Modern and effective regulation
We planned to deliver modern and effective regulation through ensuring: robust education, training and admission standards; our regulation is fair, proportionate, risk-based and independent; our regulation promotes and protects the public interest and public trust; and our alternative business models provide opportunities for innovation and competition in the sector.
Key facts and figures
Projects 2022/23
| Action | Outcome | Complete/Not complete |
|---|---|---|
Licensed Providers |
Significant progress was made on the Licensed Provider project throughout the year. Our policies, processes, governance and systems were completed and ready for implementation, with one exception. Final approvals from Scottish Ministers and the Lord President were not obtained until the end of August 2023, resulting in a delay in finalising and publishing our Regulatory Scheme. From September 2023, we chose to pause the completion of the project to allocate resources to other priorities, including our annual practising certificate renewal process and the Regulation of Legal Services (Scotland) Bill. |
Not complete |
Reform complaints handling |
Throughout the year, we engaged extensively with the Scottish Government regarding legal services regulation reform, including reform to the statutory complaints process. In April 2023, the Regulation of Legal Services (Scotland) Bill was introduced, incorporating some of our requested changes to complaints processes. We continued our discussions with the Scottish Government on the Bill which is set to modernise and improve legal services regulation. The Bill is still in progress and that work will continue in 2024. We submitted two comprehensive responses to consultations by the Scottish Solicitors' Discipline Tribunal (SSDT) regarding Rules changes, as well as addressing a further SSDT consultation on expenses. In 2022/23 we implemented several improvements to our internal processes in relation to complaints. This included restructuring the Professional Conduct Team and creating a new Disciplinary Proceedings Manager role, which has been filled. We also created an overarching process map of the conduct complaints process and improved our template documents, letters, and guidance. We developed new guidance relating to common standards relevant to our work and drafting issues of complaint. Additionally, we fully implemented a simultaneous investigation process for hybrid complaints in partnership with the Scottish Legal Complaints Commission. Moreover, we created a more proportionate policy for reviewing and quality assurance work, planned for implementation in 2024. |
Not complete |
Proportionate and Risk-Based Regulation |
The Cashroom Manager Assessment was created and implemented, to provide additional assurance that cashroom managers possess a sufficient understanding of the Accounts Rules' requirements. Follow up steps are in place to address cases where cashroom managers are unable to complete the assessment successfully. This assessment is now a routine component of our financial compliance regime. We received over 80 AML attestations from firms, reflecting each firm's self-assessment of the adequacy of their AML policies, controls, and procedures. We carried out follow up testing with 16 of these firms, ensuring the accuracy of their attestations and providing further assurance. This new process significantly strengthens our approach to the AML supervision of practice units rated as low and medium risk. We implemented all necessary steps to ensure that new Accounts Rules were successfully approved, followed by effective implementation by the Financial Compliance Team and the profession. |
Complete |
Independent exercise of regulation by Regulatory Committee |
Due to the workload associated with the Regulation of Legal Services (Scotland) Bill and the Regulatory Committee's involvement in development of the Law Society's five-year strategy, we decided not to develop a new Regulatory Committee sub-strategy this year. We published a new Regulatory Committee remit. This new remit meant that no further changes were required for the regulatory sub-committee remits. |
Not complete |
Public trust / public interest |
Work on reviewing how best to regulate systemic issues in practice units was completed, with the Regulatory Committee agreeing to propose additional powers in the Regulation of Legal Services (Scotland) Bill during the second stage of the Bill. We considered implementing new rules regarding the general financial health of practice units within the systemic issues project and concluded that such rules would not be created at this point. The Regulation of Legal Services (Scotland) Bill includes provisions that will enable us to address general financial health issues in a proactive but proportionate manner. Throughout the year, we monitored the ongoing Post Office enquiry, keeping the Complaints and Oversight Sub-committee informed with updates. Additionally, our staff members attended relevant hearings pertaining to criminal convictions of Post Masters. This monitoring will continue into the next year. We submitted a response to the HM Treasury consultation regarding structural changes to the UK's AML supervisory regime. We maintain close communication with stakeholders and the government regarding the proposals. |
Complete |
Route to qualification review |
We consulted on updated PEAT 1 and PEAT 2 Outcomes, which have been published. Reforms to the Diploma in Legal Practice (DPLP) access have been embedded and will serve as a foundation for future developments. Skills Development Scotland did not have funding to take forward further collaboration on an apprenticeship route, with funding unlikely to be available in the near future. |
Complete |
Regulatory Committee annual report 2022/23
The Regulatory Committee has had another busy year executing and delivering the Law Society’s regulatory function and contributing to regulatory strategy and policy.
2023 saw several changes in the committee. In November 2022, the committee appointed William Braes (a current lay member of the committee) as its lay vice-convener, supporting the work and role of the committee’s convener, David Gordon. We also welcomed two new members to the committee over 2023: James Campbell joined in the first half of the year as a new solicitor member, with Donna O’Boyle joining later in the year as a lay member. The new members bring a wealth of knowledge and experience which will further enhance the committee's expertise and awareness of regulatory matters. The committee also agreed the appointment of Jacqui Low as its ex-officio representative member of the Society’s Finance Committee.
After collaborative and productive engagement with the Society’s Council over many months, the committee’s revised remit was agreed in August 2023. This was a significant and important piece of work. The revised remit provides greater clarity and certainty with regards to the committee’s independent regulatory function, ensuring that the committee continues to deliver a proactive and proportionate regulatory regime focused on the interests of consumers of legal services.
Consideration and discussion of the Regulation of Legal Services (Scotland) Bill featured, and continues to feature, heavily in the committee work programme.
The committee has welcomed many aspects of the Bill, which will introduce new forms of regulation over legal businesses and will provide a further strengthening of regulatory powers. In addition, the committee welcomed the intention to further enhance its independence in its delivery of the regulatory functions and is supportive of proposals to bring greater transparency and accountability of its performance.
The committee is closely following developments and is regularly updated on these by its representative members on the Society’s dedicated Legal Services Review Working Group, a joint group made up of members of the committee and the Society’s Council.
As the Bill progresses through its parliamentary passage, the committee looks forward to continued collaborative engagement with the Scottish Government and stakeholders.
With the assistance of its sub-committees and colleagues within the Executive, the committee has reviewed and approved three regulatory consultation responses in 2023. These include responding to:
- Scottish Solicitors’ Discipline Tribunal Rule changes;
- His Majesty’s Treasury consultation on the reform of the Anti-Money Laundering and Counter Terrorism Financing Supervisory Regime;
- and Scottish Legal Complaints Commission rule changes and its oversight powers.
Reflecting anti-money laundering (AML) regulatory requirements, the committee approved two information sharing agreements which set out the lawful basis for the exchange of information and intelligence data. These agreements, with HMRC and Police Scotland, allow the Society to share and receive important information in support of the Society’s AML Supervisory responsibilities and objectives.
In 2022, the committee established a working group to consider if there are any regulatory gaps within its current regulatory powers that may be detrimental to consumer interests. The group concluded its considerations and reported in mid-2023. The report presented several recommendations to further strengthen the regulation of legal services in Scotland and it was agreed that these be taken forward as part of the Society’s overall strategy and approach to the Regulation of Legal Services ( Scotland) Bill.
As the Society moves forward to open its doors to applications from businesses seeking to be a licensed legal services provider in Scotland, under the Legal Services (Scotland) Act 2010, the committee made several decisions in 2023 necessary to facilitate commencement. These have included approving delegation arrangements to sub-committees and Society staff and agreeing policies and processes relating to a regulatory complaints framework.
Throughout 2023, the committee has considered and made decisions in many regulatory matters, in addition to those mentioned elsewhere in this report. These have included:
- approval of a new process for dealing with small client account deficits under £20K which are identified by the Society’s Financial Compliance and the Client Protection Sub-committee and as an alternative, in appropriate circumstances, to seeking appointment of the Judicial Factor.
- approval of new Equality Guidance to support Practice Rule B1.15. This guidance has been developed to promote and raise the profession’s awareness and understanding of equality and diversity and to support compliance with Rule B1.15. This Rule promotes diversity and prohibits discriminatory behaviours in any professional dealings.
- endorsing the Society’s Climate Change Resolution.
The committee is lucky to have the benefit of over 100 volunteers across its many sub-committees, who all provide their time, experience and knowledge without financial reward and for the benefit of the profession and public - and all of whom contribute significantly to the committee’s regulatory work. The committee would like to take this opportunity to convey its thanks to all those volunteer members.
In 2023, the committee approved the appointment and reappointments of 16 sub-committee members. Notwithstanding the significant number of appointments, the committee is aware of the challenges faced by the sub-committees in maintaining their membership at quorate levels.
Scottish Solicitors’ Guarantee Fund annual report 2022/23
The Scottish Solicitors' Guarantee Fund exists to protect clients who have lost money because of the dishonesty of a solicitor or a member of their staff. The fund is paid for entirely by solicitor firms without the use of taxpayer money from government.
The fund was created by statute under S.43 of the Solicitors (Scotland) Act 1980. The Scottish Solicitors’ Guarantee Fund trades as the Client Protection Fund.
The Law Society of Scotland's Client Protection Sub-committee has delegated authority for all claims and investment decisions. It further delegates minor claims to the Director of Financial Compliance, with these decisions being sample checked by the sub-committee regularly.
Download the annual Guarantee Fund report and financial statements
Professional Conduct Complaints 2022/23
The Law Society investigates conduct complaints made against Scottish solicitors. The Society has the power to make findings of unsatisfactory conduct. In more serious cases it can prosecute a solicitor for professional misconduct before the independent Scottish Solicitors' Discipline Tribunal.
You can read more about our conduct complaint processes on our website.