The Legal Services Consumer Panel (LSCP) has called for immediate action to overhaul a regulatory framework that is “fragmented, inconsistent and increasingly disconnected from the realities of a modern, technology-enabled legal market” and install a single independent regulator.
In a damning position paper published today, the independent arm of the Legal Services Board warns the regulatory framework for legal services in England and Wales is “structurally incapable of delivering the statutory objectives set out in the Legal Services Act 2007”.
The LSCP calls on both the Legal Services Board (LSB) and Ministry of Justice (MoJ) to take immediate action to unify regulation.
The LSB should use its powers in Sections 32 to 34 of the Legal Services Act 2007 to modify the regulatory arrangements across all eight regulators to align first tier complaints handling and disciplinary processes, the panel says, with a clear plan and timetable for moving towards a single, coherent scheme.
The MoJ should lead a wider review of the regulatory framework, the LSCP adds, with a new framework in place by 2029. The wider review should conclude with a single, independent regulator replacing the current eight bodies, with a regulatory perimeter drawn around risk rather than historical professional titles, a universal compensation scheme, and a technology ready mandate to govern AI in legal services.
“The current regulatory framework is no longer fit for purpose,” the position paper warns. “It cannot protect consumers consistently, cannot govern modern risks, and cannot meaningfully improve access to justice.”
The “unambiguous” evidence assessed by the LSCP in response to the MoJ’s public review of the LSB made it clear the current framework makes it “structurally impossible” to meet its eight regulatory objectives set out in the Legal Services Act 2007.
“The collapses of Axiom Ince (£60 million in missing client funds, 2023) and SSB Law (£200 million in consumer debts, 2024) exposed systemic failures by a single frontline regulator. The Mazur litigation, which began in the High Court in 2025 and required Court of Appeal intervention in 2026 to restore workable practice revealed something more fundamental: that the boundaries of the Legal Services Act 2007 are so poorly understood that the entire profession operated for years in uncertainty.
“When a reserved legal activity requires two rounds of litigation to define, the framework has failed. The fact that the courts had to resolve what Parliament and regulators had left ambiguous is itself the indictment.”
Complaints handling is “similarly fractured”, the LSCP notes, with an “artificial separation” between service complaints, handled by the Legal Ombudsman, and conduct complaints, dealt with by regulators, “a bureaucratic fiction that services institutions, not customers”.
“SSB Law collapsed in part because over 100 complaints were miscategorised and scattered across this divided landscape, allowing warning signs to go unheeded for five years,” the panel pointed out.
The eight approved regulators – the Solicitors Regulation Authority, the Bar Standards Board, the Council for Licensed Conveyancers, CILEx Regulation, the Intellectual Property Regulation Board, the Institute of Chartered Accountants in England and Wales, the Faculty Office, and the Costs Lawyer Standards Board – operate in “one incoherent system” which has direct costs for consumers, the LSCP warns.
“Regulatory competition… does not drive standards up. It risks a race to the bottom. The Council for Licensed Conveyancers has publicly advertised for firms to switch to its regulation, emphasising its ‘supportive’ approach. CILEx has pursued redelegation of its regulatory functions to the SRA, a process that has consumed regulatory bandwidth and remains unresolved.
“These are not the behaviours of a coherent regulatory system. They are the behaviours of a fragmented one competing with itself.”
The Mazur litigation is a case study in the consequences of an insufficiently clear, insufficiently co-ordinated and insufficiently governed framework, the panel continues.
“Eight regulators issued eight different guidance notes in response to the High Court judgment, with varying interpretations and different timelines. The Court of Appeal subsequently noted that supervision requirements are ‘a matter for the regulators’, precisely the outcome a coherent, unified framework should have delivered without two rounds of costly litigation.”
The panel directs stinging criticism towards the SRA for its handling of major failures. In its investigations of Axiom Ince, the SRA “missed clear warning signs, failed to verify client account balances, and inadequately managed the risks posed by the firm’s rapid acquisition strategy”, the LSCP said. And, despite having the funding, staff and powers to act, “It chose not to.”
The Council for Licensed Conveyancers has also been singled out for its handling of conditional selling and referral fees exposed in a BBC Panorama investigation. “The CLC launched a thematic review following the broadcast, acknowledging that the programme had raised ‘serious concerns’,” the panel notes.
“Its interim findings… confirmed that all twelve practices reviewed had referral arrangements in place, that record-keeping was inconsistent, and that there was a ‘potential regulator blindspot’ in how the CLC had supervised these arrangements.
“The CLC’s review was prompted by a television programme. It should have been prompted by the regulator itself.”
The panel also warns of the negative impact of technology on consumers, who encounter legal services through “automated document generators, AI-enabled triage tools, online platforms, and hybrid digital–human models that did not exist when the Legal Services Act 2007 was drafted.”
It points out: “There are currently no mandatory requirements for providers to disclose when AI is used in the delivery of legal services. No standards exist for testing or validating automated tools. No single body is responsible for cross-sector technology risk assessment. Eight regulators interpret technological risk through eight different lenses, with predictable inconsistency.”
The LSCP sets out 10 recommendations it says are the minimum required for a framework that is “coherent, modern and fit for the future”.
A single, independent regulator to replace the existing eight regulators: “The current architecture’s fragmentation is the root cause of consumer harm. Only structural consolidation can address it.”
Embed specialism within the unified structure: “Coherence does not require uniformity. It requires accountability.”
Redraw the regulatory perimeter around risk: This should include “AI-generated outputs, automated document services, platform-based triage, and hybrid digital-human models”.
Complete and extend the Regulatory Information Service: “A single regulator must complete and extend the RIS to cover all legal services operating in the market, with consistent data standards, unified complaint and disciplinary history, and a discoverability strategy grounded in real consumer behaviour.”
Abolish the service/conduct divide in complaints: “The artificial separation beween service complaints and conduct complaints must end…SSB Law must never be allowed to happen again.”
Establish a single, universal compensation scheme: “The current opacity, fragmentation and arbitrary variation in protection is indefensible.”
Mandate user-test transparency standards: “Requirements must be designed around real consumer behaviour and tested with real users.”
Build a technology-ready regulator: “Monitor outcomes for bias and consumer harm. The Panel has called explicitly for this strategy.”
Make access to justice an operational objective: “Access to justice must move from statutory aspiration to measurable obligation.”
Legislate for reform with a transitional programme body: “The cost of continued inaction, to consumers, to confidence, and to access to justice, exceeds the cost of reform.”
“The evidence has accumulated for over a decade,” the panel concludes in its position paper. “The moment for structural reform has arrived.”
Legal Service Consumer Panel Position Paper: A Regulatory Framework for the Future
