The Legal Services Board sets out a shift to targeted, risk-based regulation alongside a revised budget for the year ahead
The Legal Services Board (LSB) has confirmed a budget of just over £5.8m for 2026/27 in its final business plan, reversing an earlier proposal to reduce spending.
In its draft plan, the oversight regulator had proposed a budget of £5.688m, representing a small reduction of 0.5% on the previous year. This reflected anticipated savings, including reduced accommodation costs and the removal of one-off expenditure included in the 2025/26 budget.
In the final plan, however, the LSB revised this position, increasing the budget by 1.7% after reassessing the level of resources required to meet its regulatory objectives in light of developments over the past year.
This reassessment followed developments in the sector, including recent high-profile interventions by the Solicitors Regulation Authority into firms such as PM Law, alongside earlier cases including Axiom Ince and SSB Law. The LSB also took account of stakeholder feedback indicating that effective regulatory oversight could not be delivered with declining resources.
The approved budget of £5.812m remains a below-inflation increase but reflects the need to strengthen the LSB’s oversight function and respond to growing risks in the legal services market. The increase will be partly offset by reductions in areas such as external legal costs and will result in a small rise in practising fees.
The LSB said the agreed budget would support its core functions, including overseeing frontline regulators, improving regulatory performance and protecting consumers, while also enabling it to respond to developments in the legal services market.
This includes its statutory responsibilities in relation to key appointments, such as selecting board members for the Office for Legal Complaints and panel members for the Legal Services Consumer Panel, reflecting its role in maintaining the effectiveness and independence of the wider regulatory framework.
The business plan also sets out a number of strategic priorities for the year ahead, including improving the performance of regulators, examining the boundary between reserved and unreserved legal activities, and considering whether greater oversight of the unregulated sector is required as consumers increasingly use such services. This includes work to explore appropriate safeguards in the growing use of AI within the unregulated sector, which the LSB said would support its objective of promoting access to justice. It will also consider how consumer redress can operate more fairly and consistently, and respond to the findings of the forthcoming Public Bodies Review.
The LSB also said it would continue to hold frontline regulators, including the Solicitors Regulation Authority and the Bar Standards Board, to account by closely monitoring their performance and requiring evidence of improvements. It expects both regulators to demonstrate progress in key areas, with the aim of strengthening consumer protection and maintaining public confidence in the regulation of legal services.
The regulator said its programme of work would focus on delivery and impact, with an emphasis on proportionate and targeted regulation rather than introducing significant new policy initiatives.
The business plan also highlights changes to the LSB’s oversight approach, aimed at ensuring regulation remains effective in a sector undergoing rapid transformation, including technological developments and shifting consumer expectations.
LSB Chair, Monisha Shah said: “The legal services sector is evolving rapidly, and effective oversight has never been more important. The changes to our oversight model will focus on proportionate, targeted regulation that protects consumers, supports innovation, and maintains public confidence.
“As a new Chair, I will also dedicate time to deepen my understanding of the challenges faced by consumers and by legal service providers. This will help to further inform the crucial role that regulation can play in narrowing the gap between a thriving legal sector and better access to justice for the public.”
The LSB said the final budget reflects a balance between achieving efficiencies and ensuring it has the expertise, resources and capacity required to meet its regulatory objectives.