34.This Chapter provides for two new categories of regulator for the regulation of legal services providers and assigns the existing regulators to those categories. The use of the categories allows for the creation of an overarching regulatory framework into which the existing (and future) regulators may be allocated and therefore become subject to the same requirements. Category 1 regulators are intended to be those with a significant membership or whose members provide largely consumer-facing services. Category 2 regulators are intended to be those whose membership is more specialist in nature in terms of the legal work undertaken and whose membership is comparably smaller in number.
35.Thereafter the Chapter sets out the requirements that must be met by each category of regulator. It is worth noting though, that the regime for licensed legal services providers is separate and governed by the 2010 Act.(4) This is due to the extra considerations arising from non-legally qualified investors being involved in those businesses (for example, a licensed provider may be a company owned by a solicitor and an investor who is a member of another regulated profession, such as an accountant). This is made clear in section 7 (discussed further below).
36.However, a category 1 or category 2 regulator may also be an approved regulator of licensed providers. The Law Society has been approved to regulate licensed providers and will be subject to both the provisions of the Act as a category 1 regulator in relation to solicitors and their firms etc. and an approved regulator under Part 2 of the 2010 Act in relation to licensed providers.
Background Part 1 – Regulatory Framework Chapter 2 – Regulators