Legal Services Bill [HL]

House of Commons

Session 2006 - 07
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Legal Services Bill [HL]

Legal Services Bill [HL]
Part 3 — Reserved legal activities
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Continuity of existing rights and transitional protection
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Continuity of existing rights to carry on reserved legal activities
Schedule 5 makes provision for the continuity of existing rights and for certain
persons to be deemed, during a transitional period, to be authorised by
approved regulators to carry on certain activities.
5
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Transitional protection for non-commercial bodies
(1)
During the transitional period, a body within subsection (2) is entitled to carry
on any activity which is a reserved legal activity.
(2)
The bodies are—
(a)
a not for profit body,
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(b)
a community interest company, or
(c)
an independent trade union.
(3)
The transitional period is the period which—
(a)
begins with the day appointed for the coming into force of section 13,
and
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(b)
ends with the day appointed by the Lord Chancellor by order for the
purposes of this paragraph.
(4)
Different days may be appointed under subsection (3)(b) for different
purposes.
(5)
An order may be made under subsection (3)(b) only on the recommendation of
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the Board.
Alteration of reserved legal activities
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Extension of the reserved legal activities
(1)
The Lord Chancellor may, by order, amend section 12 or Schedule 2 (reserved
legal activities) so as to add any legal activity to the activities which are
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reserved legal activities for the purposes of this Act.
(2)
An order under subsection (1) may only be made on the recommendation of
the Board.
(3)
Schedule 6 makes provision about the making of recommendations for the
purposes of this section.
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(4)
Where a recommendation is made in relation to an activity, the Lord
Chancellor must—
(a)
consider the report containing the recommendation given to the Lord
Chancellor under paragraph 16(3)(a) of that Schedule,
(b)
decide whether or not to make an order under this section in respect of
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the activity, and
(c)
publish a notice of that decision,

within the period of 90 days beginning with the day on which the report was
given to the Lord Chancellor.

Legal Services Bill [HL]
Part 3 — Reserved legal activities
13

(5)
Where the Lord Chancellor decides not to make an order under this section in
respect of an activity, the notice under subsection (4)(c) must state the reasons
for that decision.
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Provisional designation as approved regulators and licensing authorities
(1)
The Lord Chancellor may, by order, make provision—
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(a)
enabling applications to be made, considered and determined under
Part 2 of Schedule 4 or Part 1 of Schedule 10 in relation to a provisional
reserved activity, as if the activity were a reserved legal activity;
(b)
enabling provisional designation orders to be made by the Lord
Chancellor in respect of a provisional reserved activity, as if the activity
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were a reserved legal activity.
(2)
An order under subsection (1) may, in particular, provide that Part 2 of
Schedule 4 or Part 1 of Schedule 10 is to apply, in relation to such cases as may
be specified by the order, with such modifications as may be so specified.
(3)
The Lord Chancellor may also, by order, make provision—
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(a)
for the purpose of enabling applications for authorisation to carry on an
activity which is a provisional reserved activity to be made to and
considered and determined by—
(i)
a body in respect of which a provisional designation order is
made, or
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(ii)
the Board in its capacity as a licensing authority;
(b)
for the purpose of enabling persons to be deemed to be authorised to
carry on an activity which is a new reserved legal activity by a relevant
approved regulator in relation to the activity, or by the Board in its
capacity as a licensing authority, for a period specified in the order.
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(4)
For this purpose—
“provisional reserved activity” means an activity in respect of which a
provisional report under paragraph 10 of Schedule 6 states that the
Board is minded to make a recommendation for the purposes of section
24;
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“provisional designation order” means an order made by the Lord
Chancellor under Part 2 of Schedule 4 or Part 1 of Schedule 10 which is
conditional upon the Lord Chancellor making an order under section
24 in respect of the provisional reserved activity, pursuant to a
recommendation made by the Board following the provisional report;
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“new reserved legal activity” means a legal activity which has become a
reserved legal activity by virtue of an order under section 24.
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Recommendations that activities should cease to be reserved legal activities
(1)
The Board may recommend that an activity should cease to be a reserved legal
activity.
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(2)
Schedule 6 makes provision about the making of recommendations for the
purposes of this section.
(3)
The Lord Chancellor must consider any recommendation made by the Board
for the purposes of this section (but nothing in section 208 (minor and
consequential provision etc) authorises the Lord Chancellor to give effect to
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such a recommendation).

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(4)
Where the Lord Chancellor disagrees with a recommendation (or any part of
it), the Lord Chancellor must publish a notice to that effect which must include
the Lord Chancellor’s reasons for disagreeing.
Part 4
Regulation of approved regulators
5
Introductory
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Regulatory and representative functions of approved regulators
(1)
In this Act references to the “regulatory functions” of an approved regulator
are to any functions the approved regulator has—
(a)
under or in relation to its regulatory arrangements, or
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(b)
in connection with the making or alteration of those arrangements.
(2)
In this Act references to the “representative functions” of an approved
regulator are to any functions the approved regulator has in connection with
the representation, or promotion, of the interests of persons regulated by it.
General duties of approved regulators
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Approved regulator’s duty to promote the regulatory objectives etc
(1)
In discharging its regulatory functions (whether in connection with a reserved
legal activity or otherwise) an approved regulator must comply with the
requirements of this section.
(2)
The approved regulator must, so far as is reasonably practicable, act in a way—
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(a)
which is compatible with the regulatory objectives, and
(b)
which the approved regulator considers most appropriate for the
purpose of meeting those objectives.
(3)
The approved regulator must have regard to—
(a)
the principles under which regulatory activities should be transparent,
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accountable, proportionate, consistent and targeted only at cases in
which action is needed, and
(b)
any other principle appearing to it to represent the best regulatory
practice.
Separation of regulatory and representative functions
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Prohibition on the Board interfering with representative functions
(1)
Nothing in this Act authorises the Board to exercise its functions in relation to
any representative function of an approved regulator.
(2)
But subsection (1) does not prevent the Board exercising its functions for the
purpose of ensuring—
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(a)
that the exercise of an approved regulator’s regulatory functions is not
prejudiced by its representative functions, and

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(b)
that decisions relating to the exercise of an approved regulator’s
regulatory functions are, so far as reasonably practicable, taken
independently from decisions relating to the exercise of its
representative functions.
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Rules relating to the exercise of regulatory functions
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(1)
The Board must make rules (“internal governance rules”) setting out
requirements to be met by approved regulators for the purpose of ensuring—
(a)
that the exercise of an approved regulator’s regulatory functions is not
prejudiced by its representative functions, and
(b)
that decisions relating to the exercise of an approved regulator’s
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regulatory functions are so far as reasonably practicable taken
independently from decisions relating to the exercise of its
representative functions.
(2)
The internal governance rules must require each approved regulator to have in
place arrangements which ensure—
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(a)
that the persons involved in the exercise of its regulatory functions are,
in that capacity, able to make representations to, be consulted by and
enter into communications with the Board, the Consumer Panel, the
OLC and other approved regulators, and
(b)
that the exercise by those persons of those powers is not prejudiced by
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the approved regulator’s representative functions and is, so far as
reasonably practicable, independent from the exercise of those
functions.
(3)
The internal governance rules must also require each approved regulator—
(a)
to take such steps as are reasonably practicable to ensure that it
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provides such resources as are reasonably required for or in connection
with the exercise of its regulatory functions;
(b)
to make such provision as is necessary to enable persons involved in
the exercise of its regulatory functions to be able to notify the Board
where they consider that their independence or effectiveness is being
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prejudiced.
(4)
The first set of rules under this section must be made before the day appointed
by the Lord Chancellor by order for the purposes of this section.
Performance targets
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Performance targets and monitoring
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(1)
The Board may—
(a)
set one or more performance targets relating to the performance by an
approved regulator of any of its regulatory functions, or
(b)
direct an approved regulator to set one or more performance targets
relating to the performance by the approved regulator of any of its
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regulatory functions,

if the Board is satisfied that the conditions in subsection (2) are satisfied.
(2)
Those conditions are—

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(a)
that an act or omission of the approved regulator (or a series of such
acts or omissions) has had, or is likely to have, an adverse impact on
one or more of the regulatory objectives, and
(b)
that, in all the circumstances of the case, it is appropriate to take the
action proposed under subsection (1).
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(3)
A direction under subsection (1)(b) may impose conditions with which the
performance targets must conform.
(4)
If the Board proposes to take action under this section in respect of an
approved regulator it must give notice to the approved regulator—
(a)
describing the action it proposes to take,
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(b)
specifying the acts or omissions to which the proposed action relates
and any other facts which, in the opinion of the Board, justify the taking
of that action, and
(c)
specifying the time (not being earlier than the end of the period of 28
days beginning with the day on which the notice is given) before which
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representations with respect to that action may be made.
(5)
Before taking action under this section, the Board must consider any
representations which are duly made.
(6)
In exercising its regulatory functions, an approved regulator must seek to meet
any performance target set for or by it under this section.
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(7)
The Board must publish any target set or direction given by it under this
section.
(8)
An approved regulator must publish any target set by it pursuant to a direction
under subsection (1)(b).
(9)
The Board may take such steps as it regards as appropriate to monitor the
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extent to which any performance target set under this section is being, or has
been, met.
Directions
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Directions
(1)
This section applies if the Board is satisfied—
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(a)
that an act or omission of an approved regulator (or a series of such acts
or omissions) has had, or is likely to have, an adverse impact on one or
more of the regulatory objectives,
(b)
that an approved regulator has failed to comply with any requirement
imposed on it by or under this Act (including this section) or any other
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enactment, or
(c)
that an approved regulator—
(i)
has failed to ensure that the exercise of its regulatory functions
is not prejudiced by any of its representative functions, or
(ii)
has failed to ensure that decisions relating to the exercise of its
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regulatory functions are, so far as reasonably practicable, taken
independently from decisions relating to the exercise of its
representative functions.
(2)
If, in all the circumstances of the case, the Board is satisfied that it is
appropriate to do so, it may direct the approved regulator to take—
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Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(a)
in a case within subsection (1)(a), such steps as the Board considers will
counter the adverse impact, mitigate its effect or prevent its occurrence
or recurrence;
(b)
in a case within subsection (1)(b) or (c), such steps as the Board
considers will remedy the failure, mitigate its effect or prevent its
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recurrence.
(3)
A direction under subsection (2)—
(a)
may only require an approved regulator to take steps which it has
power to take;
(b)
may require an approved regulator to take steps with a view to the
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modification of any part of its regulatory arrangements.
(4)
The Board may not exercise its powers under this section so as to give a
direction requiring an approved regulator to take steps in respect of a specific
disciplinary case or other specific regulatory proceedings (as opposed to all, or
a specified class of, such cases or proceedings).
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(5)
For the purposes of this section a direction to take steps includes a direction
which requires an approved regulator to refrain from taking a particular
course of action.
(6)
The power to give a direction under this section is subject to any provision
made by or under any other enactment.
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(7)
The Board may take such steps as it regards as appropriate to monitor the
extent to which a direction under this section is being, or has been, complied
with.
(8)
Where the Board revokes a direction under this section, it must—
(a)
give the approved regulator to whom the direction was given notice of
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the revocation, and
(b)
publish that notice.
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Directions: procedure
Schedule 7 makes provision about the procedure which must be complied with
before a direction is given under section 32.
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Enforcement of directions
(1)
If at any time it appears to the Board that an approved regulator has failed to
comply with a direction given under section 32, the Board may make an
application to the High Court under this section.
(2)
If, on an application under this section, the High Court decides that the
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approved regulator has failed to comply with the direction in question, it may
order the approved regulator to take such steps as the High Court directs for
securing that the direction is complied with.
(3)
This section is without prejudice to any other powers conferred on the Board
by this Part.
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