Legal services regulation reform: consultation analysis

Part 2(C) Regulatory Committees

Introduction

The consultation document set out how the current Regulatory Committees accountable to the law Society of Scotland operate. It was noted that under Option 1 (the Roberton Model), the existing Regulatory Committee functions would be absorbed into the new independent regulator, however, the document set out details of how these would operate under Options 2 and 3 (the Market Regulator Model and the Enhanced Accountability and Transparency Model).

Feedback was sought on the use of Regulatory Committees, as well as views on whether statute should ensure they are suitably resourced and whether they should be subject to Freedom of Information legislation.

Question 18

Q18. To what extent do you agree or disagree that regulatory committees, as described in the consultation, should be incorporated into any future regulatory framework?

Base: 85

Of those who answered the closed element of this question, around two thirds (67%, n=57) agreed that regulatory committees should be incorporated into any future regulatory framework.

As with other questions, however, there appeared to be some overlap in responses given by those who 'agreed' and 'disagreed', with respondents from both cohorts simply noting that they viewed the existing model as adequate (with the regulatory committee of the Law Society of Scotland functioning well) and/or that they would not wish to see any change introduced. Some strongly resisted any 'new' committees on this basis:

"Faculty strongly disagrees that regulatory committees, as described above, should be incorporated into any future regulatory framework… Faculty's position has long been that there is no justification for the imposition of additional layers of regulatory complexity, with attendant, and unnecessary, bureaucracy and cost… Given that the creation of an independent Regulatory Committee will entail additional complexity, bureaucracy and cost, it is a proposal with which Faculty strongly disagrees." (Professional Body, Faculty of Advocates)

Several others simply commented that regulatory committees, as described in the consultation, should be incorporated into any future regulatory framework (regardless of the chosen model), to provide necessary oversight and assist with openness, transparency and fairness (again mirroring the current position which was seen by several as not being flawed):

"We strongly agree that a regulatory committee should be embedded within the regulatory and statutory framework as is currently the case with the Society's Regulatory Committee under the provision of the 1980 Act." (Organisation, Professional Body, Law Society of Scotland)

Most of those who disagreed did so on the basis that they preferred Option 1 set out in the consultation:

"We do not consider that any form of internal separation, as set out in options 2 and 3, would be able to deliver full independence because a regulatory committee that sits within a body that also carries out representative functions cannot alone resolve the intrinsic conflict of interest between representative and regulatory functions. As such, we fully support the proposals under Option 1, the Roberton Model... Full independence of the representative and regulatory functions would minimise any risk of conflict of interest, cement public trust and facilitate more transparent and effective engagement on regulatory matters." (Consumer Organisation, Public Body/Sector)

Some who disagreed also commented, however, that if Options 2 or 3 from the consultation were taken forward then such committees would be essential:

"…if model 2 or 3 is preferred, then we believe it is vital that it is independent regulatory committees, as described in the consultation paper, who are responsible for any regulatory activity discharged by the professional bodies. This ensures greater independence and accountability." (Consumer Organisation, Public Body/Sector)

Other comments made by just one or two respondents each included that:

• The statute should require publication of a clear scheme indicating how the independence of the regulatory committee is supported through governance, budget, staffing, and decision making, in order to be transparent to all;
• Any regulatory model should not become too cumbersome as a more complex design would likely require further adjustment in the future, as its shortcomings become clear; and
• Updating the existing regulatory model rather than replacing it may be more appropriate.

A small number of respondents expressed views that they did not welcome any of the three models for independent regulatory committees to be accountable to the Scottish Parliament, as this was seen as inherently undermining independence:

"A system in which the legal profession is answerable to Parliament is inherently against independence. Political regulation is simply not appropriate under any circumstances. There is no obvious benefit to the legal profession being accountable to the legislature; it is a wholly disproportionate and inappropriate interference with the separation of powers. No good reason has been given for removing the power of the court to regulate the legal profession." (Organisation, Professional Body for the Legal Profession)

Again, a small number of respondents suggested that the question lacked specification and that there was insufficient detail in the consultation to allow them to provide a meaningful response. They urged greater detail around what was intended and further consultation on this point.

Question 19

Q19. To what extent do you agree or disagree that regulators should be required by statute to ensure that Regulatory Committees are suitably resourced, with a certain quota of persons being exclusively ring-fenced for dealing with regulation?

Base: 81

Of those who provided a rating, 60% (n=49) generally agreed that regulators should be required by statute to ensure that Regulatory Committees are suitably resourced, with a certain quota of persons being exclusively ring-fenced for dealing with regulation. However, a significant minority (40%, n=32) disagreed with this.

A large number of respondents simply stated that it was self-evident that all regulatory committees should always be sufficiently resourced to allow them to run effectively and efficiently. Whether 'ring-fencing' was required to achieve this was, however, disputed with some viewing this as unnecessarily prescriptive:

"There should be a duty to suitably resource the committees, but it may not be necessary to have exclusive ring-fencing of persons to deal with regulation." (Organisation, Third Sector Legal Profession)

Whilst several did not like the notion of 'ring-fencing' (or did not feel the term or intention had been clearly enough specified), there was consensus around ensuring that enough staff are employed to effectively support the policy and administrative work of the regulatory committees, along with reassurances that staff would not be diverted or "pulled away" into alternative areas of other work. Even among those who did not support regulatory committees, there were some who suggested that, if they did form part of the regulatory framework, they should be suitably resourced and legally and structurally ring-fenced to provide a meaningful contribution and operate independently:

"…in order to operate independently, they must be suitably resourced. In order to discharge their regulatory duties, they will, at times, have priorities which are not shared by the representative body. They must be able to discharge their duties, in line with their statutory objectives, even when the representative body does not share their priorities. To do that, they need to have dedicated resources they can deploy at will." (Consumer Organisation, Public Body/Sector)

The main sentiment expressed by those who did not agree with this proposal were that more information was required to explain if/why such ring-fencing was necessary, and exactly what its bounds would be (including clearly setting out if/ how the principle would apply to, and impact on, staff at different levels and carrying out multiple different roles):

"To move in this direction there would need to be evidence of a problem." (Individual)

"The suggestion to ring-fence persons does not reflect the reality that many colleagues perform work related functions that cut across both the regulation and support roles of the Society (for example, IT and HR colleagues). If staff were to be ring-fenced, this may require additional resource and associated cost. Ring-fencing resource would also reduce the benefits and holistic approach of professional body regulation. By reducing contact between regulatory and other staff, sector expertise and insight would be lost and mutual trust between regulator and regulated eroded." (Organisation, Professional Body, Law Society of Scotland)

Other concerns among those who did not agree with ring-fencing included that this may drive up costs for the profession, may be operationally difficult to implement, and may be contrary to the intended spirit of the proposed new regulatory approach, i.e. it would be counter to "flexible and permissive legislation" and may obstruct "a more proactive and proportionate approach to regulation". Having this provision enacted by statute was seen as inflexible.

Other more general comments included that that ring-fencing may demonstrate publicly the significance of a regulatory committee and its independence, that it would be preferable to have a combination of professionally qualified and lay members on committees to ensure appropriate checks and balances and that any quotas should be proportionate to the size of the organisation:

"Without this requirement, there could be a concern that regulatory matters were not given sufficient priority leading to a lack of confidence in the process. We would suggest, however, that the quota should be proportionate to the size of the organisation." (Organisation, Professional Body for the Legal Profession)

Again, some respondents were unsure how to interpret the question or felt unequipped to respond, and one respondent suggested that the question was disingenuous, and should be split to ask separately about availability of resourcing and the necessity of ring-fencing. In the same vein, another indicated that a more appropriate response option would have been 'neither agree nor disagree':

"It goes without saying that committees should be properly resourced, but we question if statutory intervention is necessary. We don't have the knowledge to comment on the quota part of the question." (Organisation, Legal Services Provider)

Question 20

Q20. To what extent do you agree or disagree that regulatory functions of Regulatory Committees should be subject to Freedom of Information legislation or requests?

Base: 88

Two thirds (66%, n=58) agreed that the regulatory functions of Regulatory Committees should be subject to Freedom of Information (FOI) legislation or requests, compared to 34% (n=30) who disagreed.

Among those who agreed with this proposal, the main views expressed were that all matters of public interest and all bodies discharging statutory duties should be transparent and open in order to engender public confidence and trust. Others supported the proposal on the basis that it would provide an added layer of security to the regulatory process. A view was also put forward that it would not make sense for some parts of the regulatory system to be subject to lesser statutory duties than others, since all regulation is conducted in the public interest.

The main caveat to support was that suitable safeguards (and opportunities for redaction) would need to be in place to protect any individuals and particularly any sensitive information involved, i.e. a need for transparency without releasing sensitive information. Protection for vulnerable adults involved in the system was cited as an example of where FOI exemptions may be appropriate:

"This would maintain confidence in the regulatory functions of Regulatory Committees, however, it would need safeguards to prevent any inappropriate abuse of the process." (Organisation, Professional Body for the Legal Profession)

Some also raised concerns that the FOI process may add to the financial and administrative burden of committees, and that any increase may be disproportionate to the benefits gained (i.e. being subject to FOI may be more likely to increase cost and administration than increase transparency and scrutiny).

Among those who did not agree with the proposal, the main view was that this was not in line with normal practice for other non-public regulators and that Regulatory Committees would not be defined as 'public authorities'. Other arguments against the proposal included that much of the information that would come before committees was highly confidential/sensitive in nature and that there was potential for FOIs to prejudice committees from fulfilling their roles/inhibit decision making:

"Much of the work of the Regulatory Committee and its sub-committees would be subject to exemption as sharing this information would prejudice, prevent or seriously impair the committee from fulfilling its public interest role." (Organisation, Professional Body, Law Society of Scotland)

Some who disagreed again did so on the basis of the likely costs/burdens it may incur:

"…bringing such an independent Regulatory Committee within the scope of the Freedom of Information regime would add even greater costs to an already disproportionate proposal. Faculty does not believe any public interest would outweigh the burden that including such a Committee within the FOI regime would entail." (Organisation, Professional Body, Faculty of Advocates)

"…the reality is that very little could be provided in any case on request and the costs and resource that would be required to process these requests would be disproportionate." (Organisation, Professional Body, Law Society of Scotland)

Three alternative suggestions were made to help uphold the required transparency, these being that:

• General FOI should not apply but that the complainer and complainant should both be entitled to full disclosure of any information from those committees relevant to them;
• Consideration could be given to a requirement for Regulatory Committees' annual reports to be laid before the Scottish Parliament; and
• Consideration might be given to an obligation to publish the papers and minutes of the Regulatory Committee's meetings.

Two respondents explained that they were 'unsure' with regards to this proposal and a small number again questioned the rational and evidence underpinning the proposal.