Legal regulators to appoint small business champions

In the economic climate of Britain today, it is difficult to walk down your local high street and avoid seeing boarded up premises that used to house a thriving businesses. And amongst these outcasts are many former high street law firms.

Numerous small businesses are currently treading water in order to keep themselves afloat. In recognition of this, recent moves have been made to implement change. This change seeks to ease pressure on small businesses when regulatory decisions affect their operations. This has resulted in the Government’s Department for Business and Innovation Skills (BIS) publishing a consultation paper titled ‘Small Business and Appeals Champions and Non-Economic Regulators’.

In the foreword, the minister for state of business Michael Fallon wrote that “poor decisions by regulators stood firm due to the fact that businesses do not know how to challenge them, or because challenging them is too expensive or time consuming”. It seems to be a justifiable comment. Often, simply scanning the front pages of the newspapers at the local newsagents show the decline in numbers of small businesses. With stories like these casting light onto the current condition of small businesses, many are either financially incapable of challenging regulatory decisions, or unaware of this possibility altogether.

The consultation paper calls for appeals champions to scrutinise how appeals were handled and also make recommendations on improvements. The champions would have no role or power in intervening appeals however.

The legal profession is an example of a sector whose small firms would be affected by any future change to regulatory appeals. In response to the publication of the report, the Chief Executive of the Legal Services Board (LSB) Chris Kenny has stated that champions should be appointed to the smaller regulators and not the LSB.

The LSB came into fruition following the Legal Services Act 2007 and oversees both the Solicitors Regulation Authority (SRA) and the Bar Standards Board (BSB) amongst others. It is essentially an umbrella covering the entirety of the legal sector and a powerhouse regulator.

With this information in hand, it is easy to agree with Mr Kenny.

The pinnacle aim for the formation of an Appeals Champion is to ensure that effective action is taken on behalf of small businesses, but this ideal would not be plausible if champions were to go to the LSB. Take for example an appeal from a solicitor’s firm.

Firstly, the LSB does not directly regulate the firm’s practitioners, but the SRA does. So surely, by reporting to the SRA the process would be more streamlined? Secondly, the LSB is a powerhouse regulator, so the process of getting an appeal seen to would be long-winded and overly complex. This waste of time will also add up to a more expensive bill in the end.

Therefore, the logical path to appease both the Government and the LSB is to appoint champions to the smaller regulators. It is the firms that should be put first and allowed to float rather than sink. An appeals process external from the SRA would undermine this priority. It would lead to increased allocation of costs and resources, when any improvement to the appeals process should instead aim to help rather than hinder firms bringing a claim.