Schedule 4

Legal Services Bill [Lords] – in a Public Bill Committee at 12:45 pm on 19th June 2007.

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Approved regulators

Photo of Bob Neill Bob Neill Conservative, Bromley and Chislehurst

I beg to move amendment No. 255, in schedule 4, page 142, line 14, leave out sub-paragraph (3) and insert—

‘(3) Alterations are exempt unless the Board has directed that they are not to be treated as exempt for the purposes of this paragraph.’.

By way of work sharing on the Opposition Benches, I have been asked to move the amendment, the effect of which would be to change the wording of paragraph 19(3) of the schedule, on page 142, and insert fresh wording. We seek to reverse the presumption that the advance approval of the Legal Services Board should be required to changes to approved regulators’ regulatory arrangements. That has been suggested to us by—and it is supported by—the Law Society, which is particularly involved in that type of work.

We have taken on board the logic of the Government’s own position. They have repeatedly made it clear that the primary responsibility for regulation should rest with the approved regulators and that the Legal Services Board should have a supervisory role over them. If that structure is to work in a meaningful way, it is important that we should start from the presumption that the approved regulators can be trusted, as they are the people in whose hands we place the bulk of the day-to-day operation.

Under the Bill, regulatory functions will have to be separated from any representative function that the approved regulator already holds. As some of us mentioned earlier, that has already been done by the Law Society and the Bar Council, under existing regulation. For example, all the members of the Law Society’s regulatory arm, the Solicitors Regulation Authority, are appointed on merit rather than elected, as members of the Law Society’s council are. Members of the Law Society’s representative council—people who are, in effect, elected by solicitors—are ineligible to serve upon the Solicitors Regulation Authority, so there is a separation. The Bar Council has achieved the same result as far its part of the profession is concerned.

Furthermore, the approved regulators will, I hope as a matter of ordinary good practice, consult on proposed changes to their regulatory arrangements before they are made. That consultation will include representatives of consumers and of the regulated sector. It would be perfectly possible to ensure that the Legal Services Board was included by the approved regulators in those consultations if they intended to make any such changes.

Under those circumstances, the schedule’s requirement to secure approval by the LSB before changes to regulatory arrangements come into effect seems unnecessarily burdensome and regulatory. Every time one wants to change one’s internal regulations, one will have to secure advance approval from the LSB—not just consult it. We are concerned that that requirement may significantly clog decision making, which will make it harder for approved regulators to respond appropriately to changing circumstances.

It is important to bear in mind that the legal profession is a dynamic profession, and that the market for legal services is dynamic. Circumstances change rapidly, and as we have already discussed, we are responding to an intensely competitive international market. It is important that the approved regulatory bodies can respond swiftly and flexibly to their circumstances within the consumer protection framework, on which we are all agreed.

Past experience gives us some concern. The legal services consultative panel was established in the Access to Justice Act 1999, and that procedure for making changes was found to be complicated, convoluted and lengthy. It was even worse than its predecessor body, the Advisory Committee on Legal Education and Conduct, which I remember from when I still practised at the Bar. For example, it took several years for the ACLEC process to deal with the Law Society’s rules on rights of audience, and a similar length of time for the society’s recent revisions to its rule book to go through the legal services consultative panel. I am sure that Ministers do not intend to introduce a process for making sensible changes to the operation of the rule book which could take that amount of time.

The Bill already permits the LSB to designate particular categories of changes to regulatory arrangements as exempt from prior approval. The precedent is already in the Bill, but it is inevitable that as a new body, fresh on the turf, the LSB will be cautious in the exercise of its power. Few categories of rule are likely to be exempted to start with, and the process of securing LSB approval is likely to become a significant obstacle to desirable change. It will be a regrettable unintended consequence of the legislation, which does not fit with its overall intention.

There are also considerable potential resource implications for the requirement to seek advance approval for those changes. There is a process for considering the merits of proposed changes throughout the range of regulatory arrangements. The schedule already sets out a large number of approved regulators, so a number of bodies will be caught by the legislation, which is likely to be time-consuming and expensive. If we return to our proposition that the approved regulators are people who we are satisfied can be trusted, are properly constituted and have robust internal systems, how much added value will we receive for such expense and potential delay?

We can tackle that practical issue by reversing the presumption that changes require the approval of the board in advance. Instead, under our amendment, changes would be exempt unless the LSB designated them as requiring advance approval. The last point is important for balance. If it became apparent that the category of rule change might be controversial and raise new and difficult issues, the Law Society would still be able to designate—

Photo of Frank Cook Frank Cook Labour, Stockton North

Order. This afternoon, the Chair will pass to Sir Nicholas Winterton. Confident, of course, that the Committee will treat Sir Nicholas with the same respect and good humour that you have displayed towards me, I wish you well in the continuation of your deliberations.

It being One o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o’clock.