Bar Council reacts to regulatory proposals

Bar Council reacts to regulatory proposals

The Bar Council has submitted two separate consultation responses on regulatory matters this week. Experts on our Anti-Money Laundering Working Group, Regulation Panel and Ethics Committee have been responsible for drafting the submissions. One submission was sent to HM Treasury on anti-money laundering and counter-terrorism financing, and the second submission was sent to the Legal Ombudsman on its business plan and budget.

Anti-money laundering:

HM Treasury has proposed creating a single professional services supervisor with responsibility for anti-money laundering (AML) and counter-terrorism financing (CTF) supervision of legal, accountancy, trust and company service providers. The Financial Conduct Authority (FCA) is the organisation taking on this work and the Office for Professional Body Anti-Money Laundering Supervision and the Bar Standards Board (BSB) will no longer fulfil AML/CTF functions. This major change to the supervisory regime requires legislation, funding, transition and delivery plans.

The Bar Council are concerned that the move to one new model for all professional service firms risks losing sector-specific expertise and could reduce the efficacy of supervision. At the moment, the Bar Council discharges regulatory and AML/CTF supervisory functions to the BSB and the current system works well. The new regime will mean that barristers will be supervised by two regulatory regimes: that operated by the FCA in respect of AML/CTF, and the BSB in respect of conduct.

We are disappointed that HM Treasury has decided to make the FCA the sole supervisor, but we are resolved to work with the BSB, HM Treasury and the FCA to help ensure the new regime is as effective, proportionate and as risk based as possible. We also want to ensure the new regime does not impose disproportionate costs. We remain concerned at the limited consideration given to the question of fees and funding, and the lack of any reference to the need for such fees to be levied in a way which takes account of the risk profile of specific sectors and the degree to which their activities will require regulatory activity by the FCA.

Chair of the Bar Barbara Mills KC said: "The Bar Council welcomes the statement of intent by HM Treasury that the new regime intends to improve existing regulation rather than create new burdens on businesses. The Bar is made up of individual barristers rather than legal firms. Unfortunately, the new supervisory regime does not explicitly acknowledge the distinctions between solicitors in legal firms and other legal professionals, such as barristers who are individuals in self-employed practice.

"We want to highlight that the few barristers operating in specialist fields that may fall within the regulatory scope, for example tax barristers or chancery barristers involved in advising on trust documentation, are generally instructed by other professionals who deal with clients directly and who are obliged to have addressed any AML/CTF issues prior to counsel being instructed. The different roles of legal professionals, and their differing risk profiles, should influence the shape of the new regime."

Legal Ombudsman's business plan and budget:

The Legal Ombudsman (LeO) has recommended a £2.4m (12.1%) increase in its budget for next year. In our response to the consultation, we have called for a reduction to the proposed budget.

Chair of the Bar Barbara Mills KC said: "The Bar Council does not support the budget increasing significantly above an inflationary-only increase, and we do not support any additional funding that is not focused on the need to reduce the number of waiting complaints. The key priority for LeO should remain as resolving complaints fairly, effectively and expeditiously.

"It is positive that the LeO has made progress in reducing the wait time by 22% from the previous year but around half of LeO's cases are still taking 60 days or longer to resolve, with an average end-to-end customer journey of 275 days. It is unclear what period of time the LeO considers an acceptable waiting time, and it would be helpful if LeO could define this."

Read the Bar Council's two submissions:

Bar Council response to HM Treasury consultation on anti-money laundering and counter terrorist financing supervision reform: duties, powers, and accountability

Bar Council response to the Office for Legal Complaints Consultation on the draft business plan and budget 2026/27

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