Legal Services Board consults on plans to increase practising certificate fee transparency and drive greater accountability

The Legal Services Board (LSB) has today launched a consultation on plans to increase transparency around how regulators spend practising certificate fee (PCF) income.

Each year individual lawyers (e.g. solicitors, barristers, legal executives, patent and trademark attorneys, costs lawyers and notaries) and legal firms pay a PCF to their approved regulator in order to practise. Increased transparency will help empower them to hold regulators to account and to make their own determination of whether the fee offers value for money.

The fee can only be used for certain “permitted purposes” which are set out in the Legal Services Act 2007 and in LSB Rules. These permitted purposes include, for example, regulatory activities as well as certain non-regulatory activities like the promotion and protection by law of human rights and fundamental freedoms. Regulators can only collect a PCF if the level and methodology has been approved by the LSB.

Today, the LSB has published new draft PCF Rules that make it clearer how PCF income can be used (for what permitted purposes) and outline the criteria and supporting material that approved regulators must provide to the LSB before the LSB decides to approve a PCF application.

This consultation seeks to gather views, evidence and data from regulators, legal professionals, businesses, and all interested parties to help the LSB shape its processes for approving the level of PCF.

This should lead to a more meaningful debate on the purpose, benefits, costs and value of regulation, which ought to result in improved standards across the sector.

The LSB’s proposals also include ensuring the PCF application process is better integrated with the LSB’s performance assessment framework for regulators.

Chris Nichols, Director, Regulation and Policy at the LSB says:

“The LSB is committed to reshaping legal services to better meet the needs of society, and ensuring transparent and accountable regulation is an important ingredient.

“Practising certificate fees are a mandatory cost of regulation. It is crucial that those being required to pay these fees can see where their money goes and are empowered to satisfy themselves that this represents value for money.

“In discussion with approved regulators, we have developed a draft framework that will put the onus on approved regulators to clearly articulate the purpose, value and costs of regulation. Encouraging a meaningful discussion on these issues – between approved regulators and those who pay their fees, as well as with the LSB as oversight regulator – should be a powerful driver for ongoing improvement in standards across the sector.”

The consultation opens on 30 July 2020 and will close at 5pm on 8 October 2020.

The LSB intends to implement the final PCF Rules and Guidance by December 2020, in time for the 2021 PCF applications cycle (for the 2022 practising fees).

Details of the consultation can be found on the Legal Services Board’s website.

The process for assessing practising fee applications has remained largely unchanged since it was first introduced in 2011. In this time, the LSB’s overall approach to regulation has evolved significantly. In particular, the LSB introduced its regulatory performance framework in 2018 for assessing the Regulatory Bodies’ performance against a common set of standards, and new Internal Governance Rules in 2019 on the delegation, and separation of, an Approved Regulator’s regulatory functions to an independent Regulatory Body.

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