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
35

(a)
a body’s designation as an approved regulator in relation to the activity
is cancelled under section 45, or
(b)
the activity becomes a reserved legal activity by virtue of an order
under section 24.
(3)
Subsection (2) does not prevent the order having effect in advance of an event
5
within paragraph (a) or (b) of that subsection for the purpose of enabling the
Board to authorise persons to carry on activities which constitute the reserved
legal activity in question with effect from the occurrence of the event.
(4)
The order must ensure that the Board, acting as an approved regulator, may
make regulatory arrangements or modify its regulatory arrangements only
10
with the approval of the Board (acting otherwise than in its capacity as an
approved regulator or as a licensing authority under Part 5).
64
Modification of the Board’s functions under section 62(1)(b)
(1)
This section applies in relation to an order under section 62(1)(b) (an order
modifying the functions of the Board).
15
(2)
The order may include (among other things) provision conferring on the Board
powers to do any of the following—
(a)
to authorise (otherwise than by the grant of a licence under Part 5)
persons or any category of persons (whether corporate or
unincorporate) to carry on one or more activities which are reserved
20
legal activities in relation to which the Board is designated as an
approved regulator;
(b)
to make qualification regulations;
(c)
to make provision as to the educational, training and other
requirements to be met by regulated persons who are not relevant
25
authorised persons;
(d)
to make practice rules and conduct rules;
(e)
to make disciplinary arrangements in relation to regulated persons
(including discipline rules);
(f)
to make rules requiring the payment of fees specified in or determined
30
in accordance with the rules;
(g)
to make indemnification arrangements;
(h)
to make compensation arrangements;
(i)
to make rules as to the treatment of money (including money held in
trust) which is received, held or dealt with for clients, or other persons,
35
by regulated persons, and as to the keeping by such persons of accounts
in respect of such money;
(j)
to take steps for the purpose of ascertaining whether or not the
provisions of rules or regulations made, or any code or guidance
issued, by the Board in its capacity as an approved regulator are being
40
complied with, and to make rules requiring relevant authorised
persons to produce documents and provide information for that
purpose;
(k)
to delegate any of the functions exercisable by the Board in its capacity
as an approved regulator to such persons as it considers appropriate.
45
(3)
The order may—
(a)
provide for any provision of Schedule 14 (licensing authority’s powers
of intervention)—

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
36

(i)
to apply in relation to the Board (in its capacity as an approved
regulator) and regulated persons as it applies in relation to a
licensing authority and licensed bodies (or managers or
employees of such bodies), or
(ii)
to so apply with such modifications as are prescribed by the
5
order, or
(b)
make provision, in relation to the Board (in that capacity) and regulated
persons, corresponding to any of the provisions made, in relation to
licensing authorities and licensed bodies (or managers or employees of
such bodies), by that Schedule.
10
(4)
For the purposes of giving effect to indemnification arrangements and
compensation arrangements, the order may authorise the Board to make
rules—
(a)
authorising or requiring the Board to establish and maintain a fund or
funds;
15
(b)
authorising or requiring the Board to take out and maintain insurance
with authorised insurers;
(c)
requiring relevant authorised persons or relevant authorised persons of
any specific description to take out and maintain insurance with
authorised insurers.
20
(5)
In this section—
“authorised insurer” means a person within any of the following
paragraphs—
(a)
a person who has permission under Part 4 of the Financial
Services and Markets Act 2000 (c. 8) to effect or carry out
25
contracts of insurance of a relevant class;
(b)
an EEA firm (within the meaning of that Act) of the kind
mentioned in paragraph 5(d) of Schedule 3 to that Act, which
has permission under paragraph 15 of that Schedule (as a result
of qualifying for authorisation under paragraph 12 of that
30
Schedule) to effect or carry out contracts of a relevant class;
(c)
a person who does not fall within paragraph (a) or (b) and who
may lawfully effect or carry out contracts of insurance of a
relevant class in a member State other than the United
Kingdom;
35
“regulated person” has the meaning given by section 21;
“relevant authorised person” means a person authorised by the Board
(other than by the grant of a licence under Part 5) to carry on one or
more activities which are reserved legal activities.
(6)
For the purposes of this section—
40
(a)
a contract of insurance is of a relevant class if it insures against a risk
arising from accident, credit, legal expenses, general liability to third
parties, sickness, suretyship or miscellaneous financial loss, and
(b)
the definition of “authorised insurer” in subsection (5) must be read
with section 22 of the Financial Services and Markets Act 2000, and any
45
relevant order under that section, and with Schedule 2 to that Act.
65
Cancellation of the Board’s designation under section 62(1)(c)
(1)
This section applies in relation to an order under section 62(1)(c) (cancellation
of Board’s designation as an approved regulator).

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
37

(2)
Where such an order is made, section 46 (other than subsection (4)(b)) and
section 47 (transfer arrangements etc on cancellation of approved regulator’s
designation) apply in relation to the Board and relevant authorised persons as
they apply to an approved regulator whose designation is cancelled under
section 45 and persons authorised by that approved regulator to carry on
5
activities which are reserved legal activities.
(3)
In this section “relevant authorised persons” has the same meaning as in
section 64.
66
The Board’s power to recommend orders made under section 62
(1)
The Board may recommend to the Lord Chancellor that the Lord Chancellor
10
make an order under section 62 in the form of a draft order prepared by the
Board and annexed to the recommendation.
(2)
Before making a recommendation under this section, the Board must give each
of the persons listed in subsection (3) a notice containing—
(a)
a copy of the proposed recommendation,
15
(b)
a copy of the proposed draft order, and
(c)
a statement specifying a period within which representations may be
made about the proposals.
(3)
Those persons are—
(a)
the Lord Chancellor,
20
(b)
the OFT,
(c)
the Consumer Panel,
(d)
the Lord Chief Justice, and
(e)
such other persons as the Board considers it reasonable to consult
regarding the proposals.
25
(4)
The Board must publish a notice given under subsection (2).
(5)
Before making the recommendation, the Board must have regard to any
representations duly made (whether by persons within subsection (3) or
otherwise).
(6)
If the draft order to be annexed to the recommendation differs from the draft
30
contained in the notice under subsection (2) in a way which is, in the opinion
of the Board, material, the Board must, before making the recommendation,
publish the draft order along with a statement detailing the changes made and
the reasons for those changes.
67
Effect of the Board’s designation as an approved regulator
35
(1)
The powers of the Board under sections 31 to 51 and 55 (regulatory powers in
respect of approved regulators) are not exercisable by it in relation to the Board
in its capacity as an approved regulator.
(2)
In section 53 references to an approved regulator do not include the Board in
its capacity as an approved regulator.
40
(3)
Sections 57 to 61 (reports by OFT etc) do not apply in relation to the Board in
its capacity as an approved regulator.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
38

68
Regulatory conflict and the Board as approved regulator
(1)
An approved regulator may make a request under subsection (4) if it considers
that the regulatory arrangements of the Board (in its capacity as an approved
regulator) do not make appropriate provision to prevent a conflict between—
(a)
a requirement of those regulatory arrangements, and
5
(b)
a requirement of the regulatory arrangements of the approved
regulator.
(2)
An affected person in relation to an approved regulator may request the
approved regulator to exercise its powers under subsection (1).
(3)
An affected person in relation to the Board may make a request under
10
subsection (4) if the person considers that the regulatory arrangements of the
Board (in its capacity as an approved regulator) do not make appropriate
provision to prevent a conflict between—
(a)
a requirement of those regulatory arrangements, and
(b)
a requirement of the regulatory arrangements of an approved
15
regulator.
(4)
The request is a request made to the Board (in its capacity as an approved
regulator) that it reconsider the provision made by its regulatory arrangements
to prevent a regulatory conflict with the conflicting regulator.
(5)
An affected person in relation to the Board may make an application under
20
subsection (6) if the person considers that the regulatory arrangements of an
approved regulator do not make appropriate provision to prevent a conflict
between—
(a)
a requirement of those regulatory arrangements, and
(b)
a requirement of the regulatory arrangements of the Board (in its
25
capacity as an approved regulator).
(6)
The application is an application to the Board for it to exercise its powers under
section 32 to direct the approved regulator—
(a)
to take steps to modify, in such manner as may be specified in the
direction, the provision made by its regulatory arrangements to
30
prevent a regulatory conflict with the Board (in its capacity as an
approved 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
(7)
An affected person in relation to an approved regulator (other than the Board)
may make a request under subsection (8) if the person considers that the
regulatory arrangements of the approved regulator do not make appropriate
provision to prevent a conflict between—
(a)
a requirement of those regulatory arrangements, and
40
(b)
a requirement of the regulatory arrangements of the Board (in its
capacity as an approved regulator).
(8)
The request is a request to the approved regulator that it reconsider the
provision made by its regulatory arrangements to prevent a regulatory conflict
with the Board.
45
(9)
The Board (in its capacity as an approved regulator) and any other approved
regulator must consider any request made to it under this section.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
39

(10)
Subsections (5) to (8) of section 53 apply in relation to an application under
subsection (6) as they apply in relation to an application under that section,
except that—
(a)
references to the applicant regulator are to be read as references to the
person who made the application, and
5
(b)
references to the conflicting regulator are to be construed in accordance
with this section.
(11)
In this section—
“affected person” in relation to the Board or any other approved
regulator, means—
10
(a)
any person authorised by the body to carry on a reserved legal
activity, or
(b)
an employee or manager of such a person;
“conflicting regulator” means—
(a)
in a case within subsection (1), the approved regulator making
15
the request, and
(b)
in a case within subsection (3) or (5), the approved regulator
whose regulatory arrangements are considered to conflict with
those of the Board.
Functions of approved regulators etc
20
69
Modification of the functions of approved regulators etc
(1)
The Lord Chancellor may by order modify, or make other provision relating to,
the functions of an approved regulator or any other body (other than the
Board).
(2)
The Lord Chancellor may make an order under subsection (1) only if—
25
(a)
the Board has made a recommendation under this section,
(b)
a draft order was annexed to the recommendation, and
(c)
the order is in the same form as, or a form not materially different from,
that draft order.
(3)
The Board may make a recommendation under this section only with a view to
30
an order being made which enables the body to which it relates to do one or
more of the following—
(a)
to become designated by an order under Part 2 of Schedule 4 as an
approved regulator, or designated by an order under Part 1 of Schedule
10 as a licensing authority, in relation to one or more reserved legal
35
activities;
(b)
to authorise persons or any category of persons (whether corporate or
unincorporate) to carry on one or more activities which are reserved
legal activities in relation to which the body is (at the time the
authorisation has effect) designated as an approved regulator, or to
40
make regulatory arrangements;
(c)
to carry out its role as an approved regulator (including its role, if any,
as a licensing authority) more effectively or efficiently;
(d)
to become a qualifying regulator under Part 1 of Schedule 18;
(e)
if it is a designated qualifying regulator under section 86A of the
45
Immigration and Asylum Act 1999 (c. 33), to authorise persons to
provide any additional advice or services the provision of which

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
40

amounts to the provision of immigration advice or immigration
services.
(4)
Subsections (2) (other than paragraph (a)), (3) and (4) of section 64 apply in
relation to an order under this section as they apply in relation to an order
under section 62(1)(b) in relation to the Board.
5
(5)
An order under this section also may make provision in relation to—
(a)
the provision of immigration advice or immigration services, and
(b)
persons authorised to provide such advice and services by the body to
which the order relates,

corresponding to the provision which may be made by virtue of section 64(2)
10
to (4) in relation to reserved legal activities and persons authorised to carry on
those activities.
(6)
An order under this section may modify provisions made by or under any
enactment (including this Act or any Act passed after this Act), prerogative
instrument or other instrument or document.
15
(7)
Any provision made by an order under this section may be expressed to be
conditional upon—
(a)
the body to which the order relates being designated by an order under
Part 2 of Schedule 4 as an approved regulator, or by an order under Part
1 of Schedule 10 as a licensing authority, in relation to one or more
20
reserved legal activities specified in the proposed draft order, or
(b)
the body to which the order relates becoming a designated qualifying
regulator under section 86A of the Immigration and Asylum Act 1999
(c. 33).
(8)
The powers to make an order conferred by this section are without prejudice
25
to any powers (statutory or non-statutory) which an approved regulator or
other body may have apart from this section.
70
Procedural requirements relating to recommendations under section 69
(1)
A recommendation may be made under section 69 only with the consent of the
approved regulator or other body to which the recommendation relates.
30
(2)
Before making a recommendation under that section, the Board must publish
a draft of—
(a)
the proposed recommendation, and
(b)
the proposed draft order.
(3)
The draft must be accompanied by a notice which states that representations
35
about the proposals may be made to the Board within a specified period.
(4)
Before making the recommendation, the Board must have regard to any
representations duly made.
(5)
If the draft order to be annexed to the recommendation differs from the draft
published under subsection (2)(b) in a way which is, in the opinion of the
40
Board, material, the Board must, before making the recommendation, publish
the draft order along with a statement detailing the changes made and the
reasons for those changes.

Legal Services Bill [HL]
Part 5 — Alternative business structures
41

Part 5
Alternative business structures
Introductory
71
Carrying on of activities by licensed bodies
(1)
The provisions of this Part have effect for the purpose of regulating the
5
carrying on of reserved legal activities and other activities by licensed bodies.
(2)
In this Act “licensed body” means a body which holds a licence in force under
this Part.
72
“Licensable body”
(1)
For the purposes of this Act, a body is a “licensable body” if—
10
(a)
at least one manager of the body is a non-authorised person, or
(b)
at least one person who has an interest in shares in the body is a non-
authorised person.
(2)
For the purposes of this Act, whether a person has an interest in shares in any
description of body is to be determined in accordance with section 820 of the
15
Companies Act 2006 (c. 46).
(3)
In this Act “shares” means—
(a)
in relation to a body with a share capital, allotted shares (within the
meaning of the Companies Acts);
(b)
in relation to a body with capital but no share capital, rights to share in
20
the capital of the body;
(c)
in relation to a body without capital, interests—
(i)
conferring any right to share in the profits, or liability to
contribute to the losses, of the body, or
(ii)
giving rise to an obligation to contribute to the debts or
25
expenses of the body in the event of a winding up.
Licensing authorities
73
Licensing authorities and relevant licensing authorities
(1)
In this Act “licensing authority” means—
(a)
the Board, or
30
(b)
an approved regulator which is designated as a licensing authority
under Part 1 of Schedule 10 and whose licensing rules are approved for
the purposes of this Act.
(2)
For the purposes of this Act—
(a)
the Board is a licensing authority in relation to all reserved legal
35
activities, and
(b)
an approved regulator within subsection (1)(b) is a licensing authority
in relation to any reserved legal activity in relation to which the
designation is made.