What’s it about?
Following a year-long study, the Competition and Markets Authority (CMA) published its Legal Services Market Study on 15 December 2016.
The CMA investigation into the market encompassed the work of all legal professions. It found that there were problems of transparency of price and quality and that consumers did not have the information they needed before employing a lawyer.
The key recommendation from the CMA asks the legal services regulators to ‘deliver a step change in standards of transparency to help consumers (i) understand the price and service they will receive, what redress is available and the regulatory status of their provider and (ii) compare providers’.
What are we doing?
Our Action Plan sets out the detail of what we are doing in response to the CMA’s recommendations. Actions have been built in to our business plan for 2018-2022 and are underway.
We published a consultation in October 2017 which included detailed proposals based on the CMA recommendations, including estimate generator templates, measures of quality and changes to our rules. The responses helped to inform proposed changes to the Regulatory Arrangements which we consulted on in June 2017.
We published our response to the consultation at the end of June
What happens next?
The timetable for implementation is as follows:
- Council approve rules July 2018
- Application to Legal Services Board August 2018
- Publication of Rules and Guidance September 2018
- Rules and Guidance in force December 2018
IMPLEMENTATION OF CMA TRANSPARENCY RECOMMENDATIONS SET OUT IN ITS LEGAL SERVICES MARKET STUDY
CLC CONSULTATION PAPER
We recently sought views on the proposed changes to our Regulatory Arrangements in order to implement the Competition and Markets Authority’s (CMA) recommendations set out in its Legal Services Market Study regarding price and service transparency.
You can read a summary of the responses we received here and the response of:
You can read the consultation document here.
The changes aim to provide better transparency for consumers and foster innovation and competition in the legal services market whilst having minimal impact on the regulatory burden on the profession.
Whilst promoting appropriate levels of consumer protection, our aim in reviewing the Regulatory Arrangements is to:
- Ensure minimal impact on the regulatory burden.
- Provide greater flexibility for CLC Lawyers and Practices to participate in a diverse legal market, increasing access for the public and quality of legal services.
- Provide greater clarity for CLC Lawyers and Practices so that the CLC’s expectations are clear.
We propose that CLC Practices will be:
a. required to provide information on costs on their websites (‘Costs Information’)
b. required to make available on their websites standard information about:
- the services that they provide;
- key stages in the delivery of those services; and
- indicative timescales
(together ‘Service Information’).
c. required to make available on their websites standard information about:
- how to make a complaint;
- client protection arrangements (details of PII arrangements and access to the CLC Compensation Fund); and
- regulatory status
(together ‘Regulatory Information’).
d. encouraged to consider the benefits and risks of third party feedback platforms and price comparison websites for them and their clients.
We expect any changes to the Regulatory Arrangements to come into force in December 2018.
This consultation paper sets out our:
- Action Plan in response to the CMA’s proposals.
- Response to the CLC’s consultation on ‘helping consumers choose their lawyer’.
- Review of Regulatory Arrangements together with draft amendments.
- Next steps and implementation timetable.
Responding to this consultation
- You are invited to respond to our online consultation.
- A list of all the questions, and proposed changes to the Regulatory Arrangements can be found at the end of the consultation.
- The CLC reserves the right to publish any response and to refer to it specifically in any further document it publishes following this Consultation. If you wish your response to be treated as confidential please let us know when you respond.
- You can respond to the consultation by an online survey, email to Consultations@clc-uk.org or by post to:
The Council for Licensed Conveyancers
CAN Mezzanine
49-51 East Road
London
N1 6AH
DX 42615 Cheapside
Submission Deadline: 29 June 2018
HELPING CONSUMERS CHOOSE THEIR LAWYER: SERVICE, QUALITY AND PRICE TRANSPARENCY CONSULTATION DOCUMENT
In October-December we consulted 2017 on how to implement recommendations from the Competition and Markets Authority on increasing the transparency of information about service features, quality and price. You can read the consultation document here.
The consultation closed on 8th January 2018.
We have now analysed and responded to the submissions we received to our consultation and this response can be found here. A list of respondent scan be found here.
Below are other resources related to the consultation.
Read the Legal Services Consumer Panel’s insight on market transparency in legal services (based on data fromn its 2017 Tracker Survey)
CLC webinars during the consultation period
Quality information (webinar held on 25th October 2017)
Service information (webinar held on 1st November 2017)
Price information (webinar held on 8th November 2017)
Channels: making information accessible for consumers (webinar held on 22nd November)
Download slides now
Background
The Competition and Markets Authority’s Legal Services Market Study
The Competition and Markets Authority issued the final report of its Legal Services Market Study on 15th December 2016: https://www.gov.uk/cma-cases/legal-services-market-study
The key recommendation from the CMA asks the legal services regulators to ‘deliver a step change in standards of transparency to help consumers (i) understand the price and service they will receive, what redress is available and the regulatory status of their provider and (ii) compare providers’.
How we are responding
The front line regulators of legal services published Action Plans in response to the recommendations in the report. These plans will be assessed by the CMA and Legal Services Board (LSB) to ensure that they address the CMA’s recommendations effectively.
The CLC is grateful to the Competition and Markets Authority (CMA) for its thorough and constructive review of the legal services market. We are especially pleased that it included clear and actionable recommendations
Our Chief Executive, Sheila Kumar, is chairing the Legal Services Remedies Programme Implementation Group through which the front line regulators are coordinating their action plans in response to CMA’s recommendations. As far as possible, the regulators are moving forward together, but this will not mean that progress will be at the pace of the slowest.
The CLC is determined to take any and all steps that it believes to be appropriate and effective to empower consumers and to continue to foster competition and innovation in the delivery of the legal services we regulate. Our streamlined governance arrangements and complete independence mean that this may be easier for us than for other regulators.
Our discussions with stakeholders and other members of the conveyancing and wider legal services community lead us to believe that private sector solutions for improving the availability and comparability of information on price and service will emerge. So we hope that regulatory action can be limited to setting expectations, monitoring delivery and promoting and supporting compliance.
Summary of CLC’s responses to the CMA’s recommendations
The CLC fully supports the recommendations set out by the CMA. Our Action Plan sets out the full detail of what we plan to undertake and those actions have already begun and are being built in to our business plans for 2018 and beyond. In summary they are as follows.
Price and service
We will consult on detailed proposals, including quote generator template, measures of quality and changes to our rules from the autumn of 2017.
Regulatory status and redress
We are exploring what more we can do, through our own channels and the Legal Choices website, to increase consumer understanding of the protections afforded to them by using a CLC-regulated firm.
Use of independent feedback platforms
We will be encouraging the use of independent feedback platforms, engaging with providers and helping conveyancing and probate lawyers make the best use of them.
Helping consumers navigate legal services
We are committed to developing the Legal Choices website and already have a well-advanced plan worked up with other regulators.
Data for intermediaries
We are working with other regulators to ensure consistency in the data that is available to intermediaries.
The market we regulate
The specialist conveyancing and probate lawyers and firms we regulate provide the most commonly used legal services. Unlike some other legal services, there is no issue of lack of access to conveyancing or probate services on the basis of cost nor any evidence of unmet need in those areas. Providers work very hard to win customers in a highly contested market, the need to use a lawyer is well understood and funding the work will only very rarely be a problem for the clients that use conveyancing and probate services.
The CLC and the profession of Licensed Conveyancer were established by parliament in 1985 to foster competition in the provision of conveyancing services. This, and the abolition of scale fees for conveyancing based on the value of the property, mean that conveyancing costs now make up a much smaller percentage of the overall property transaction than was the case thirty years ago.
The CLC’s regulatory approach
The CLC regulates specialist conveyancing and probate lawyers.
Activity-based regulation allows us to focus tightly on the particular risks that arise in the delivery of these legal services, which are of course the services most used by the public.
Our assessment of risk is built on deep insight into the entities that we regulate, starting with information captured at the point a firm enters regulation by the CLC and an initial intense period of supervision, regular inspections, desktop monitoring, the very detailed Annual Regulatory Return we require each firm to provide, intelligence received from a wide range of sources and our analysis of data generated by agencies such as HM Land Registry, HMRC etc.
We have comprehensive arrangements in place for consumer redress, beginning with the expectations we place on firms to deal with complaints from clients. If complaints are not resolved at this stage, clients can turn to us in the case of conduct issues and the Legal Ombudsman in the case of service complaints. Compulsory Professional Indemnity Insurance is provided by the market under our Participating Insurers scheme that sets out minimum acceptable terms and a minimum cover of £2m for each and every claim. In 2016 we added run-off cover free at the point of closure of a firm to the minimum terms, so increasing consumer protection. We also operate a Compensation Fund, provisioned by the regulated community, as a fund of last resort.
The Legal Services Board has noted that we take a ‘consistent and risk-based approach’, are able to take ‘targeted action depending on the risk posed’ and ‘allow practitioners to be innovative in the way they deliver their products’. Three-quarters of CLC Lawyers say that regulation by the CLC provides value for money and supports innovation and growth in their businesses and that being regulated by the CLC is either ‘extremely’ or ‘mostly’ beneficial to their businesses.
The CLC’s current transparency regime
Our action plan contains details of our current activity, which is summarised here for ease.
Price and service
We require firms to give their clients full and accurate estimates, including details of any referral fee that may be paid before accepting instruction. Firms are also required to set out their terms and conditions ahead of instruction.
Regulatory status and redress
Firms are required to show that they are regulated by the CLC on their websites, printed materials and letterhead.
Our online register provides full details of regulated firms and individuals which clients and others can use to check their regulatory status. Details of regulatory actions taken against firms and individuals are also published on our website in accordance with our Publication Policy.
In early 2017 we launched a secure badge scheme for the websites of CLC-regulated firms. This gives consumers added assurance about the status of CLC firms and, by linking to the CLC’s site, provides an additional channel for us to engage with consumers.
Firms are required to signpost the CLC and LeO for conduct and service complaints respectively. They are also required to tell clients about their entitlement to make a claim on the Compensation Fund administered by the CLC.
Use of independent feedback platforms
We encourage use of feedback platforms and provide support and advice to firms using those tools.
Helping consumers navigate legal services
The CLC contributes to funding of the Legal Choices website and is on the editorial board. We also provide information for consumers about conveyancing and probate services through our own website.
Data for intermediaries
Since 2015 we have made available basic data about CLC firms in a usable format for intermediaries such as comparison websites. The spreadsheet contains the names, office addresses, contact points and the unique identification numbers of CLC firms. It is updated quarterly and published on our website. http://clc-uk.org/Updates/Data-for-Comparison-Websites.aspx
Developing and delivering the CLC’s CMA Remedies Action Plan
The CLC’s Action Plan has been developed in close cooperation with the other front line regulators through the Remedies Programme Implementation Group that is chaired by the Chief Executive of the CLC, Sheila Kumar. We are very grateful to the CMA and LSB for making time available for some very constructive discussions that have helped us shape this Action Plan.
Our Action Plan has also been informed by sessions at the CLC’s Managers Conference in January 2017 and sessions at Society of Licensed Conveyancers Roadshows around England in May. The CMA’s recommendations were also reviewed in discussions with small groups of representatives of CLC-regulated firms across England and Wales in February 2017.
We ran a survey for three months from December 2016 to gather initial views on a range of possible approaches to the provision of price and service information in ways that could inform consumer choice better.
The CLC ran a full consultation on its detailed proposals in the autumn of 2017 with a view to implementing the Action Plan through our business plan for 2018 and beyond and our response to the consultation can be found here. This path has been taken account of as the CLC has developed its new strategy for 2018-2022 and is fully integrated into that strategy.
