumers. 

‘The SRA requires the Law Society’s approval for changes to the corporate objects of SRA Limited in order to be able to take on the regulation of CILEX members. The SRA has created the impression that this is no more than an administrative issue to be resolved. Instead, the Law Society has consistently said our consent cannot be assumed. This is a matter for the Law Society’s Council to decide at the appropriate time when any proposals are made and supported by a persuasive case for change.

‘We are concerned that the redelegation of CILEX’s regulatory functions to the SRA could adversely affect the SRA’s ability to meet its duty to regulate the solicitor profession in a way that supports and promotes the regulatory objectives. This is of particular concern in light of the collapses of Axiom Ince, Metamorph, Kingly and the SSB Group.’

CILEx Regulation, which would effectively be dumped if the proposal went ahead, has not given up its fight to remain responsible for legal executive regulation.

In a statement, chair Jonathan Rees said there is insufficient evidence to show that consumers and professionals would benefit.

Rees added: ‘CRL remains concerned that the proposals to redelegate regulatory responsibility in this way are potentially unlawful, and as the justice select committee said raise serious concerns about the model of the 2007 Legal Services Act in undermining efficient and stable regulation. We are therefore considering next steps including recourse to the courts.’

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