Clause 11

Part of Legal Services Bill [Lords] – in a Public Bill Committee at 10:15 am on 14 June 2007.

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Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice 10:15, 14 June 2007

I have some sympathy with the arguments that have been advanced in so far as I agree that representations from the consumer panel will be hugely important in informing the board.

To ensure that the panel is equipped to do its job, we have provided that it must be consulted by the board in respect of certain key regulatory activities. The panel may also make representations to the board about any other matter. When it does so, the board must consider them and give the panel notice if it disagrees. Any such notice must state the board’s reasons for disagreeing with the representations. If it wishes, the consumer panel can publish any information relating to the provision of its advice.

I turn to how that might work. If the panel considers that there is evidence of a clear detriment to the consumer interest, it may make a representation to the  board that it request that the panel carry out research into the matter. Such a representation could also specify that the board should receive and consider advice from the panel. If the board elected to disagree with such a representation, the panel would have to be provided with a justification for that disagreement, and it could then go ahead and publish that exchange.

Amendment No. 222 would allow the panel to conduct research of its own volition. A number of hon. Members have prayed in aid other consumer panels, but they are labouring under a misunderstanding of the role and powers of some of those other panels. Ofcom’s consumer panel can provide advice of its own volition, but only in very specific circumstances under section 16(3) of the Communications Act 2003. As far as I am aware, neither the Financial Services Authority nor Ofcom consumer panel have the power to undertake research of their own volition. I do not know of any other statutorily provided consumer panel having that ability.

In the Bill, we have given the consumer panel more powers than those available to others. In fact, I would argue that Ofcom’s consumer panel is more restricted in its ability to carry out research than the panel of the Legal Services Board.

Amendment No. 223 states that the cost must not fall on the approved regulators. In that case, on whom must it fall? If the implication is that it would fall on the Government, in effect, that means the consumer. In fact, the Bill states that, after the transitional period in which the Government contribute to the cost, the Government will play no further part. It is for the legal profession, which is to be regulated, to bear the burden of that cost. Therefore, even if the amendments are accepted, it is inevitable that the cost will fall on the legal profession.

Amendment No. 223 is problematic because it does not indicate who should bear the costs. I understand what it seeks to do, but the amendment is flawed in itself and in its principle because the implication is that the cost will fall on the consumer. In fact, once the board is up and running, the costs will fall on those who are being regulated.

When the board identifies an area that needs regulatory scrutiny—or a representation has been made by the panel that identifies such a need—it is important that the panel is available to undertake that research and to advise the board on the potential impact on consumers. There would be a real danger that the panel might be unable to honour that request if it is dedicating time, manpower and other resources to research projects of its own.

Finally, there are no safeguards in the amendments to ensure fairness or to prevent misuse of power. Nothing in the amendments would stop the panel from conducting irrelevant research, incurring exorbitant costs, or providing that the board need not act on the advice. The amendments contain no clear lines of accountability. They are flawed in themselves and in the principle that they are trying to express. On that basis, I ask the Committee to reject them.