Legal Services Bill [HL]

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Legal Services Bill [HL]

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
28

which must be satisfied for that person to be authorised by the approved
regulator to carry on one or more activities which are reserved legal activities.
(2)
An approved regulator may only apply amounts raised by practising fees for
one or more of the permitted purposes.
(3)
The Board must make rules specifying the permitted purposes.
5
(4)
Those rules must, in particular, provide that the following are permitted
purposes—
(a)
the regulation, accreditation, education and training of relevant
authorised persons and those wishing to become such persons,
including—
10
(i)
the maintaining and raising of their professional standards, and
(ii)
the giving of practical support, and advice about practice
management, in relation to practices carried on by such
persons;
(b)
the payment of a levy imposed on the approved regulator under
15
section 174;
(c)
the participation by the approved regulator in law reform and the
legislative process;
(d)
the provision by relevant authorised persons, and those wishing to
become relevant authorised persons, of reserved legal services,
20
immigration advice or immigration services to the public free of charge;
(e)
the promotion of the protection by law of human rights and
fundamental freedoms;
(f)
the promotion of relations between the approved regulator and
relevant national or international bodies, governments or the legal
25
professions of other jurisdictions.
(5)
A practising fee is payable under the regulatory arrangements of an approved
regulator only if the Board has approved the level of the fee.
(6)
The Board must make rules containing provision—
(a)
about the form and manner in which applications for approval for the
30
purposes of subsection (5) must be made and the material which must
accompany such applications;
(b)
requiring applicants to have consulted such persons as may be
prescribed by the rules in such manner as may be so prescribed before
such an application is made;
35
(c)
about the procedures and criteria that will be applied by the Board
when determining whether to approve the level of a fee for the
purposes of subsection (5).
(7)
Rules under subsection (6)(c) must, in particular, contain—
(a)
provision requiring the Board, before it determines an application for
40
approval of the level of a fee, to consult such persons as it considers
appropriate about the impact of the proposed fee on persons providing
non-commercial legal services;
(b)
provision about the time limit for the determining of an application.
(8)
In this section “relevant authorised persons”, in relation to an approved
45
regulator, means persons who are authorised by the approved regulator to
carry on activities which are reserved legal activities.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
29

Regulatory conflict
52
Regulatory conflict with approved regulators
(1)
The regulatory arrangements of an approved regulator must make such
provision as is reasonably practicable to prevent regulatory conflicts.
(2)
For the purposes of this section and section 53, a regulatory conflict is a conflict
5
between—
(a)
a requirement of the approved regulator’s regulatory arrangements,
and
(b)
a requirement of the regulatory arrangements of another approved
regulator.
10
(3)
Subsection (4) applies where a body is authorised by an approved regulator
(“the entity regulator”) to carry on an activity which is a reserved legal activity.
(4)
If a conflict arises between—
(a)
a requirement of the regulatory arrangements of the entity regulator, in
relation to the body authorised by the entity regulator or an employee
15
or manager of the body (“an entity requirement”), and
(b)
a requirement of the regulatory arrangements of another approved
regulator in relation to an employee or manager of the body who is
authorised by it to carry on a reserved legal activity (“an individual
requirement”),
20

the entity requirement prevails over the individual requirement.
53
Modification of provision made about regulatory conflict
(1)
An approved regulator (“the applicant regulator”) may make an application
under this section if it considers that the regulatory arrangements of another
approved regulator (“the conflicting regulator”) do not make appropriate
25
provision to prevent a regulatory conflict with the applicant regulator.
(2)
An application under this section is an application made to the Board for the
Board to exercise its powers under section 32 to direct the conflicting
regulator—
(a)
to take steps to modify, in such manner as may be specified in the
30
direction, the provision made by its regulatory arrangements to
prevent a regulatory conflict with the applicant regulator, or
(b)
if its regulatory arrangements do not make any such provision, to make
such provision as may be specified in the direction to prevent such a
conflict.
35
(3)
An approved regulator must consider any request made by an affected
person—
(a)
for the approved regulator to reconsider the provision made by its
regulatory arrangements to prevent a regulatory conflict with another
approved regulator, or
40
(b)
for the approved regulator to make an application under this section.
(4)
An “affected person”, in relation to an approved regulator, means—
(a)
a person authorised by the approved regulator to carry on a reserved
legal activity;
(b)
an employee or manager of such a person.
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Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
30

(5)
Where an application is made under this section, the Board—
(a)
must give the applicant regulator and the conflicting regulator an
opportunity to make representations, and
(b)
may consult any persons it considers appropriate.
(6)
The Board must decide whether or not to give a warning notice in response to
5
the application.
(7)
The Board must make that decision before the end of the period of 6 months
beginning with the day on which the application is received by it.
(8)
The Board must give notice of its decision, and the reasons for it, to the
applicant regulator and the conflicting regulator.
10
(9)
For the purposes of this section “warning notice” means a notice given under
paragraph 2(1) of Schedule 7 (warning of proposed direction under section 32).
54
Regulatory conflict with other regulatory regimes
(1)
The regulatory arrangements of an approved regulator must make such
provision as is reasonably practicable and, in all the circumstances,
15
appropriate—
(a)
to prevent external regulatory conflicts,
(b)
to provide for the resolution of any external regulatory conflicts which
arise, and
(c)
to prevent unnecessary duplication of regulatory provisions made by
20
an external regulatory body.
(2)
For the purposes of this section, an external regulatory conflict is a conflict
between—
(a)
a requirement of the regulatory arrangements of the approved
regulator, and
25
(b)
a requirement of any regulatory provision made by an external
regulatory body.
(3)
For this purpose “external regulatory body” means a person (other than an
approved regulator) who exercises regulatory functions in relation to a
particular description of persons with a view to ensuring compliance with
30
rules (whether statutory or non-statutory) by those persons.
(4)
Regulatory arrangements made for the purposes of subsection (1)(b) may, with
the consent of the Board, provide for the Board to exercise functions in
connection with the resolution of conflicts.
Information
35
55
Provision of information to the Board
(1)
The Board may, by notice, require an approved regulator—
(a)
to provide any information, or information of a description, specified in
the notice, or
(b)
to produce documents, or documents of a description, specified in the
40
notice.
(2)
A notice under subsection (1)—

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
31

(a)
may specify the manner and form in which any information is to be
provided;
(b)
must specify the period within which any information is to be provided
or document is to be produced;
(c)
may require any information to be provided, or document to be
5
produced, to the Board or to a person specified in the notice.
(3)
The Board may, by notice, require a person representing the approved
regulator to attend at a time and place specified in the notice to provide an
explanation of any information provided or document produced under this
section.
10
(4)
The Board may pay to any person such reasonable costs as may be incurred by
that person in connection with—
(a)
the provision of any information, or the production of any document,
by that person pursuant to a notice under subsection (1), or
(b)
that person’s compliance with a requirement imposed under
15
subsection (3).
(5)
The Board, or a person specified under subsection (2)(c), may take copies of or
extracts from a document produced pursuant to a notice under subsection (1).
(6)
For the purposes of this section and section 56, references to an approved
regulator include a body which was, but is no longer, an approved regulator.
20
56
Enforcement of notices under section 55
(1)
Where an approved regulator is unable to comply with a notice given to it
under section 55(1), it must give the Board a notice to that effect stating the
reasons why it cannot comply.
(2)
If an approved regulator refuses, or otherwise fails, to comply with a notice
25
under section 55(1), the Board may apply to the High Court for an order
requiring the approved regulator to comply with the notice or with such
directions for the like purpose as may be contained in the order.
(3)
This section applies in relation to a person to whom a notice is given under
section 55(3) as it applies in relation to an approved regulator to whom a notice
30
is given under section 55(1).
Competition
57
Reports by the OFT
(1)
If the OFT is of the opinion that the regulatory arrangements of an approved
regulator (or any part of them) prevent, restrict or distort competition within
35
the market for reserved legal services to any significant extent, or are likely to
do so, the OFT may prepare a report to that effect.
(2)
A report under subsection (1)—
(a)
must state what, in the OFT’s opinion, is the effect, or likely effect, on
competition of the regulatory arrangements or part of them to which
40
the report relates, and
(b)
may contain recommendations as to the action which the Board should
take for the purpose of ensuring that the regulatory arrangements of
the approved regulator do not prevent, restrict or distort competition.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(3)
Where the OFT makes a report under subsection (1), it must—
(a)
give a copy of the report to the Board, the Consumer Panel and the
approved regulator, and
(b)
publish the report.
(4)
Before publishing a report under subsection (3)(b), the OFT must, so far as
5
practicable, exclude any matter which relates to the private affairs of a
particular individual the publication of which, in the opinion of the OFT,
would or might seriously and prejudicially affect the interests of that
individual.
(5)
The OFT may exercise any of the powers conferred on it by section 174(3) to (5)
10
of the Enterprise Act 2002 (c. 40) (investigation powers) for the purpose of
assisting it in exercising its functions under this section.
(6)
For the purposes of the law of defamation, absolute privilege attaches to any
report of the OFT under this section.
58
The Board’s response to OFT report
15
(1)
This section applies where a report is made by the OFT under section 57 in
respect of an approved regulator.
(2)
The Board must allow the approved regulator a period of 28 days beginning
with the day on which the copy of the report is given to the approved regulator
under section 57, or such longer period as the Board may specify in a particular
20
case, to make representations to the Board about the OFT’s report.
(3)
The Consumer Panel may give the Board such advice as the Consumer Panel
thinks fit regarding the OFT’s report.
(4)
Having considered any representations made under subsection (2) and any
advice given under subsection (3), the Board must notify the OFT of the action
25
(if any) it proposes to take in response to the report.
59
Referral of report by the Lord Chancellor to the Competition Commission
(1)
This section applies where the OFT is satisfied that the Board has failed to give
full and proper consideration to a report made by the OFT, in respect of an
approved regulator, under section 57.
30
(2)
The OFT may give a copy of its report to the Lord Chancellor.
(3)
The OFT must notify the Board and the approved regulator if it gives a copy of
its report to the Lord Chancellor.
(4)
On receiving a report under subsection (2), the Lord Chancellor must—
(a)
give the Competition Commission a copy of the report, and
35
(b)
seek its advice on what action (if any) should be taken by the Lord
Chancellor under section 61.
60
Duties of the Competition Commission
(1)
Where the Lord Chancellor seeks the advice of the Competition Commission
under section 59, the Commission must investigate the matter.
40

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
33

(2)
The Commission must then make its own report on the matter unless it
considers that, as a result of any change of circumstances, no useful purpose
would be served by a report.
(3)
If the Commission decides in accordance with subsection (2) not to make a
report, it must make a statement setting out the change of circumstances which
5
resulted in that decision.
(4)
The Commission must comply with subsection (2) or (3) within the period of 3
months beginning with the day on which it receives a copy of the OFT’s report
under section 59(4)(a).
(5)
A report made under this section must state the Commission’s conclusion as to
10
whether any of the matters which is the subject of the report has or is likely to
have the effect of preventing, restricting or distorting competition within the
market for reserved legal services to a significant extent.
(6)
A report under this section stating the Commission’s conclusion that there is,
or is likely to be, such an effect must also—
15
(a)
state whether or not the Commission considers that that effect is
justified, and
(b)
if it states that the Commission considers that it is not justified, state its
conclusion as to what action, if any, ought to be taken by the Board.
(7)
When determining under subsection (6)(b) any action to be taken by the Board,
20
the Commission must ensure—
(a)
that the action stated is action which the Board has power to take, and
(b)
so far as reasonably possible, that the action stated is compatible with
the functions conferred, and obligations imposed, on the Board by or
under this Act.
25
(8)
A report under this section must contain such an account of the Commission’s
reasons for its conclusions as is expedient, in the opinion of the Commission,
for facilitating proper understanding of them.
(9)
Sections 109 to 115 of the Enterprise Act 2002 (c. 40) (investigation powers)
apply in relation to an investigation under this section as they apply in relation
30
to an investigation made on a reference made to the Commission under Part 3
of that Act (mergers), but as if—
(a)
in section 110(4) of that Act, the reference to the publication of the
report of the Commission on the reference concerned were a reference
to the Commission making a report under subsection (2) or a statement
35
under subsection (3), and
(b)
in section 111(5)(b)(ii) of that Act the day referred to were the day on
which the Commission makes that report or statement.
(10)
If the Commission makes a report or a statement under this section it must—
(a)
give a copy to the Lord Chancellor, the Board, the Consumer Panel and
40
the approved regulator to which the OFT’s report relates, and
(b)
publish the report or statement.
61
Lord Chancellor’s power to give directions
(1)
The Lord Chancellor may direct the Board to take such action as the Lord
Chancellor considers appropriate in connection with any matter raised in a
45
report made by the OFT under section 57.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
34

(2)
Before giving a direction under subsection (1), the Lord Chancellor must
consider any report from the Competition Commission under section 60 on
that matter.
(3)
When exercising the power to give a direction under subsection (1), the Lord
Chancellor must ensure—
5
(a)
that the action stated is action which the Board has power to take, and
(b)
so far as reasonably possible, that the action stated in any direction is
compatible with the functions conferred, and obligations imposed, on
the Board by or under this Act.
(4)
The Lord Chancellor must publish a direction given under this section.
10
The Board as approved regulator
62
The Board as an approved regulator
(1)
The Lord Chancellor may by order—
(a)
designate the Board as an approved regulator in relation to one or more
reserved legal activities;
15
(b)
modify the functions of the Board, and make such other provision
relating to those functions as the Lord Chancellor considers necessary
or expedient, with a view to enabling the Board to discharge its
functions as an approved regulator effectively and efficiently;
(c)
cancel the Board’s designation as an approved regulator in relation to
20
one or more reserved legal activities.
(2)
But the Lord Chancellor may make an order under subsection (1) only if—
(a)
the Board has made a recommendation in accordance with section 66,
and
(b)
the order is in the same form as, or in a form which is not materially
25
different from, the draft order annexed to that recommendation.
(3)
If the Lord Chancellor decides not to make an order pursuant to a
recommendation made under section 66, the Lord Chancellor must—
(a)
give the Board a notice stating the reasons for that decision, and
(b)
publish the notice.
30
(4)
In discharging its functions as an approved regulator the Board must take such
steps as are necessary to ensure an appropriate financial and organisational
separation between the activities of the Board that relate to the carrying out of
those functions and the other activities of the Board.
(5)
An order under this section may make such modifications of provision made
35
by or under any enactment (including this Act or any Act passed after this Act)
as the Lord Chancellor considers necessary or expedient.
63
The Board’s designation under section 62(1)(a)
(1)
This section applies in relation to an order under section 62(1)(a) (an order
designating the Board as an approved regulator).
40
(2)
Subject to subsection (3), the order may designate the Board as an approved
regulator in relation to a reserved legal activity only where—