The Legal Services Board (LSB) publishes today the latest findings of its cost of regulation project and sets out the next steps for further investigation and analysis.
This work looked at two aspects of the cost of regulation to providers:
- awareness of and transparency of regulatory costs (including the practising certificate fee (PCF) and ongoing compliance costs), and
- perceptions of value for money.
In a series of reports, the LSB has analysed not only the costs associated with each of the legal services regulators but also its own costs. Key findings from the research include:
- practitioners do not differentiate between legal services regulatory costs and other ‘costs of doing business’ such as non-legal regulatory requirements and membership of quality assurance schemes. This contributes to dissatisfaction with the cost of regulation
- solicitors and barristers understand that their PCF pays for both regulatory and their representative bodies, and
- barristers and solicitors regard the PCF and compliance costs as being of poor value.
Improved levels of financial transparency by the regulators could help address low awareness amongst legal services providers about the cost of regulation. Overall levels of transparency are mixed. Some regulators publish comprehensive and clear financial data. Others do not.
Legal Services Board’s Chairman Sir Michael Pitt said:
“The aim is to improve value for money and, wherever possible, drive down the cost of regulation.
Unnecessary regulation can stifle innovation and the costs are borne by businesses and ultimately by consumers. This is why the LSB has been reviewing the costs associated with regulation to legal services providers.
This work underpins our regulatory objectives. It has repeatedly been highlighted as a problem for the profession and we now have meaningful evidence on this issue.
It is clear from the findings of this work that there is general lack of understanding about the true cost of legal services regulation.
The challenge is to ensure that the regulated community and the public greater clarity of the costs of legal services regulation. Without this, a robust assessment of value for money cannot be mounted.
As the oversight body for regulation in the legal sector we will continue to scrutinise and encourage openness on all regulatory costs, including our own, in the expectation that general awareness grows over time and that costs will reduce as a consequence.”