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LSB demands lay chairs for UK legal regulators

Non-traditional business models ‘regarded with suspicion’ by legal professionals

9 October 2013

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In a move unlikely to be welcomed by many UK-based lawyers, the Legal Services Board is demanding that approved regulators, including the Solicitors Regulation Authority and Bar Standards Board, should be headed by lay chairs. The SRA and BSB already have lay majorities on their boards.

The new rule would not apply to the Council for Licensed Conveyancers or to accountancy bodies such as the ICAEW, should its application to become an ABS regulator be approved.

In a consultation published yesterday, the LSB argued that the approved regulators were still "tied too closely to the individual branches of the profession that they oversee" and this closeness was "detrimental to both the public and consumer interests in regulation".

The umbrella regulator claimed that "overly strong ties to the history, culture and rules of professional self-regulation within specific sub-groups act as a significant drag on the better regulation principles" and put regulatory objectives at risk.

"While many regulators have taken significant steps forward in terms of allowing ABSs, shifting their models towards outcomes and refocusing on risk-based supervision, we are in no doubt that reform would have come further under regulators who were not tied to their particular arms of the profession.

"Non-traditional business models, with owners and practitioners drawn from a range of different backgrounds both within and outside the legal professions, are regarded with some caution (and, on occasion, even suspicion)."

The LSB said there was a danger that approved regulators confused "breadth of background" with "breadth of skills and knowledge", particularly in leadership, regulatory expertise and governance.

The LSB said it was likely that, in a closely balanced argument, "a professional would, consciously or unconsciously, be more likely than a lay person to come down on the side of their profession and its traditions".

Both Charles Plant, chairman of the SRA, and Baroness Ruth Deech, chair of the BSB, are due to retire at the end of next year.

The LSB said that, although the change to the existing internal governance rules, introduced in 2009, could be imposed with "immediate effect", applying it to future chairs would probably be "satisfactory".

The umbrella regulator concluded: "Due to the size of their regulated community and the impact in terms of number of consumers served, the selection of lay chairs for these regulators would set the tone for the other approved regulators and send a clear message about the importance of independence to consumers of legal services and the rest of the sector."

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