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Under the current legislation, the ombudsman has very little power to take the matter further. She can only publicise the fact that a recommendation has not been followed--usually by taking out an advertisement in a local newspaper--and then recover from the person involved the costs that she has expended.

The new clause will allow the ombudsman to make a binding order in cases in which she considers that appropriate, which will be enforceable through the courts. Before such a binding determination was made, however, the person or professional body would be entitled to appear before the ombudsman to make representations about the decision.

This extension to the ombudsman's powers will be a welcome addition to her armoury of powers to tackle those who are not providing an adequate service to their clients. It should assist clients in recovering compensation that is due to them and which they would not otherwise receive. The ombudsman will not be obliged to use the powers, but the reserve power will be of value in appropriate cases. The current ombudsman, Ann Abraham, does an excellent job, and I pay tribute to her. I am sure that the extra powers will enable her to carry out her duties even more effectively in future.

The clause also makes a minor amendment to section 23, so that the professional bodies have a duty to have regard to the conclusions and recommendations made by the ombudsman in reports. There was an error in the original drafting of section 23(6). In reality that was not a problem, as the professional bodies have always complied with the ombudsman's recommendations, but it is right to take this opportunity to clarify the legislation.

I shall deal briefly with amendment No. 86, which repeals references in the Courts and Legal Services Act 1990 to consent of the Treasury being required when the Lord Chancellor determines the amount of pay and pensions for the ombudsman and her staff. That is in line with current Treasury policy.

New clause 9 inserts a new sub-paragraph into schedule 3 to the Courts and Legal Services Act 1990. The schedule deals with, among other things, the remuneration, staffing and financial provisions of the office of the legal services ombudsman. The purpose of the new clause is to give the Lord Chancellor the power to require any professional body to make payments to the legal services ombudsman in respect of any of the expenses of the ombudsman. I remind the House that the current relevant professional bodies are the Bar Council, the Law Society, the Institute of Legal Executives and the Council for Licensed Conveyancers.

The Government do not intend to use this power unless the Lord Chancellor appoints the legal services complaints commissioner; I will speak about that post in detail later. The commissioner will not be appointed unless and until the professional bodies are seen not to be making progress with their complaints systems. It is only right that if the commissioner is appointed, and therefore the professional bodies are failing, they should be required to contribute towards the body that oversees complaints handling. The practice elsewhere is for ombudsman schemes to be financed directly by the professions concerned.

However, I reiterate that the Government would not use this power unless and until a commissioner were appointed, and then only for those bodies that were

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subject to his remit. If any professional body were liable to make payments in this regard, those payments would, of course, be proportionate to the size of the body and the number and nature of the complaints generated. The Lord Chancellor will have similar powers to require payments from the professional bodies to fund the commissioner.

New clause 10 gives the Lord Chancellor power to appoint a legal services complaints commissioner. That is, in part, in response to hon. Members who have been pressing the Government for some time to intervene in the handling of complaints about the legal professions, in particular the Office for the Supervision of Solicitors. My predecessor and I have received many complaints including those from my right hon. Friend the Secretary of State for Culture, Media and Sport; the right hon. Member for South-West Surrey (Mrs. Bottomley); the hon. Member for South Dorset (Mr. Bruce); my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), and the hon. Member for Southend, West (Mr. Amess). I should point out, however, that the commissioner will not be brought into being by the passing of the Bill. The clause simply gives the Lord Chancellor the power to set up the post, if and when it is necessary. I will explain the reasons for this later.

The commissioner will have powers to intervene effectively to improve standards of complaints handling by the legal professional bodies. New clause 11--in particular, subsection (2)--sets out in detail the functions and the powers of the commissioner. In addition to the investigatory powers specified in subsections (2)(a) and (2)(b), the commissioner will have powers to make recommendations about the arrangements for the handling of complaints and any aspect of complaints handling. The commissioner will also have powers to impose targets on the authorised bodies for the handling of complaints. Those targets could include the timeliness of the handling of complaints; customer perceptions of the complaints system; and perhaps targets for training lawyers in complaints handling.

Subsection (2)(e) gives the commissioner power to require a professional body to produce a plan setting out how it intends to improve its complaints handling performance to meet such targets. If a professional body fails to submit such a plan when required to do so by the commissioner, or, having submitted such a plan, it fails to handle complaints in accordance with it, subsection (3) gives the commissioner the power to levy fines on that body.

Subsection (4) provides that, where the commissioner requires a professional body to pay a penalty, he shall afford the body a reasonable opportunity of appearing before him to make representations. It will be for the House to decide, if and when the commissioner is set up, what the penalty should be.

The new post will be financed by a levy on the authorised bodies. I will set out the background which I believe justifies these measures. The provisions on the legal services complaints commissioner will, however, come into force only if it appears to the Lord Chancellor that complaints about members of any professional body are not being handled effectively and efficiently. The Lord Chancellor would use those powers only after a great deal of thought and with a great deal of reluctance. We have not spelt out in the legislation precisely the circumstances in which the Lord Chancellor might use those powers. It is impossible to predict all the circumstances in which the

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public interest might be best served by using these powers. But the professional bodies will, rightly, wish to know what performance is expected of them.

First, I can assure the House that the Lord Chancellor has no plans to use these powers within 18 months of Royal Assent. In particular, he will want to see the annual report of the Office for the Supervision of Solicitors for the calendar year 2000 in spring 2001. These are reserve powers and we wish to give the OSS in particular the opportunity to put its house in order. I shall shortly be seeing the director of the OSS. I know that the Law Society recently published a report from Ernst and Young which set out a blueprint for a more efficient system of dealing with complaints against solicitors.

Secondly, we intend to tell the professional bodies about the sort of performance that would ensure that the Government will not use these powers. We will meet representatives of the Law Society and the other professional bodies during the next few months to find out how they view their present performance and what improvements might reasonably be expected. In the light of those consultations, the Government will give their view on what performance would persuade the Lord Chancellor not to use his powers.

These consultations will principally concern the Law Society, which is by far the largest professional body and which generates by far the largest volume of complaints. But we will also consult the Bar Council, the Institute of Legal Executives and the Council for Licensed Conveyancers, to whom the legislation equally applies. We will involve the legal services ombudsman in this process because of her considerable knowledge of complaints procedures and the professional bodies' performance.

It may be helpful if I explain the background to our proposal to take those powers. The OSS, which is an integral part of the Law Society and which has been set up to deal with complaints of inadequate professional service and complaints of misconduct against solicitors, is at present failing to deal adequately with complaints of inadequate professional service. There is a backlog of 9,000 complaints, and it is increasing.

Complaints are not allocated to a case officer for six months. The OSS is the most recent attempt by the Law Society to get its complaints systems right. Like the previous attempts--most notably, the Solicitors Complaints Bureau--it has not been seen to deliver any sustained improvement and there is a good deal of public concern. As I said earlier, certain members of the House are well aware of that and have written to me on behalf of constituents who are extremely concerned by their dealings with OSS. Indeed, the matter has been raised on the Floor of the House at Question Time.

There are arguments that the Government should put the regulation of the legal professions on a statutory basis, perhaps similar to that of the Financial Services Authority or the Immigration Services Commissioner proposed in the Immigration and Asylum Bill. The Government do not accept that argument. Self-regulation remains the best option for the legal professions, whose members must at times oppose the Government strenuously in pursuit of citizens' rights.

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Nevertheless, there is a public interest in the efficient handling of complaints by the legal professional bodies. That is why the independent legal services ombudsman was set up by the Courts and Legal Services Act 1990. Although the ombudsman can and does make general recommendations to the legal professional bodies on their complaints handling arrangements, the office exists principally to ensure that individual complaints are effectively dealt with. Its primary remit is to examine and adjudicate on appeals by dissatisfied complainants from the complaints mechanisms of the legal professional bodies. That arrangement is no longer enough. That is why we are introducing legislation to make provision for the new body.

There are signs that the Law Society wants to put its own house in order. A new scheme for the handling of complaints has been put together by the OSS. The Law Society has also recently increased the budget for the OSS. We are not proposing to appoint a commissioner, and therefore bring those powers into force, unless and until an authorised body is clearly failing to make substantial progress in improving its complaints record. We believe those proposals will encourage the Law Society to ensure that the profession makes real improvements in complaints handling.

Turning to the detail of the new clause, our view is that, in practice, the new post, if it is necessary to bring it into force, is likely to be held by the person holding the office of the legal services ombudsman, because the commissioner's role overlaps with some functions of the ombudsman. For that reason, the legislation mirrors the provisions in the 1990 Act relating to the appointment of the ombudsman.

As in the 1990 Act, the proposed legislation provides for the commissioner to be appointed for not more than three years, in accordance with the Nolan guidelines. The commissioner shall be eligible for reappointment on conclusion of that term. As in the 1990 Act, the commissioner may not be a member of the legal profession so that the public can be assured of the impartiality of the postholder. The new clause also gives effect to a new schedule, which makes further provision about practical arrangements of the commissioner's office.

Hon. Members may be concerned that we have introduced these powers to the Bill at a relatively late stage; that is why I have explained the proposals in details. My justification for doing so is that the deterioration in the performance of the OSS has become far more marked recently, and it has recently become clear that the legal services ombudsman will signal to the Lord Chancellor in her annual report at the end of this month that the OSS has not made sufficient progress.

In my view, it would be wrong not to act immediately because we have a clearly appropriate legislative vehicle. The new powers will help to achieve better performance in the handling of complaints, which I know is the aim of the Law Society and the other professional bodies. They are proportionate, appropriate and timely and will be welcomed by the Members of the House and the public at large.

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