Schedule 4
Legal Services Bill [Lords]
12:00 pm
Bridget Prentice (Parliamentary Under-Secretary, Ministry of Justice; Lewisham East, Labour)
May I also express my delight that you, Sir Nicholas, you have returned well and full of enthusiasm from the Falklands? We all know how firm and fair you will be throughout our proceedings and look forward to continuing our debates under your wise chairmanship.
I understand that there is anxiety over the need to ensure that the board operates in a proportionate fashion. I agree that it should operate that way and that it would go against that principle if we were to create a system that encourages micromanagement by the board. Equally, we do not want to add unnecessary delay or inefficiency to the day-to-day operation of the regulatory regime, but I do not consider that the current arrangements under schedule 4 will have either of those effects.
I come to what has been slightly lost in the amendment. First, the hon. Member for Bromley and Chislehurst touched on the fact that, under schedule 4, the board will have wide discretion to exempt certain classes of rules. It is appropriate that it should be possible to exempt minor alterations to regulatory arrangements or those alterations that are not particularly relevant. Secondly, the proposed change would not necessarily make the board’s relationship with the approved regulators more efficient, despite what the hon. Member for Birmingham, Yardley said. In fact, I would go so far as to say that it might have the opposite effect.
Even if the presumption were that the regulatory arrangements are to be exempt unless otherwise directed, the board would not be doing its job properly if it did not know what it was exempting. It could not be expected to relinquish oversight unless it was confident that in each case the regulatory arrangements in question required no input from the board in order to achieve the regulatory objectives. The outcome would be increased regulatory burdens on both the board and the approved regulators. The board would have to monitor regularly and assiduously all regulatory arrangements, and approach constantly each of the eight—so far—approved regulators to assess the ever-changing scope of the exemption and evaluate whether it needed to create further exceptions.
The frequent and unpredictable demands created by that system would increase rather than reduce the burden on approved regulators. A system whereby approved regulators are free to submit proposals for exemptions seems to be more straightforward rather than less. Apart from my reservations about the procedure and inefficiency, I believe that the change would compromise our primary objective of accountability and consumer protection through the regulatory framework.
If the board is to be strong and effective as an oversight regulator, acting in the interests of the consumer, it is vital that it is aware of the regulatory environment. That does not mean that it has to take an interventionist approach. Indeed, I hope that it does not. However, to avoid doing so, it needs to have full information in order to make its judgment.
The hon. Member for Bromley and Chislehurst referred to the present position and what the Bill will, in effect, achieve in terms of streamlining the system. At the moment, under the procedure set out in part II of schedule 4 to the Courts and Legal Services Act 1990, any alteration to the rules relating to the conduct of persons exercising a right of audience or a right to conduct litigation, any alteration to the qualification regulations of the authorised body or the alteration of any rights granted by those bodies must be approved by the Secretary of State. Before doing so, the Secretaryof State must follow the procedures set out under schedule 4 to the Act, which usually involves obtaining the advice of the legal services consultative panel and the Office of Fair Trading, each of which gives its advice separately.
The Secretary of State then sends the advice to the authorised body for its observation and consults the designated judges for their views before making a final decision. There is no limit to how long the process can take and, as the hon. Member for Bromley and Chislehurst rightly pointed out, at times it has taken many months, if not years. It can take even longer if the rule is complicated or if the authorised body is unwilling to amend the rule to take into account the worries of the legal services consultative panel. That was the position with the Law Society’s conflict and confidentiality rules.
Under the Bill, the board will have sole responsibility for approving the rules. Under the procedures setout in part 3 of schedule 4, alterations to regulatory arrangements will be approved either automatically, if the board considers them to be exempt, or after an initial determination. They will also be subject to the warning notice procedures in paragraphs 21 to 35, under which the board might consider advice from appropriate persons and representations made bythe approved regulator making the application. The process is subject to a time limit to ensure that applications do not become drawn out. For example, the approved regulator must make representations within 28 days, and alterations will be approved automatically after 12 months unless the board refuses the application or applies to extend the consideration period.
The three-stage process will ensure that the regulatory arrangements for different levels of risk are given appropriate consideration. It will certainly streamline the current situation. On that basis, although I understand the concerns about complication and length of time, I think that the hon. Member for Bromley and Chislehurst might find that the situation outlined in schedule 4 makes for a better system. I hope that he will therefore withdraw his amendment.