The Solicitors Regulation Authority (SRA) has unveiled ambitious plans to overhaul key pillars of the regulation of the profession in order to cut red tape, improve competition, cut costs and ensure that regulation is properly targeted.
In a policy statement entitled Approach to Regulation and its Reform published last week, the regulatory body announced that it will undertake separate consultations on a number of major issues to have come under frequent scrutiny since the Legal Services Act 2007 came into force. These include facilitating the entry of multi-disciplinary alternative business structures to the market; making changes to arrangements for professional indemnity insurance (PII) for regulated entities; making changes to the requirement that an accountant’s report is needed for client accounts; and making changes to the separate business rule to allow firms greater flexibility in how they structure their business.
The SRA’s proposal to change the rules on PII, to ‘ensure that the minimum requirements set for firms by the SRA are proportionate while maintaining protection for the public, particularly small businesses,’ comes just months after the body confirmed in January the names of 136 firms which were forced to close after failure to secure PII cover.
The SRA last week also announced it decision that insurers participating in the solicitors’ PII market will not be required to have a financial strength rating following a consultation, but said it ‘will keep this under review.’
The package of consultations and proposed reforms comes as the SRA board is set to vote on an overhaul of legal training, with the results of a 12-week consultation due to be voted on by the board on 21 May. It is also expected to vote to end the current system of continuing professional development points.
On the latest proposals, SRA chair of the board Charles Plant said: ‘We are determined to regulate in a way which maintains the core professional principles and which enables good, committed, lawyers and firms to meet the diverse legal needs of an increasing number of consumers. We have set out the approach we will take in order to provide clarity for those we regulate, for the legal services market more widely, and for consumers.
‘This will be consistent with and support the government’s challenge to all legal services regulators to reduce regulatory burdens on practitioners in the legal sector, and promote innovation, competition and growth in the legal services market.’
The programme follows an announcement by the Government on 1 May that its review of the legal services regulatory framework will not be taken any further.
Having considered a total of 71 responses from regulators, consumer bodies, practitioners and the judiciary, justice minister Shailesh Vara concluded that there was no consensus on the longer term vision for regulation.
A statement added: ‘In addition, we found that the majority of responses focused on the structure of the regulatory landscape, rather than on the detail of particular burdens that could be removed. Due to the detailed legislative framework and independence of legal regulation from government, the call for evidence did not reveal any options for government to reduce regulatory burdens on legal service practitioners, or to simplify the regulatory framework, that did not entail changes to primary legislation.’