Publication - Consultation paper

Legal services regulation reform: consultation

Published: 1 October 2021
Directorate: Justice Directorate
Part of: Law and order
ISBN: 9781802014075

A consultation based on recommendations from an independent review of the regulation of legal services will run until 24 December. It will seek views on options for change designed to lead to improvements to the way legal services are regulated, and the legal complaints system operates in Scotland.

Supporting documents

Part 4: Complaints and Redress

A. Complaints Principles and Objectives

The Roberton report advised that there a clear unanimity on the view of the legal complaints and redress process. It found a strongly held view that the current complaints system is not fit for purpose. Reflecting on the review's call for evidence the report set out:

"There was agreement amongst stakeholders that there is an urgent need for clarity and reform. The responses reflect a feeling of a lack of transparency, for some consumers a lack of power and a lack of trust and accountability of those bodies involved in dealing with complaints."

The Scottish Legal Complaints Commission was created in 2008 to provide an independent gateway for all complaints about solicitors, advocates and commercial attorneys. Its creation was itself a response to criticism that the complaints system was not consumer friendly enough, resulting from The Scottish Parliament's Justice 1 Committee's Report in 2002 on Regulation of the Legal Profession Inquiry. It is also important to recognise complaints processes as a form of human rights remedy.

The Roberton report expressed a view that there is too much detail in legislation on the processes in which the Scottish Legal Complaints Commission is required to follow. This has limited the ability of the SLCC to respond to complaints proportionally, and that the legislation restricts opportunities to make significant improvements to the process. It made the recommendation:

The legislation should require the regulator to develop a complaints handling process for those it regulates. This process should be based on well-established consumer principles and provide appropriate and speedy resolution for all parties. This should include the option of early dispute resolution learning from the Scottish Legal Complaints Commission's positive experience of mediation services.

The Roberton report sets out:

"Too much of the Scottish budget for regulation of legal services is given over to complaints. For example, the Scottish Legal Complaints Commission (budget reports) have spent £1.382 million between 2009 and 2017 on appeals which is very high given the small constituency covered by the complaints system of around 12,000 professionals. To put this into perspective in 2017 alone the Scottish Legal Complaints Commission spent £166,000 on appeals. The equivalent figure in England and Wales was £30,000 to cover 200,000 legal professionals."

In addition the report sets out that a quality improvement approach should be at the foundation of any new legal services complaints system. Discussion in this area also support that flexibility and proportionality as key, whilst taking into account the better regulation and consumer principles.

The complaints system under model Option 1 is clearly set out in the Roberton report, where the complaints system would be adapted to the regulatory framework, and so there is scope to consider what key components it should comprise depending on the model ultimately taken forward. There is much read-across from the proposed regulatory principles and objectives set out in Part 1 of this consultation paper that could also underpin the principles and objectives of any future complaints system. However these would be influenced by the regulatory framework in place, and the number of organisations involved in the complaints process. The following sets out key aspects that would likely apply regardless of the regulatory model option chosen:

Uphold the rule of law and the proper administration of justice.

Provide access to justice.

Operate for the public interests (offer accountability in protecting the public and consumer interest).

Have a high degree of public confidence and trust, embedding a modern culture of prevention, continuous quality improvement, quality assurance and compliance. Promote improvements, use information and evidence gathered to identify sector-wide issues.

Work collaboratively with consumer and legal professional bodies as appropriate. Encourage companies to act on complaints data. Publish guidance, and provide training to help firms and the sector improve complaint handling. Provide support for 1^st tier complaints management (be able to provide guidance on handling).

Embed the better regulation and consumer principles throughout its areas of responsibility.

Accessible, remove barriers to people seeking the redress they are entitled to. 3^rd party complaints would be permitted.

Effective, able to resolve consumer complaints and have adequate enforcement powers to hold providers to account when things go wrong.

Transparent, publish a range of information including decision criteria, complaints data and outcomes of cases. Be able to advise on trends and issues emerging from 1s tier complaints.

Have an increased focus on independence and accountability. Provide an impartial service to both consumers and providers. Accountable, to a competent authority or a regulator. Undertake periodic reviews on the effectiveness of ADR schemes and publish the results.

Enable early consensual resolution, which would include mediation as a key process which should be built upon.

Provide prompt resolution, proportionate to the complexity of the complaint.

The levy for entities should be on a financial turnover basis.

A simplified process of appeals, but whilst adhering to ECHR. (There would be no appeal of decisions on service issues outwith the complaints body, in line with other professional appeal processes. There would be no appeal in terms of the amount of compensation awarded, again similar to other professions.)

Depending of the model option followed, additional aspects may apply:

There should be a single gateway and investigation for complaints.

There should be a Memorandum of Understanding between the complaints body and professional bodies on cross referring cases.

The presence of conduct issues should not delay or complicate the process or disadvantage the outcome for consumers with service complaints.

B. Redress

As stated above, the Roberton report found that there is too much detail in legislation on the processes that the Scottish Legal Complaints Commission must follow. This has limited the ability of the SLCC to respond to a complaint proportionally. It also found that the legislation restricts opportunity to make any significant improvement to the complaints process, and that from a consumer perspective, a complaint is a complaint and may have elements of both service and conduct. The report set out that it is unhelpful to be required to make such a distinction early in the complaints process. In many jurisdictions, a complaint is subject to a single investigation and any conduct concerns are directed through the relevant process and, if necessary, investigated in parallel. The report recommended:

The regulator should be required to develop appropriate sanctions and establish rules for proportionate compensation.

The regulator should be required to develop a simple process of appeals which are only available at the end of the complaints process.

In terms of this reform, the future complaints process is, to a great extent, dependent on the regulatory model option taken forward. However the principles and objectives above follow from discussions with stakeholders where there is agreement on many but perhaps not all of these points. They are aimed at reducing the complexity and cost of the complaints system to the benefit of the legal profession and consumers.

The intention of embedding a modern culture of prevention and continuous quality improvement in the complaints process is to seek to reduce the number of complaints raised. In seeking to resolve complaints promptly, and in proportion to the complexity of the facts and circumstances of the case, the aim would be to reduce complexity whilst also embedding the Better Regulation and Consumer Principles throughout the process.

Removing the ability to (a) appeal a final decision of the complaints body, and (b) the amount of the compensation award, whilst also retaining the ability to appeal complaints of misconduct to the Court of Session, may have the effect of reducing a costly aspect of the current legal complaints system whilst ensuring compliance with the rights protected by the European Convention on Human Rights.

C. Discipline Tribunal

This reform presents the opportunity to consider the positioning of the Disciplinary Tribunals within the regulatory framework. The Roberton report recommended:

The regulator should establish an independent arm's length tribunal dealing with conduct cases referred by the regulator. This should cover all legal professional individuals and entities providing legal services.

Taking into account the view of the Roberton report that the landscape is cluttered, the Tribunals might benefit from being merged into one Tribunal, and incorporated into the Scottish Courts and Tribunals Service. This would serve to promote transparency in regard to this aspect of complaints handling and provide for an enhanced mechanism for the collection of financial penalties.

In addition, the maximum fine amount that the SSDT can impose is limited to £10,000^[55]. This potential reform provides an opportunity to assess the sanctions currently available to the Tribunals and whether these should be amended.

D. Complaints Budget

The 2007 Act sets out that the SLCC must lay an annual budget before the Scottish Parliament in April each year, following consultation with each of the relevant professional organisations and their members. The Act requires that the budget must be reasonably sufficient to cover expenditure for the year. The SLCC proposed no increase in levies for 2021-22 largely as a result of the Covid-19 pandemic.

The SLCC operates independently of both the Scottish Government and the legal profession and, as such, neither have the powers to interfere with the operation of the SLCC. It is for the SLCC to determine both the annual general levy and the complaints levy to be paid by the legal profession, in accordance with the 2007 Act.

The cost of the complaints system has been a source of tension with the legal profession. There is potential in this period of reform to incorporate increased accountability in terms of the scrutiny of the budget for dealing with legal complaints going forward. This is an aspect that some in the legal profession have already called for^[56]. The budget could be subject to the approval of the Scottish Parliament.

Question 47

To what extent do you agree or disagree that there should be a single gateway for all legal complaints?

Strongly agree
Mostly agree
Mostly disagree
Strongly disagree