A study into whether competition in the legal services market in Scotland would be improved by the proposals in the Roberton review is to be carried out for the Scottish Government by the Competition & Markets Authority.
The CMA’s first Scotland-specific project since the expansion of its Edinburgh office last year will support the Scottish Government’s response to the review.
In its headline recommendation the review, which reported last October, proposed that a single independent body be set up to regulate the legal profession, set standards and handle complaints, taking over the regulatory functions of the Law Society of Scotland and Faculty of Advocates among others – a proposal strongly opposed by the professional bodies.
Building on work already done as part of the CMA market study into the supply of legal services in England & Wales, its new project will examine whether there is evidence of a lack of competition among legal services providers in Scotland, as was the case in England & Wales.
The research will also focus on:
- the benefits of independent regulation of legal services in Scotland, and whether the current arrangement by which the bodies regulating the professions also represent and lobby for them dampens competition; and
- the impact of the current legal services regulatory framework in Scotland on competition, particularly on innovation and the entry of new business models to the market.
In its own response to the review, published with the announcement of its research, the CMA welcomes the report, including the recommendation that the new regulatory model should be "principles-based, sustainable and flexible", embedding the Better Regulation Principles, with the public and consumer interest at its heart.
In the CMA's view, "an optimal regulatory framework that met the better regulation principles" would have the following characteristics:
- A clear overall objective, with a clear primary objective to maximise benefits to consumers and society as a whole;
- Independent: regulation should operate independently from government and the legal professions.
- Targeted: regulation needs to allow for different activities to be regulated in different ways if they pose different risks. It should be evidence-based and focused primarily on the activities that give rise to the most serious risks.
- Flexible: the framework should be sufficiently flexible to adapt to market changes, including changes in the degree of risk associated with a legal activity, technological changes, the emergence of new business models and change in consumers’ characteristics or behaviour. Regulation should be systematically reviewed, and modified or eliminated if no longer necessary or effective.
- Proportionate: regulation should be introduced only when its benefits outweigh the costs imposed on providers and regulators, and these benefits are likely to be passed on to consumers. In addition, costs should be identified and minimised.
- Clear in scope and easily enforceable.
- Consistent: regulation should be consistent across the legal services sector, so that activities carrying the same level of risk should be regulated in a similar way.
"We consider that independence of a regulator from the providers that it regulates is a key principle for any regulatory framework for securing the public interest", the CMA states.
Click here to view the full response. The CMA intends to publish the findings of its research in early 2020.