Regulatory fee reduction announced by CLC

The Council for Licensed Conveyancers (CLC) has announced plans to reduce the regulatory fees imposed on CLC practices next year to an even lower level than that first proposed during a consultation earlier this year.

In its original consultation on the 2020 practice fee rates, a 20 per cent reduction was mooted for the coming year.

Now, the regulator of specialist property lawyers has applied to the Legal Services Board (LSB) for approval to reduce practice fee rates by 30 per cent. This is in addition to a 20 per cent cut made in 2016 and 10 per cent in 2018.

At the same time the CLC has proposed a 60 per cent cut in compensation fund contribution rates.

The base compensation fund contribution has been stable at 0.4 per cent of turnover since 2011, but will change to 0.16 per cent if approved by the LSB.

The individual licence fee charged to CLC lawyers providing conveyancing and  or probate services will remain unchanged at £400.

The reductions, the regulator said, support the CLC’s strategic goal to reduce the regulatory cost burden on CLC practices and will also help the CLC deliver its longer-term plan to manage a reduction in the level of reserves in the practice fund – the money which covers the cost of regulation.

The CLC council said it could safely consider reducing the cost of practising further while maintaining high standards of consumer protection, because the CLC’s proactive approach to securing compliance minimises the number of failures that result in harm to clients and expensive corrective work.

Cost management and the sale of CLC-owned properties also mean reserves are now at a level that should be reduced closer to the minimum level of £1m set by the council.

In addition, 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.

The council has pledged to review the regulatory fee rates next year to consider whether a further reduction is achievable, taking account of market conditions at that time.

Any changes, it said, will only be proposed if the council is confident they are sustainable over the long term as a lack of consistency in fee rates would itself be damaging to the market.

CLC’s CEO Sheila Kumar said: “There are real benefits for all, particularly consumers, when our approach as a risk-based independent regulator, working with our regulated community, enables us to pass on regulatory savings in the form of lower fees.”

The CLC’s focused approach, she said, means it is in close touch with those it regulates, with regulatory supervision managers who understand not only the regulatory but also the business risks the regulated community faces.

“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 onerous regulation. It is especially pleasing that we are able to go further than initially indicated, in line with our ambition to be the regulator of choice in our specialist areas.”