The government said on Thursday that it will carry out a comprehensive review of legal services regulation in England and Wales, after accepting all ten recommendations of the independent review of the Legal Services Board.
The Ministry of Justice said in its response that the review will consider “whether it remains fit for purpose in a changing legal services market”.
It will be done with consumers, regulators and other stakeholders in the legal sector.
Recommendation 1B of the Lloyd review asked the MoJ to look at what activity should sit within or outside the current regulatory perimeters, with a new framework developed by 2029.
The government accepted the substance of that recommendation but said it cannot fully commit to the proposed timeline at this stage.
It said the scale and complexity of the work will need a full and robust review process.
The government will develop the scope and approach of the longer-term review, and said immediate improvements are not to be delayed in anticipation of future reform.
Sarah Sackman KC MP, minister of state for courts and legal services, wrote in the foreword: “The government accepts all the review’s recommendations and supports a reset in how the regulatory system operates.”
Two principles will guide the work. The first is that consumer protection must be at the heart of regulation, covering the prevention of harm, effective redress and access to appropriate legal services.
The second is that the independence of legal services regulation from government must be preserved. The LSB must stay independent in its regulatory decision-making, but with clear accountability for performance, outcomes and value for money.
Which bodies must act on the recommendations
Recommendations 1B and 8 are directed to the MoJ. Recommendation 8 concerns transparency in the oversight of the LSB, and the MoJ said it will review its own assurance arrangements.
Recommendations 5 and 6 require the MoJ to act alongside the LSB and the frontline regulators. They cover a shared framework for market and risk management and a refocusing of policy activity on the oversight role.
Recommendations 1A, 2, 3, 4, 7, 9 and 10 are primarily for the LSB, which the government expects to act promptly and to set out how it will take them forward. The government also expects the frontline regulators to play their part.
The government said it has already begun implementation. Initial work includes strengthening transparency and accountability arrangements and agreeing with the LSB and frontline regulators a shared approach to risk management.
Background to the Lloyd review
Sackman commissioned the review on 10 February, led by Richard Lloyd, chair of the Independent Parliamentary Standards Authority. It was published on 13 July.
The LSB was last reviewed in 2017. The response cites market consolidation, major law firm failures, the growth of artificial intelligence and lawtech, and concerns over professional ethics, consumer protection and access to justice as changes since then.
The review found that the LSB has lacked strategic clarity and has not always exercised its oversight role as effectively as it could. It also found that the wider framework is characterised by duplication, complexity and unclear responsibilities.
The response says the Legal Services Act 2007 already gives the LSB scope to set clearer priorities and improve how the existing framework operates.
LSB chair Monisha Shah said on publication of the review: “Regulatory failures have resulted in significant consumer detriment. We accept our responsibility in the failure of the system to protect the interests of consumers.”
She said the LSB plans a consultation in the autumn on a focused three-year strategy to replace its current 10-year sector-wide strategy.
Planned changes also include separating the LSB’s enforcement and oversight function from its regulatory policy and engagement work.
The annex to the response sets an end-of-2026 timescale for the LSB on recommendation 4, which concerns its convening role and the Chief Executives’ Forum, and the government agrees it.