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 5 — Alternative business structures
57

Special kinds of body
105
Trade union exemptions
(1)
Paragraphs 11 to 14 of Schedule 11 (Head of Legal Practice and Head of
Finance and Administration) do not apply in relation to a licensed body which
is a trade union.
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(2)
Schedule 13 (ownership) does not apply in relation to an applicant for a licence,
or a licensed body, which is a trade union.
106
Power to modify application of licensing rules etc to special bodies
(1)
This section applies to a licensed body (or an applicant for a licence) which is—
(a)
a trade union,
10
(b)
a not for profit body,
(c)
a community interest company,
(d)
a low-risk body (see section 108), or
(e)
a body of such other description as may be prescribed by order made
by the Lord Chancellor on the recommendation of the Board.
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(2)
A body to which this section applies may apply to the relevant licensing
authority, in accordance with its licensing rules, for the authority to make an
order under this section.
(3)
The licensing authority may make one or both of the following orders—
(a)
that the authority’s licensing rules apply in relation to the body with
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such modifications as may be specified in the order;
(b)
that Schedule 13 does not apply in relation to the body, or applies in
relation to the body with such modifications as may be specified in the
order.
(4)
On an application under subsection (2), the licensing authority may make any
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order which the authority—
(a)
has power to make under subsection (3), and
(b)
considers appropriate in all the circumstances of the case,

whether or not it is the order for which the applicant applied.
(5)
In deciding what order (if any) is appropriate in all the circumstances of the
30
case, the licensing authority must in particular have regard to—
(a)
the reserved legal activities and non-reserved activities which the body
carries on (or proposes to carry on),
(b)
the nature of the persons to whom the body provides (or proposes to
provide) services,
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(c)
any non-authorised persons who have an interest in shares in the
licensed body or hold a material interest in the licensed body, or are
managers of the body, and
(d)
any other matter specified in the authority’s licensing rules.
(6)
If the licensing authority makes an order under subsection (3), the authority’s
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licensing rules or Schedule 13 or both (as the case may be) have effect in
relation to that body in accordance with that order.

Legal Services Bill [HL]
Part 5 — Alternative business structures
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(7)
The licensing authority may not make an order under subsection (3)(a) in
relation to provisions of its licensing rules made in accordance with the
following paragraphs of Schedule 11—
(a)
paragraphs 2 and 3 (determination and review of applications for a
licence);
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(b)
paragraphs 7 and 8 (applications under this section);
(c)
paragraphs 9(3), 18 and 23 (disqualifications);
(d)
paragraph 10(2) (management);
(e)
paragraph 16 (carrying on of licensed activities);
(f)
paragraph 24(1), (2), (3) and (8) (grounds for suspending and revoking
10
licences);
(g)
paragraph 24(10) and (11) (procedure for suspending or revoking
licence);
(h)
paragraph 26(2) (review of decision to suspend or revoke licence).
(8)
The licensing authority may not make an order under subsection (3)(a) which
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results in its licensing rules, as they apply in relation to the body to which the
order relates, not making the provision required by—
(a)
section 83(5)(a) to (g);
(b)
paragraph 1 of Schedule 11 (applications for licences);
(c)
paragraph 4(3) of that Schedule (renewal of licences);
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(d)
paragraph 6 of that Schedule (modification of licence);
(e)
paragraph 20 of that Schedule (accounts).
(9)
If the licensing authority’s licensing rules, as they apply in relation to a body
to which an order under subsection (3)(a) relates, make provision requiring the
body to have—
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(a)
a Head of Legal Practice approved by the licensing authority, or
(b)
a Head of Finance and Administration approved by the licensing
authority,

they must also provide for a review by the licensing authority of any decision
by it to refuse or withdraw that approval.
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107
Modifications under section 106: supplementary
(1)
This section applies where a licensing authority has made an order under
section 106 in relation to a body to which that section applies.
(2)
The licensing authority must revoke the order under section 106 if it becomes
aware that the body in respect of which the order was made is no longer a body
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to which that section applies.
(3)
The licensing authority may revoke or otherwise modify an order under
section 106—
(a)
on the application of the body in relation to which the order was made,
or
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(b)
of its own motion.
(4)
It may do so only if it considers it appropriate to do so in all the circumstances
of the case, having regard to the matters mentioned in section 106(5).

Legal Services Bill [HL]
Part 5 — Alternative business structures
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108
“Low risk body”
(1)
A body (“B”) is a low risk body if the management condition and the
ownership condition are satisfied in relation to it.
(2)
The management condition is that the number of managers of the body who
are non-authorised persons is less than 10% of the total number of managers.
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(3)
The ownership condition is that—
(a)
the proportion of shares in B in which non-authorised persons have an
interest is less than 10%, and
(b)
the proportion of the voting power in B which non-authorised persons
are entitled to exercise, or control the exercise of, is less than 10%, and
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(c)
if B has a parent undertaking (“P”)—
(i)
the proportion of shares in P in which non-authorised persons
have an interest is less than 10%, and
(ii)
the proportion of the voting power in P which non-authorised
persons are entitled to exercise, or control the exercise of, is less
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than 10%.
(4)
For the purposes of this section—
“parent undertaking” has the same meaning as in the Financial Services
and Markets Act 2000 (c. 8) (see section 420);
“voting power”, in relation to a body which does not have general
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meetings at which matters are decided by the exercise of voting rights,
means the right under the constitution of the body to direct the overall
policy of the body or alter the terms of its constitution.
109
Foreign bodies
The Lord Chancellor may by order make provision for the modification of any
25
provision of this Part in its application to a body of persons formed under, or
in so far as the body is recognised by, law having effect outside England and
Wales.
Supplementary provision
110
Reporting requirements relating to Part 5
30
(1)
The Board’s annual report must deal with how, in the Board’s opinion, the
activities of licensing authorities and licensed bodies have affected the
regulatory objectives.
(2)
This section does not apply to an annual report for a financial year before the
first financial year in which a licence is issued under this Part.
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(3)
In this section “annual report” and “financial year” have the same meaning as
in section 6.
111
Interpretation of Part 5
(1)
In this Part—
“licensed activity”, in relation to a licensed body, means an activity—
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(a)
which is a reserved legal activity, and

Legal Services Bill [HL]
Part 6 — Legal Complaints
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(b)
which the licensed body is authorised to carry on by virtue of its
licence;
“non-authorised person” means a person who is not within subsection (2);
“non-reserved activity” means an activity which is not a reserved legal
activity;
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“relevant appellate body”, in relation to decisions made by a licensing
authority under this Part, means the body having power to hear
appeals from those decisions (whether by virtue of an order under
section 80 or otherwise).
(2)
The following persons are within this subsection—
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(a)
an authorised person in relation to an activity which constitutes a
reserved legal activity,
(b)
a registered foreign lawyer (within the meaning of section 89 of the
Courts and Legal Services Act 1990 (c. 41)),
(c)
a person entitled to pursue professional activities under a professional
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title to which the Directive applies in a state to which the Directive
applies (other than the title of barrister or solicitor in England and
Wales),
(d)
a body which provides professional services such as are provided by
persons within paragraph (a) or lawyers of other jurisdictions, and all
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the managers of which and all the persons with an interest in shares in
which—
(i)
are within paragraphs (a) to (c), or
(ii)
are within this paragraph by virtue of sub-paragraph (i).
(3)
In subsection (2)(c) “the Directive” means Directive 98/5/EC of the European
25
Parliament and the Council, to facilitate practice of the profession of lawyer on
a permanent basis in a Member State other than that in which the qualification
was obtained.
Part 6
Legal Complaints
30
Complaints procedures of authorised persons
112
Complaints procedures of authorised persons
(1)
The regulatory arrangements of an approved regulator must make provision
requiring each relevant authorised person—
(a)
to establish and maintain procedures for the resolution of relevant
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complaints, or
(b)
to participate in, or make arrangements to be subject to, such
procedures established and maintained by another person,

and provision for the enforcement of that requirement.
(2)
The provision made for the purposes of subsection (1) must satisfy such
40
requirements as the Board may, from time to time, specify for the purposes of
that subsection.
(3)
In this section—

Legal Services Bill [HL]
Part 6 — Legal Complaints
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“relevant authorised person”, in relation to an approved regulator, means
a person in relation to whom the approved regulator is a relevant
approved regulator;
“relevant complaint”, in relation to a relevant authorised person, means a
complaint which—
5
(a)
relates to an act or omission of that person, and
(b)
may be made under the scheme provided for by this Part.
(4)
The Board must publish any requirements specified by it for the purposes of
subsection (2).
(5)
This section applies in relation to the licensing rules of the Board as it applies
10
in relation to the regulatory arrangements of an approved regulator except that
subsection (3) has effect as if for the definition of “relevant authorised person”
there were substituted—
““relevant authorised person”, in relation to the Board, means a
person licensed by the Board under Part 5;”.
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Overview of the scheme
113
Overview of the scheme
(1)
This Part provides for a scheme under which complaints which—
(a)
relate to an act or omission of a person (“the respondent”) in carrying
on an activity, and
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(b)
are within the jurisdiction of the scheme (see section 125),

may be resolved quickly and with minimum formality by an independent
person.
(2)
Under the scheme—
(a)
redress may be provided to the complainant, but
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(b)
no disciplinary action may be taken against the respondent.
(3)
Section 158 prevents provision relating to redress being included in the
regulatory arrangements of an approved regulator, or licensing rules made by
the Board in its capacity as a licensing authority.
(4)
But neither the scheme nor any provision made by this Part affects any power
30
of an approved regulator, or the Board in its capacity as a licensing authority,
to take disciplinary action.
(5)
“Disciplinary action” means the imposition of sanctions, in respect of a breach
of conduct rules or discipline rules, on a person who is an authorised person in
relation to an activity which is a reserved legal activity.
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The Office for Legal Complaints
114
The Office for Legal Complaints
(1)
There is to be a body corporate called the Office for Legal Complaints (in this
Act referred to as “the OLC”).
(2)
Schedule 15 is about the OLC.
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