Regulation: Independent Regulatory Bodies

A. Regulatory Functions

The requirement of the LSA 2007 that regulatory functions are operated indepen­dently of representative bodies^[807] led the professions to establish regulatory arms, for example, the Bar Standards Board (BSB), the Solicitors Regulatory Authority (SRA) and ILEX Professional Standards (IPS).

Regulatory functions are not defined by the LSA 2007. They are however implicit in the tasks an approved regulator has ‘under or in relation to its regulatory arrange­ments, or in connection with the making or alteration of those arrangements’.^[808] The section of the LSA 2007 setting out the regulatory arrangements of a body states that they need not be defined by any statute.^[809] The section states that the regulatory arrangements of a body are:

a. its arrangements for authorising persons to carry on reserved legal activities;

b. its arrangements (if any) for authorising persons to provide immigration advice or immi­gration services;

c. its practice rules;

d. its conduct rules;

e. its disciplinary arrangements in relation to regulated persons (including its discipline rules);

f.its qualification regulations;

g. its indemnification arrangements;

h. its compensation arrangements;

i. any of its other rules or regulations (however they may be described), and any other arrangements, which apply to or in relation to regulated persons, other than those made for the purposes of any function the body has to represent or promote the interests of persons regulated by it; and

j. its licensing rules (if any), so far as not within paragraphs (a) to (i).

The Lord Chancellor can modify the functions of an approved regulator on the recommendation of the LSB.^[810] Therefore, the regulatory functions of the approved regulators are largely defined by their regulatory objectives, their regulatory arrange­ments and by their powers under the LSA 2007.

The LSB is required by the LSA 2007, section 30 to make rules to prevent the exercise of an approved regulator’s regulatory functions being prejudiced by its representative functions. It must ensure that decisions relating to the exercise of an approved regulator’s regulatory functions are taken independently from decisions relating to the exercise of its representative functions. The LSB sought to achieve this by creating Internal Governance Rules applicable to regulators.^[811]

B. Regulatory Objectives

In discharging their regulatory functions, approved regulators are under a duty to promote, and act compatibly with, the same eight regulatory objectives as apply to the LSB.^[812] Some of these regulatory objectives may be considered particularly relevant to the frontline regulator. They include protecting and promoting the interests of consumers of legal services, promoting competition in the provision of legal services and promoting and maintaining adherence to the professional principles. They must also have regard to principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed. Approved regulators may, however, adopt any other principle appearing to represent the best regulatory practice.^[813]

C. Regulatory Powers

The approved regulators can collect practising certificate fees approved by the LSB. The sums collected can only be applied for the permitted purposes. These include the regulation, accreditation, education and training of authorised persons or those wishing to become authorised persons, including maintaining and rais­ing their professional standards and providing advice and support about practice management.^[814]

Practising certificate fees can also be applied for activities that appear to cross the line between representation and regulation. These include participation in law reform, promotion of protection by law of human rights and fundamental freedoms and pro­motion of relations between the approved regulator and national bodies, governments or legal professions in other jurisdictions.^[815]

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