CMA demands greater transparency from legal service providers

Having undertaken a year-long study into the legal services sector, the Competition and Markets Authority (CMA) has concluded that competition in legal services for both small businesses and individual consumers is not working well. In particular, there is not enough information available on price, quality and service to help choose the best option.

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. The changes have been drawn up after discussions with key stakeholders, including the eight frontline legal regulators, and will be overseen by the Legal Services Board, which will report regularly on progress. These include:

• A requirement on providers to display information on price, service, redress and regulatory status to help potential customers. This would include publishing pricing information for particular services online (only 17% of firms do so at present).
• Revamping and promoting the existing Legal Choices website to be a starting point for customers needing help, information and guidance on how to navigate the market and purchase services.
• Facilitating the development of comparison sites and other intermediaries to allow customers to compare providers in one place by making data already collected by regulators available. At present only 22% of people compare the services on offer before appointing a lawyer.
• Encouraging legal service providers to engage with feedback and review platforms to ensure that customers can benefit from the experience of others before making their choice.
• Recommending that the Ministry of Justice looks at whether to extend protection from existing redress schemes to customers using “unauthorised” providers.

As part of its study, the CMA considered the impact of legal services regulation on competition and 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.