Access to justice in doubt for mis-sold consumers as fee caps could discourage law firms.

ME Group boss, Rob Cooper, has called into question the SRA’s proposed fee cap for firms dealing with financial mis-selling cases- believing it could potentially hamper people’s access to justice.

The Legal Tech CEO believes the regulator’s idea to restrict fees could create a climate where law firms are reluctant to even take on cases simply because they cannot financially afford to.

The Solicitors Regulation Authority has launched a discussion paper in response to Parliament’s call for action in the industry.

Speaking about his reservations on the proposals, Rob Cooper believes price regulation should only be a ‘last resort.’

He said: ‘The subject is open to a lot of debate.

‘If you take a look at the success of price regulation, both in this country and across Europe, there’s some evidence that it’s been successful.

‘However, there is also lots of evidence that it significantly distorts markets and prevents consumers from having access to services.

‘This is simply because the cap on price exceeds the costs and a reasonable profit margin that firms can now seek to provide it for.

‘In many circumstances, most regulators will look at price capping as a means of regulation of the last resort.

Rob Cooper
ME Group CEO, Rob Cooper

‘As a regulator what you’re saying when you resort to price capping is that we’ve been unable to create a marketplace in which the normal market forces of supply and demand lead to healthy competition and pricing that is fair and reasonable for consumers.’

The discussion paper also asks to what level its recommendations should be aligned with previous proposals from The Financial Conduct Authority (FCA) around fee caps for claims management companies.

In relation to these latest proposals, the SRA is continuing to hold discussions to build knowledge and information working with those in the industry.

In a statement on the SRA’s website, Paul Philip, SRA Chief Executive, said: ‘This is an important piece of work for consumers and the firms we regulate. Fees have to be set at a level that means the cost is affordable for people seeking redress, while ensuring that this is still a viable area of work for firms that provide this service for those who need it. So although the number of law firms involved may be small, the impacts for consumers could be significant.

‘I would urge firms currently providing claims management in this area, and others who may be thinking about doing so, to read the discussion paper and let us know what you think.’

A webinar explaining the SRA’s thinking will be held on Wednesday 4th August at 12.30pm. Click here to register.

Views on the discussion paper are invited by 29th September.