ICAEW's consumer engagement strategy
Find out more about ICAEW's commitment to improving access to legal services and increasing competition in the sector.
In January 2016 the Competition and Markets Authority launched a market study into legal services to see if they are working well for individual consumers and small businesses and published its final report1 on 15 December 2016 which concluded that competition in the legal services sector for individuals and small businesses was not working well. The CMA’s main concern was that a lack of information weakens the ability of consumers to drive competition through making informed purchasing decisions.
The Competition and Markets Authority report
The Competition and Markets Authority (CMA) reported that only 29% of consumers sought formal advice for their legal problems, which they blame largely on the information deficit problem in the legal services sector. There is a common misconception about the ways legal service providers can help with a problem, and how much it will cost. This is unsurprising as currently only 17% of firms publish their prices online2.
The CMA also reported that consumers’ limited knowledge and awareness of legal services was a key barrier to engagement and, for those that did seek legal advice, ‘almost half (45%) of consumers had no idea what cost would be involved in their legal work before they made direct contact with a legal services provider’3. Consequently, in order to make any meaningful comparison of pricing and service provision, consumers would have had to arrange face to face meetings with multiple providers. This not only discouraged consumers from seeking help, but added to consumer wariness of the profession as it exacerbated the perception of inaccessibility.
Finally, with regard to regulation, the CMA research found that ‘the majority of consumers were unaware of the regulatory status of their legal services provider’ and that most ‘individual consumers assumed that their legal services provider was regulated and had not checked their regulatory status before engaging them’4. This is potentially very damaging as engaging with an unregulated provider can leave consumers vulnerable to malpractice with no means of redress.
The CMA thus concluded that, currently, consumers experience ‘substantial detriment’ when accessing services due to the lack of transparency of information provided. It therefore proposed remedies by way of recommendations that it believed could lead to significant long-term benefits for consumers, including improving access to legal services for less well-off consumers.
The CMA recommended that the frontline legal regulators should develop action plans designed to help consumers by increasing transparency in the market. In addition, the CMA made specific recommendations to the Legal Services Board that it:
- Monitor and engage with the frontline regulators on their progress in implementing the CMA recommendations
- Report publicly at appropriate intervals, on the sufficiency of action plans published by regulators individually and collectively and the progress in delivering those action plans
- Take appropriate action where regulators failed to address information gaps.
Marketing needs in the 21st century
Separate feedback from our firms on advice enquiries and inspection visits has indicated that some firms are struggling to position probate and other services in the market place as a result of technical change and change in customer base. Separate advice in the marketing your probate services section of our website provides wider material to assist this, but the move to transparency and service and price disclosure are essential parts of the development of a market strategy, making a firm more accessible to the consumer. The regulatory requirements of the LSB and the CMA put to one side, this initiative is still highly relevant for firms as a means of promoting their legal services in the marketplace.1 https://assets.publishing.service.gov.uk/media/5887374d40f0b6593700001a/legal-services-market-study-final-report.pdf