The Law Society of Scotland said on Tuesday it is “frustrated and disappointed” at the UK Government’s proposal to remove its role as an anti-money laundering supervisory body.
The Law Society said it believes law firms and consumers of legal services in Scotland “will pay the price.”
It said that under the plan, the Financial Conduct Authority would replace the Law Society and all other professional body regulators across the UK.
“It is difficult to see how a body overseeing banks and other finance sector businesses with thousands of staff can also provide effective enforcement and support for single-solicitor law firms,” said the Law Society
“This will be especially the case if FCA resources remain so heavily concentrated in London.
“We would urge the Government to reconsider this expensive and potentially counterproductive change.
“It is consumers of legal services who ultimately pay the price for inefficient and ineffective regulation.”
The Law Society said the UK Government’s proposal to overhaul anti-money laundering (AML) enforcement will impose additional complexity and cost for law firms and consumers of legal services in Scotland.
It said the UK Government has announced that the Law Society’s anti-money laundering function would be removed “despite a strong track record of enforcement and education.”
The announcement follows consultation launched by the UK Treasury in 2023 on four possible AML supervision models, when the Law Society argued strongly against the approach now being adopted.
David Gordon, the Convener of the Law Society of Scotland’s Regulatory Committee, said: “We are frustrated and disappointed with this decision, which imposes a finance sector focused AML regulator on law firms and all other professional services.
“It also flies in the face of other changes made here in Scotland which actually granted the Law Society new and strengthened regulatory powers over law firms.
“The Government has made this decision despite acknowledging our strong record of maintaining high standards in our role as an AML supervisory body, thanks to our detailed understanding of the Scottish legal services sector. We do not believe the FCA will be able to replicate our knowledge of Scotland’s legal sector, let alone improve oversight.
“Law firms in Scotland now face the prospect of dealing with multiple regulators, including one with little experience of legal businesses. This will inevitably add to the bureaucratic burden on them at a time when the Government says it is prioritising economic growth and business competitiveness.
“It is difficult to see how a body overseeing banks and other finance sector businesses with thousands of staff can also provide effective enforcement and support for single-solicitor law firms. This will be especially the case if FCA resources remain so heavily concentrated in London.
“We would urge the Government to reconsider this expensive and potentially counterproductive change. It is consumers of legal services who ultimately pay the price for inefficient and ineffective regulation.”