Clause 54

Legal Services Bill [Lords] – in a Public Bill Committee at 6:30 pm on 19th June 2007.

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Regulatory conflict with other regulatory regimes

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Justice)

I beg to move amendment No. 258, in clause 54, page 30, line 21, at end insert—

‘(1A) An approved regulator must consider any request made by an external regulatory body for the approved regulator to reconsider any provision made by its regulatory arrangements on the grounds that the provision either—

(a) conflicts with a requirement of a regulatory provision made by the external regulatory body, or

(b) unnecessarily duplicates any regulatory provision made by that external regulator.’.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

With this it will be convenient to discuss amendment

No. 252, in clause 54, page 30, line 27, at end insert—

‘(2A) An external regulatory body may make an application to an approved regulator under this section if it considers that the arrangements of the approved regulator—

(a) frustrate the exercise of the external regulatory body’s requirements, or

(b) conflict with the external regulatory body’s regulatory requirements, or

(c) give rise to unnecessary duplication of regulatory requirements for the subjects of the external regulatory body.

(2B) For the purposes of subsection (2A)(c) above, “subjects” means any individuals or entities subject to the regulatory powers and jurisdication of the external regulator.

(2C) Where an application is made to an approved regulator under this section, the approved regulator must—

(a) determine whether such regulatory conflict exists with the external regulatory body’s requirements and, where it so determines, take such steps as are reasonably practicable to address the regulatory conflict outlined by the external regulatory body, or,

(b) in the absence of satisfactory resolution and where provisions for the resolution of external regulatory conflict provide, make an application to the Board under subsection (4).’.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Justice)

Amendment No. 258 would bring parity to the different forms of conflict that an approved regulator might face, either with external regulators or with approved regulators. That is why it is important.

Amendment No. 252 would simply add to and complement that. I shall not go through it in detail, because the Minister will have had a technical briefing on it. It was tabled as a probing amendment in the House of Lords. We did not receive a satisfactory response at the time, and I would like the Minister to say either that she can accept it because it improves the Bill and the clause, or that she cannot accept it and give and give an explanation for that. I look forward to hearing what she has to say.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

These are reasonable amendments, which we support.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice 6:45 pm, 19th June 2007

As the hon. Member for North-West Norfolk said, these amendment are similar to amendments that were tabled in another place. We agreed there to reflect on the initial suggestions put forward. I say to the hon. Gentleman that, having reflected, we do not believe the amendments would do much to alter existing policy on regulatory conflict, except perhaps risk inviting undesirable interpretations of how the obligations on approved regulators should apply.

I am sorry that I will disappoint the hon. Gentleman again, but that is not to say that I do not sympathise with the objectives behind the amendments. I agree that it is essential for the Bill to do all it can to facilitate co-operation between regulatory bodies when a range of professionals work together, and that robust procedures for dealing with regulatory conflicts are a key part of that. The clause is effective enough to achieve that, and no evidence has arisen since it was debated before to persuade me otherwise.

I realise that the provision is not the same as that being made in relation to conflicts between two approved regulators. Given the different legal contexts, it is neither possible nor appropriate for it to be the same. Clauses 52 and 53 impose detailed and specific mutual obligations upon approved regulators, in particular requiring them to consider requests from regulated members to consider any specific regulatory arrangements that might create conflict and to submit to the direction of the board in the event that it identifies a need for any particular arrangement to be altered.

It is not possible to translate those principles into the context of clause 54, mainly because it would not be within the scope of the Bill to seek to impose obligations upon regulators of non-legal services or require them to submit to the jurisdiction of the board. They can of course do that voluntarily, and the clause recognises that, but only to the extent that it is compatible with other legal and regulatory obligations to which external bodies are subject. The clause therefore relies entirely upon the efforts of approved regulators for its efficacy. That is appropriate given the aims and scope of the Bill, and I do not want to amend it in a way that could risk uncertain and overly onerous impositions on approved regulators.

The clause already imposes clear duties on the approved regulators to have regard to other regulatory regimes. They are required not only to take measures to prevent regulatory conflict and avoid unnecessary duplication of regulatory requirements but to provide for the resolution of conflicts that do arise. That does not only apply when the initial rules are drafted, it is a continuing obligation that should inform all current and future regulatory arrangements. That combination of requirements goes a long way towards achieving the outcome sought in the amendments.

In some respects the clause goes a bit further than clause 52. The duty to avoid unnecessary duplication is unique to clause 54 and intended specifically to target  issues that might arise in relation to external regulatory conflicts and give effect to general principles of better regulation.

The amendments would not assist in encouraging better regulation or preventing regulatory conflict. At worst, they could exacerbate conflicts and increase bureaucracy. They would apply a further statutory burden to the approved regulators not only to address conflicts with external regulators but to take action formally on any applications about specific instances, no matter how numerous and whatever their merit or relevance. That could increase the pressure on approved regulators to be overly assiduous, to avoid the possibility of legal challenge if they fail properly to consider every approach made by an external regulator. It would have the undesirable effect of diverting substantial resources from both the approved regulators and the board into handling those requests when they could be more productively engaged in ensuring that their own rules take a robust and consistent approach to pre-empting conflicts, and dealing effectively with overlapping regulatory regimes.

On that note, clause 54 as drafted has achieved about the right balance between ensuring that the approved regulators are obliged to take a proactive approach to dealing with external regulatory conflicts, but not to create an undesirable and potentially burdensome duty on themselves in so doing. I therefore ask the hon. Gentleman to withdraw his amendment.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Justice)

I am grateful to the Minister for her explanation. I shall consult the interested outside bodies that take seriously the whole issue of regulatory conflict with outside regulatory regimes. It is important to make sure that the right relationship is achieved. I take on board the hon. Lady’s point about part of the amendment being outwith the scope of the Bill. After consultation, I shall come back to her on Report,if necessary. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 54 ordered to stand part of the Bill.