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Public Bill Committee: 12th June 2007                  

167

 

Legal Services Bill-[ [], continued

 
 

Bridget Prentice

 

5

 

Clause  45,  page  23,  line  29,  leave out from ‘have,’ to ‘and’ in line 30 and insert ‘an

 

adverse impact on one or more of the regulatory objectives,’.

 

 

Members’ explanatory statement

 

This amendment reverses one made in the House of Lords which changed a condition for Board

 

action so as to refer to the likelihood of a significant adverse impact on the regulatory objectives

 

taken as a whole, rather than an adverse effect on one or more of those objectives.

 


 

Mr Henry Bellingham

 

Mr Jonathan Djanogly

 

Mr Tobias Ellwood

 

250

 

Clause  47,  page  25,  line  27,  leave out subsection (5) and insert—

 

‘(5)    

If the order which the Board intends to make differs from the draft published

 

under subsection (2) in a way which in the opinion of the Board is material, the

 

Board must, before making the order, publish the draft order along with a

 

statement detailing the changes made and the reasons for those changes.’.

 


 

Bridget Prentice

 

6

 

Clause  49,  page  27,  line  1,  leave out subsection (3) and insert—

 

‘( )    

In preparing a statement of policy, the Board must have regard to the principle

 

that its principal role is the oversight of approved regulators.

 

( )    

The statement of policy prepared under subsection (1) must—

 

(a)    

take account of the desirability of resolving informally matters which

 

arise between the Board and an approved regulator, and

 

(b)    

specify how, in exercising the functions mentioned in that subsection, the

 

Board will comply with the requirements of section 3(3) (regulatory

 

activities to be proportionate, consistent and targeted only at cases in

 

which action is needed, etc).’.

 

 

Members’ explanatory statement

 

This amendment replaces Clause 49(3), inserted by amendment in the House of Lords, with new

 

subsections setting out the matters that the Board must have regard to when preparing policy state­

 

ments pursuant to Clause 49(1) and (2) and imposing requirements as to the content of statements

 

under Clause 49(1).

 



 
 

Public Bill Committee: 12th June 2007                  

168

 

Legal Services Bill-[ [], continued

 
 

Mr Henry Bellingham

 

Mr Jonathan Djanogly

 

Mr Tobias Ellwood

 

251

 

Clause  51,  page  28,  line  4,  at end insert—

 

‘(2A)    

Practising fee income shall be kept separate from the other assets of a regulator.’.

 


 

Mr Jonathan Djanogly

 

Mr Henry Bellingham

 

Mr Tobias Ellwood

 

258

 

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.’.

 

 

Members’ explanatory statement

 

This amendment would bring parity between the different forms of conflict an approved regulator

 

might face - either with external regulators or with approved regulators.

 

Mr Henry Bellingham

 

Mr Jonathan Djanogly

 

Mr Tobias Ellwood

 

252

 

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,


 
 

Public Bill Committee: 12th June 2007                  

169

 

Legal Services Bill-[ [], continued

 
 

(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).’.

 


 

Mr Henry Bellingham

 

Mr Jonathan Djanogly

 

Mr Tobias Ellwood

 

253

 

Clause  55,  page  31,  line  6,  at end insert—

 

‘(d)    

shall give a reason and explanation for such notice.’.

 


 

Simon Hughes

 

John Hemming

 

Mr Henry Bellingham

 

Mr Jonathan Djanogly

 

Mr Tobias Ellwood

 

226

 

Clause  63,  page  35,  line  4,  at end insert ‘and, in either case, no other approved

 

regulator is suitable and willing to regulate the activity in question.’.

 

 

Members’ explanatory statement

 

To ensure that the Legal Services Board directly regulates the legal services only as a last resort,

 

where there is no other approved regulator which could regulate the activity in question.

 


 

Mr Jonathan Djanogly

 

Mr Henry Bellingham

 

Mr Tobias Ellwood

 

268

 

Clause  71,  page  41,  line  8,  at end insert ‘, provided that a body is not a “licensable

 

body” if the only managers who are non-authorised persons are individuals who do not

 

directly provide any services to consumers.’.

 

 

Members’ explanatory statement

 

To ensure that a law firm or LLP will not become an ABS solely because it wishes to appoint as

 

managers non-lawyer professionals. This will apply only if these appointees only provide services

 

to their firms internally and do not directly provide services to clients of the firm.

 


 

Bridget Prentice

 

111

 

Clause  72,  page  41,  line  10,  leave out subsections (1) and (2) and insert—

 

‘(1)    

A body (“B”) is a licensable body if a non-authorised person—


 
 

Public Bill Committee: 12th June 2007                  

170

 

Legal Services Bill-[ [], continued

 
 

(a)    

is a manager of B, or

 

(b)    

has an interest in B.

 

(2)    

A body (“B”) is also a licensable body if—

 

(a)    

another body (“A”) is a manager of B, or has an interest in B, and

 

(b)    

non-authorised persons are entitled to exercise, or control the exercise of,

 

at least 10% of the voting rights in A.

 

(2A)    

For the purposes of this Act, a person has an interest in a body if—

 

(a)    

the person holds shares in the body, or

 

(b)    

the person is entitled to exercise, or control the exercise of, voting rights

 

in the body.

 

(2B)    

A body may be licensable by virtue of both subsection (1) and subsection (2).

 

(2C)    

For the purposes of this Act, a non-authorised person has an indirect interest in a

 

licensable body if the body is licensable by virtue of subsection (2) and the non-

 

authorised person is entitled to exercise, or control the exercise of, voting rights

 

in A.’.

 

 

Members’ explanatory statement

 

This amendment refines the definition of “licensable body”, by replacing the “interest in shares”

 

test with an “interest” test (sub-paragraph (1)(b)) and the test in subsection (2). Subsection (2A)

 

defines “interest”, and subsection (2C) defines non-authorised persons with an “indirect interest”

 

in a body licensable because of subsection (2).

 

Mr Jonathan Djanogly

 

Mr Henry Bellingham

 

Mr Tobias Ellwood

 

257

 

Clause  72,  page  41,  line  10,  leave out subsection (1) and insert—

 

‘(1)    

For the purposes of this Act, a body is a “licensable body” if—

 

(a)    

at least one manager of the body is an individual who is a non-authorised

 

person who provides services directly or indirectly to clients; or

 

(b)    

more than 25 per cent. of the managers of the body are individuals who

 

are not authorised persons regardless of whether they provide services

 

directly or indirectly to clients; or

 

(c)    

at least one person who has an interest in shares in the body is a non-

 

authorised person and is not a manager of that body.’.

 

 

Mr Jonathan Djanogly

 

Mr Henry Bellingham

 

Mr Tobias Ellwood

 

259

 

Clause  72,  page  41,  line  13,  at end insert—

 

‘(1A)    

A body is not a licensable body if it is regulated under section 9(A) of the

 

Administration of Justice Act 1985.’.

 

 

Members’ explanatory statement

 

This purpose of this amendment is to enable Legal Disciplinary Practices to be regulated under

 

the Law Society’s ordinary regulatory regime providing at least three-quarters of their members

 

are lawyers, they do not have external ownership and, any non-lawyer partners or members do not

 

provide services direct to clients.


 
 

Public Bill Committee: 12th June 2007                  

171

 

Legal Services Bill-[ [], continued

 
 

Bridget Prentice

 

112

 

Clause  72,  page  41,  line  26,  at end insert ‘, and references to the holding of shares,

 

or to a shareholding, are to be construed accordingly.’.

 

 

Members’ explanatory statement

 

This amendment provides that references to the holding of shares or to a shareholding are to be

 

construed in accordance with the definition of “shares” in section 72(3).

 


 

Bridget Prentice

 

7

 

Clause  83,  page  48,  line  24,  leave out paragraph (e).

 

 

Members’ explanatory statement

 

This amendment reverses one made in the House of Lords requiring licensing rules to contain pro­

 

vision for specific attention to be paid to the likely effect on access to justice of each application

 

by a body to be licensed under Part 5 of the Bill.

 


 

Mr Jonathan Djanogly

 

Mr Henry Bellingham

 

Mr Tobias Ellwood

 

Simon Hughes

 

John Hemming

 

211

 

Schedule  11,  page  183,  line  8,  at end insert—

 

‘( )    

Licensing rules may provide the fees to cover the whole cost to the licensing

 

authority of dealing with the application, whether the application is granted or

 

not.’.

 

 

Members’ explanatory statement

 

The amendment is intended to make it clear that licensing rules can put the whole cost of dealing

 

with an application on the individual applicant, rather than leaving part to be borne by the licens­

 

ing authority itself (and hence by other firms regulated by that licensing authority).

 

Bridget Prentice

 

134

 

Schedule  11,  page  189,  line  43,  leave out ‘an interest in shares in the body’ and

 

insert ‘a shareholding in the licensed body, or a parent undertaking of the licensed body,’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 162 and reflects the changes made to paragraph 38(1)(a)

 

of Schedule 13 by that amendment.

 

Bridget Prentice

 

135

 

Schedule  11,  page  189,  line  44,  at end insert—

 

‘( )    

if the relevant licensing rules make the provision mentioned in

 

paragraph 38(1)(aa) of that Schedule, a non-authorised person has


 
 

Public Bill Committee: 12th June 2007                  

172

 

Legal Services Bill-[ [], continued

 
 

under those rules an entitlement to exercise, or control the exercise of,

 

voting rights in the licensed body or a parent undertaking of the

 

licensed body which exceeds the voting limit,’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 163. It provides that where rules are made under the pro­

 

vision inserted by that amendment setting a voting limit, and that limit is breached, the licensing

 

authority may suspend or revoke the licensed body’s licence.

 

Bridget Prentice

 

136

 

Schedule  11,  page  190,  line  1,  leave out ‘in which non-authorised persons have an

 

interest’ and insert ‘or a parent undertaking of the licensed body held by non-authorised

 

persons’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 164 and reflects the changes made to paragraph 38(1)(b)

 

of Schedule 13 by that amendment.

 

Bridget Prentice

 

137

 

Schedule  11,  page  190,  line  2,  at end insert—

 

‘( )    

if the relevant licensing rules make the provision mentioned in

 

paragraph 38(1)(c) of that Schedule, the total proportion of voting

 

rights in the licensed body or a parent undertaking of the licensed body

 

which non-authorised persons are entitled to exercise, or control the

 

exercise of, exceeds the limit specified in the rules.’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 165. It provides that where rules are made under the pro­

 

vision inserted by that amendment setting a limit on the total proportion of voting rights, and that

 

limit is breached, the licensing authority may suspend or revoke the licensed body’s licence.

 


 

Bridget Prentice

 

138

 

Schedule  12,  page  191,  line  24,  leave out ‘a’ and insert ‘an independent’.

 

 

Members’ explanatory statement

 

This amendment is part of a set of amendments that change references to trade unions to independ­

 

ent trade unions, as defined in amendment 126. This amendment provides that the third ground

 

(see paragraph 1(5)) for an application for a licence to the Board applies in relation to independ­

 

ent trade unions.

 

Bridget Prentice

 

139

 

Schedule  12,  page  193,  line  24,  leave out ‘in shares’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

 

with “interest”.


 
 

Public Bill Committee: 12th June 2007                  

173

 

Legal Services Bill-[ [], continued

 
 

Bridget Prentice

 

140

 

Schedule  12,  page  193,  line  26,  leave out ‘in shares’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

 

with “interest”.

 

Bridget Prentice

 

141

 

Schedule  12,  page  193,  line  29,  leave out ‘in shares’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

 

with “interest”.

 

Bridget Prentice

 

142

 

Schedule  12,  page  193,  line  31,  leave out ‘in shares’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

 

with “interest”.

 

Bridget Prentice

 

143

 

Schedule  12,  page  193,  line  32,  at end insert—

 

‘( )    

the kinds of non-authorised persons who have an indirect interest in

 

the licensable body.’.

 

 

Members’ explanatory statement

 

This amendment is related to amendment 111, which introduces the concept of non-authorised per­

 

sons with an “indirect interest”.

 


 

Bridget Prentice

 

113

 

Clause  85,  page  49,  line  39,  leave out ‘persons having an interest in shares,’ and

 

insert ‘non-authorised persons having an interest or an indirect interest,’.

 

 

Members’ explanatory statement

 

This amendment is related to the replacement in amendment 111 of the “interest in shares” test.

 

It also clarifies that it is only non-authorised persons who have an “interest” or “indirect interest”

 

(or a material interest) against whom obligations under subsection (4) may be imposed.

 



 
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