LSB to review enforcement tools for tackling serious misconduct

The Legal Services Board (LSB) announced plans over the summer to review the enforcement and investigative tools available to legal services regulators when tackling wilful and serious misconduct.

This could include increasing financial penalties available to regulators, as well as enabling them to proactively gather information and share intelligence to help them detect and address misconduct.

The review was a response to the LSB’s long-held view that existing penalties may be insufficient to deter wilful and serious misconduct in some areas.

LSB chair Alan Kershaw said that, for some time, the oversight regulator has been concerned that a lack of effective fining powers among some regulators, particularly the Solicitors Regulation Authority (SRA), may “hamper their ability to tackle wilful and serious misconduct” and that the LSB was “anxious to ensure that regulators have the most effective tools available to identify and deal with such misconduct”.

In May last year, the LSB wrote to the then Lord Chancellor Dominic Raab, in relation to economic crime, setting out its support for the government to significantly increase the SRA’s fining powers. Through the Economic Crime and Transparency Act 2023, which recently became law, SRA will have unlimited fining powers in relation to economic crime, but the maximum penalty it can impose in relation to other misconduct remains at £25,000.

Under section 69 of the Legal Services Act 2007, the LSB has the power to recommend to the Lord Chancellor changes to the functions of legal services regulators, including in relation to the level of financial penalty that can be applied when misconduct has been identified and established. The LSB’s review, it said, would be “carried out with a view to framing, subject to statutory process and consultation, an appropriate recommendation”.

The LSB also has work underway to review regulators’ disciplinary and enforcement processes, following weaknesses identified through its annual regulatory performance assessments. It said it would “assess the progress made by regulators in addressing these weaknesses as it considers the case for strengthening the enforcement tools available to them”.