An independent review finds the Legal Services Board (LSB) has “lost its way”, falling short in overseeing front‑line watchdogs after a series of high‑profile law‑firm collapses that saw tens of millions of pounds of client money disappear. The Ministry of Justice‑commissioned report, released on Monday, lists ten recommendations, including shifting the LSB’s strategy toward consumer protection and accounting for the impact of technology and AI. It also urges separating enforcement from policy work to improve relations with bodies such as the Solicitors Regulation Authority and the Bar Standards Board, which together regulate over 90 % of legal professionals.

Report author Richard Lloyd, a former FCA board member, warned that the LSB’s lack of strategic clarity has left consumer interests insufficiently protected. He called for a government‑led review of legal‑services regulation by 2029. LSB chair Monisha Shah said the sector has changed dramatically, with AI and alternative business structures posing both opportunities and threats, and that the findings provide a clear basis for a major reset. The regulator’s budget last year was £5.7mn, underscoring the need for efficient resource allocation.