Regulator’s action plan underscores benefit of regulatory standards for consumers
30 June 2017
Law firms could be allowed to use a new ‘Regulated by the SRA’ logo under plans unveiled by the Solicitors Regulation Authority yesterday.
The logo is part of a range of measures proposed in response to the Competition and Markets Authority’s report on legal services.
Frontline regulators had until today (30 June) to put forward an implementation plan taking forward the CMA’s recommendations, the most controversial of which has been to make it compulsory for providers to publish pricing information so consumers would be able to make more informed choices.
Price transparency has officially been on the SRA’s agenda since October last year but in its post-CMA report action plan, the regulator also addresses key recommendations on changing supplier behaviour, including ‘the use of quality signals by providers and issue guidance for providers on engaging with online reviews’.
‘We will look to develop, “regulated by the SRA” and “protected by compensation fund” logos that could help SRA-regulated firms meet some of the [transparency] requirements’ which ‘will help boost consumer awareness of SRA regulation and what it means,’ the report says.
The action plan attached to the report says the logos will be for firms to use on printed materials and as a digital kite mark. The SRA is also proposing to make it an obligation for law firms with a website to use the mark because ‘it denotes SRA regulation’.
Confusingly, for firms that do not have a website, use of the ‘regulated by’ logo would not be compulsory, while use of the separate compensation fund logo will be voluntary for all firms; and the SRA is still considering how firms could use the logos on social media.
‘To make effective choices, the public wants to assess quality as well as the extent of protections in place,’ the SRA said in a statement, explaining it would test options for the logos ‘to see if these can help inform consumers about the extra protections in place for those using regulated law firms.’
The proposals on price information follow on from the SRA’s own conclusions last October that firms should be forced to be more transparent on price and service quality. It resulted in separate research published earlier this week, which brought together the regulator’s emerging thinking and solutions on tackling unmet legal needs.
With the regulatory burden identified as the main obstacle, the SRA is ploughing on with proposals to allow solicitors to work in unregulated businesses without having to come off the roll and to reduce the minimum level for professional indemnity cover.
Although solicitors in this environment would not be able to provide services in reserved areas, the move has been criticised for failing to require that they should be covered by professional indemnity insurance.
Parallel proposals to reduce compulsory PII cover levels have prompted just as much suspicion. The SRA is due to consult on the issue in the autumn but already stakeholders wonder what this could add in a market that has already come up with its own suitable response to risk.
Meanwhile, yesterday, the Law Society dismissed the SRA’s unmet needs proposals as increasing risk for consumers. ‘What will not help address unmet legal need is the wholesale weakening of consumer protections, which the SRA seems intent on with their proposed changes to the regulations governing solicitors,’ said society president Robert Bourns.
SRA chief executive Paul Philip sought to pacify opponents. ‘In considering how we publish price information, we need to continue having in-depth conversations with everyone, from law firms to consumer groups, to get this right,’ he said.
‘We want to make sure we strike a balance between making sure consumers have access to consistent, useful price information, while not over-burdening firms with over-restrictive rules.’
Unsurprisingly, the SRA also agreed with the CMA that legal regulators should be independent of both representation and government. In its response to the CMA’s interim report, the solicitors’ regulator had ‘strongly encouraged’ the competition watchdog to support its bid for independence from the Law Society. ‘This would boost public trust in the legal sector,’ it said yesterday.
The SRA is due to formally consult on better information for consumers later this year.
This story was first published on Solicitors Journal on 30 June 2017 and is reproduced by kind permission