CMA Launches Review

Competition and markets Authority (CMA)

The Competition and Markets Authority (CMA), whose remit is expressed to be to “promote competition for the benefit of consumers, both within and outside the UK” is carrying out an assessment of the implementation and impact of the recommendations of its 2016 market study into the legal services sector in England and Wales.

The CMA announced yesterday that it was undertaking a review of the progress in the legal services sector in England and Wales since its 2016 market study and is now calling for inputs and responses from interested parties to a number of specific questions.  Responses are required by Wednesday 30 September 2020.

The review, which can be downloaded in full from the CMA website, follows on from a market study carried out in 2016 which was prompted by “concerns that consumers were not getting a good deal from legal services providers and that there was evidence that a high proportion of consumers were not seeking to purchase legal services when they had legal needs …, driven in part by the high cost of legal services; and the possibility that regulation might be dampening competition.”

The CMA’s 2016 market study concluded that competition for individual consumers and small businesses was not working well. The CMA made recommendations to industry regulators to improve transparency by legal firms on price, quality and service, and to enable customers to navigate the market more easily and get value for money. It also made recommendations on regulatory reform, including to the Ministry of Justice, to consider whether consumers of unregulated services need stronger protections, particularly in terms of access to redress, and to review the regulatory framework for the longer term.

The CMA indicated in its market study report that it would assess progress in the sector after several years and is now doing so. Its short, focused 3-month review will assess the extent to which the market study recommendations have been taken forward and the impact that these changes have had on competition. The review will look at existing evidence from regulatory monitoring and other available research, as well as submissions from interested parties.

The CMA is inviting responses to the following questions:

Q1. What challenges have legal service providers faced in complying with transparency measures, and how could these be addressed?

Q2. Are consumers engaging with the new transparency measures including the availability of price information, eg by accessing the pricing information on the provider websites and/or using this information in their interactions with providers? Does this differ between different areas of law?

Q3. How effective have transparency measures been in driving competition? Does this differ across areas of law?

Q4. To what extent has the Legal Choices website helped consumers to navigate the legal services sector? To what extent has improved content been actively promoted by regulators, consumer/industry bodies and service providers?

Q5. To what extent are quality indicators needed to drive consumer engagement and competition? Which further indicators are needed and what are the barriers to these indicators being developed?

Q6. To what extent are DCTs currently operating in the legal services market? What are the main barriers to greater use of DCTs in legal services and how can they be overcome?

Q7. What impact have ABSs and lawtech24 had on driving innovation in the legal services sector? Are there any barriers deterring further innovation?

Q8. Are there other developments which have had or will have a significant impact on competition in the sector?

Q9. Are further measures needed to drive consumer engagement and competition in legal services in addition to the areas we have identified above?

Q10. Are there any issues specific to the provision of legal services for small businesses that should be considered in order to improve competition for such customers?

The CMA will publish its findings in December 2020.

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