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CMA demands greater transparency from legal service providers

Competition in legal services is ‘not working well’

After the completion of a year-long study into the legal services sector, the Competition and Markets Authority (CMA) has concluded that competition in legal services for individual consumers, including family law, is not working well. In particular, there is not enough information available on price, quality and service to help those who need legal support choose the best option.

Obtaining the right service at good value can therefore be challenging as consumers can face wide variations in the cost of similar services. They can also struggle to find enough information to help them identify their legal need in the first place.

In its report, the CMA notes the Legal Service Board's finding that the price charged by firms for a specifically defined complex divorce scenario with a dispute over assets might vary from around £1,260 to £3,000.

The CMA has set out a package of measures which challenges providers and regulators to help customers better navigate the market and get value for money. These changes have been drawn up after discussions with key stakeholders, including legal regulators, and will be overseen by the Legal Services Board, which will report regularly on progress. These include:

In addition, as part of the study, the CMA considered the impact of legal services regulation on competition. The CMA found that whilst the current system is not a major barrier, it may not be sustainable in the long term. In particular, the framework is not sufficiently flexible to apply proportionate risk-based regulation which reflects differences across legal services which could harm competition.

The CMA is therefore also recommending that the Ministry of Justice reviews the current framework to make it more flexible and targeted at protecting consumers in areas where it is most needed.

The CMA has recommended that frontline regulators work with consumer and small business groups – including the Legal Services Consumer Panel, Citizens Advice, Which?, and the Federation of Small Businesses – to deliver this improved transparency on price and quality as well as clearer guidance on buying legal services.

The CMA has pledged to re-evaluate progress and the impact of the recommendations in three years' time and intervene further if progress is not satisfactory.

For the report, click here.

15/12/16