Dear Sirs

The Office of Fair Trading – In the Dock facing charges

Dismissive of Scots Law
No support evidence
Ignorant of EU Law
Biased against Small Business
Happy with removal of client protections

The Scottish Law Agents Society feel compelled to respond to the OFT letter sent to the Scottish Parliament.

Firstly the letter does not approach ABS in a manner of “Scottish solution to Scottish problems” and the OFT fails to recognise the distinctive nature of Scots law.

The OFT letter contains mere assertion and once more has no evidence base whatsoever a fact which MSPs have already spotted and have unfavourably commented upon. The OFT have ignored the criticism and treated MSPs concerns with contempt by repeating the error.

There is no evidence this will help the poor.

The EU Commission report in relation to competition in professional services (2004) recognised that the requirement for independence in the provision of services such as legal services may be a greater imperative than competition. The OFT does not even attempt a balance and is out of step with EU Law.

There is no evidence base referred to in the OFT letter regarding a suitably “robust” regulatory regime working effectively. In Financial Services since 1988, when a regulatory system was first introduced, there have been a series of mis-selling scandals to the detriment of consumers that continues to this day. These are the very institutions which the OFT is now promoting as suitable owners of legal service providers. Why?

The OFT named specific companies in its correspondence with the Scottish Parliament and has been forced to clarify its position. How embarrassing that it required to do so. Naming these companies is quite simply unacceptable, unprofessional and outrageous. The OFT is supposed to be impartial but they have acted otherwise. It would be quite simple to have referred to “supermarkets” and “Banks”.

We note the terms of the Justice Committee's own report on the Bill Justice Committee report para 56

“On the “consumer interest” argument, the Committee concludes that although increased competition in the legal services market could bring about gains for consumers, increased competition can be seen as a risk for local or high street firms and in the longer term for the consumer interest as a result of the diminished competition, if banks or supermarkets enter the legal services market. “ The OFT is biased against small businesses.

Since the OFT insists on making reference to things in England let us look there. The OFT makes no reference to recent rumblings of discontent in England. The Times recently reported (2/6/10) that there are suggestions around Chancery Lane, the Inns of Court and Whitehall that the coalition does not share its predecessor’s determination to rush towards reform and that it is rumoured that Jonathan Djanogly at the Ministry of Justice with responsibility for implementing the Legal Services Act 2007 is not enthusiastic about the philosophy behind ABSs and external investment.

That is hardly a ringing endorsement of an ABS package that was widely debated and is on the statute books in England awaiting implementation. The Law Society and Bar Council have apparently expressed concern about the perceived haste with which the Legal Services Board (LSB) appears to be racing towards implementation. Both sides hope that new faces at the Ministry of Justice will, if not completely scupper ABSs and external investment, at least significantly amend the way in which they will operate. So if we do look down South the OFT have failed to convince.

It would be unfortunate indeed if Scotland brought in ABS and England abandons it. Many supporters of ABS in Scotland were prepared to sacrifice independence only on the basis of a level playing field being necessary if England had it.

Unfortunately the OFT appears to be obsessed with competition theory and seems divorced from reality. It is time they were taken to task and MSPs have a golden opportunity to do so.

Yours faithfully

Ian C Ferguson

Spokesman of Scottish Law Agents Society