A call from a consumer panel to introduce a central regime of financial protection has been rejected by the Legal Services Board.
The Legal Services Consumer Panel raised concerns regarding the current state of protective measures for clients, describing the existing compensation and insurance arrangements as “fragmented”.
However, this view was disputed by the Legal Services Board, who stated that the safeguards currently in place were adequate enough for them to be assured that “consumers are not being exposed to an unreasonable level of risk.”
The ongoing concerns voiced by the consumer panel were further aggravated by the increasingly different arrangements of regulators, which they believe could cause confusion for consumers.
During their review of the issue, however, the Board stated that allowing the differentiation between regulators enabled them to tailor rules to individual cases, helping them to ensure actions are proportionate.
In contrast, “simplifying the current system to a single set of minimum terms of insurance is unlikely to be proportionate.”
The Legal Services Board also pointed out the safeguard against regulators reducing protection arrangements; prior to any rule changes being made, the regulator must obtain the approval of the board.
Whilst it went on to state that no action was required at present, it said that this may change if additional evidence was brought to its attention, asking the panel to submit anything they thought may be relevant.
