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
18

Censure
35
Public censure
(1)
This section applies if the Board is satisfied—
(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
5
more of the regulatory objectives, and
(b)
that, in all the circumstances of the case, it is appropriate to act under
this section.
(2)
The Board may publish a statement censuring the approved regulator for the
act or omission (or series of acts or omissions).
10
36
Public censure: procedure
(1)
If the Board proposes to publish a statement under section 35 in respect of an
approved regulator, it must give notice to the approved regulator—
(a)
stating that the Board proposes to publish such a statement and setting
out the terms of the proposed statement,
15
(b)
specifying the acts or omissions to which the proposed statement
relates, 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 to the
approved regulator) before which representations with respect to the
20
proposed statement may be made.
(2)
Before publishing the statement, the Board must consider any representations
which are duly made.
(3)
Before varying any proposed statement set out in a notice under subsection
(1)(a), the Board must give notice to the approved regulator—
25
(a)
setting out the proposed variation and the reasons for it, and
(b)
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 to the
approved regulator) before which representations with respect to the
proposed variation may be made.
30
(4)
Before varying the proposal, the Board must consider any representations
which are duly made.
Financial penalties
37
Financial penalties
(1)
This section applies if the Board is satisfied—
35
(a)
that an approved regulator has failed to comply with a requirement to
which this section applies, and
(b)
that, in all the circumstances of the case, it is appropriate to impose a
financial penalty on the approved regulator.
(2)
This section applies to any requirement imposed on the approved regulator—
40
(a)
by rules under section 30 (internal governance rules),
(b)
by a direction given under section 32 (Board directions), or

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
19

(c)
by section 51 (control of practising fees charged by approved
regulators) or by rules under that section.
(3)
The Board may impose a penalty, in respect of the failure, of such an amount
as it considers appropriate, but not exceeding the maximum amount
prescribed under subsection (4).
5
(4)
The Board must make rules prescribing the maximum amount of a penalty
which may be imposed under this section.
(5)
Rules may only be made under subsection (4) with the consent of the Lord
Chancellor.
(6)
A penalty under this section is payable to the Board.
10
(7)
In sections 38 to 40 references to a “penalty” are to a penalty under this section.
38
Financial penalties: procedure
(1)
If the Board proposes to impose a penalty on an approved regulator, it must
give notice to the approved regulator—
(a)
stating that the Board proposes to impose a penalty and the amount of
15
the penalty proposed to be imposed,
(b)
specifying the failure to which the proposed penalty relates,
(c)
specifying the other facts which, in the Board’s opinion, justify the
imposition of a penalty and the amount of the penalty, and
(d)
specifying the time (not being earlier than the end of the period of 21
20
days beginning with the day on which the notice is published under
subsection (8)) before which representations with respect to the
proposed penalty may be made.
(2)
Before imposing a penalty on an approved regulator, the Board must consider
any representations which are duly made.
25
(3)
Where the Board proposes to vary the amount of a proposed penalty stated in
a notice under subsection (1)(a), the Board must give notice to the approved
regulator—
(a)
setting out the proposed variation and the reasons for it, and
(b)
specifying the time (not being earlier than the end of the period of 21
30
days beginning with the day on which the notice is published under
subsection (8)) before which representations with respect to the
proposed variation may be made.
(4)
Before varying the proposal, the Board must consider any representations
which are duly made.
35
(5)
As soon as practicable after imposing a penalty, the Board must give notice to
the approved regulator—
(a)
stating that it has imposed a penalty on the approved regulator and its
amount,
(b)
specifying the failure to which the penalty relates,
40
(c)
specifying the other facts which, in the Board’s opinion, justify the
imposition of the penalty and its amount, and
(d)
specifying a time (not being earlier than the end of the period of 3
months beginning with the day on which the notice is given to the
approved regulator), before which the penalty is required to be paid.
45

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
20

(6)
The approved regulator may, within the period of 21 days beginning with the
day on which it is given the notice under subsection (5), make an application
to the Board for it to specify different times by which different portions of the
penalty are to be paid.
(7)
If an application is made under subsection (6) in relation to a penalty, the
5
penalty is not required to be paid until the application has been determined.
(8)
The Board must publish any notice given under this section.
39
Appeals against financial penalties
(1)
An approved regulator on whom a penalty is imposed may appeal to the court
on one or more of the appeal grounds.
10
(2)
The appeal grounds are—
(a)
that the imposition of the penalty was not within the power of the
Board under section 37;
(b)
that any of the requirements of section 38 have not been complied with
in relation to the imposition of the penalty and the interests of the
15
approved regulator have been substantially prejudiced by the non-
compliance;
(c)
that the amount of the penalty is unreasonable;
(d)
that it was unreasonable of the Board to require the penalty imposed or
any portion of it to be paid by the time or times by which it was
20
required to be paid.
(3)
An appeal under subsection (1) must be made—
(a)
within the period of 3 months beginning with the day on which the
notice under section 38(5) is given to the approved regulator in respect
of the penalty, or
25
(b)
where the appeal relates to a decision of the Board on an application by
the approved regulator under section 38(6), within the period of 3
months beginning with the day on which the approved regulator is
notified of the decision.
(4)
On any such appeal, where the court considers it appropriate to do so in all the
30
circumstances of the case and is satisfied of one or more of the appeal grounds,
the court may—
(a)
quash the penalty,
(b)
substitute a penalty of such lesser amount as the court considers
appropriate, or
35
(c)
in the case of the appeal ground in subsection (2)(d), substitute for any
time imposed by the Board a different time or times.
(5)
Where the court substitutes a penalty of a lesser amount it may require the
payment of interest on the substituted penalty at such rate, and from such time,
as it considers just and equitable.
40
(6)
Where the court specifies as a time by which the penalty, or a portion of the
penalty, is to be paid a time before the determination of the appeal under this
section, it may require the payment of interest on the penalty, or portion, from
that time at such rate as it considers just and equitable.
(7)
Except as provided by this section, the validity of a penalty is not to be
45
questioned by any legal proceedings whatever.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(8)
In this section “the court” means the High Court.
40
Recovery of financial penalties
(1)
If the whole or any part of a penalty is not paid by the time by which it is
required to be paid, the unpaid balance from time to time carries interest at the
rate for the time being specified in section 17 of the Judgments Act 1838 (c. 110).
5
(2)
If an appeal is made under section 39 in relation to a penalty, the penalty is not
required to be paid until the appeal has been determined or withdrawn.
(3)
If the Board grants an application under subsection (6) of section 38 in relation
to a penalty but any portion of the penalty is not paid by the time specified in
relation to it by the Board under that subsection, the Board may where it
10
considers it appropriate require so much of the penalty as has not already been
paid to be paid immediately.
(4)
Where a penalty, or any portion of it, has not been paid by the time when it is
required to be paid and—
(a)
no appeal relating to the penalty has been made under section 39
15
during the period within which such an appeal can be made, or
(b)
an appeal has been made under that section and determined or
withdrawn,

the Board may recover from the approved regulator, as a debt due to the Board,
any of the penalty and any interest which has not been paid.
20
Intervention
41
Intervention directions
(1)
The Board may give an approved regulator an intervention direction in
relation to any of the approved regulator’s regulatory functions if the Board is
satisfied—
25
(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, and
(b)
that, in all the circumstances of the case, it is appropriate to give the
intervention direction.
30
(2)
An intervention direction, in relation to a regulatory function of an approved
regulator, is a direction—
(a)
that the regulatory function is to be exercised by the Board or a person
nominated by it, and
(b)
that the approved regulator must comply with any instructions of the
35
Board or its nominee in relation to the exercise of the function.
(3)
The Board may not determine that it is appropriate to give an intervention
direction unless it is satisfied that the matter cannot be adequately addressed
by the Board exercising the powers available to it under sections 31 to 40.
(4)
Part 1 of Schedule 8 makes provision about the procedure which must be
40
complied with before an intervention direction is given and the manner in
which such a direction is to be given.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
22

(5)
The Board must make rules as to the persons it may nominate for the purposes
of subsection (2)(a).
42
Intervention directions: further provision
(1)
This section applies where an intervention direction has effect in respect of a
function of an approved regulator (“the relevant function”).
5
(2)
The approved regulator must give the specified person all such assistance, in
connection with the proposed exercise of the relevant function by the specified
person in pursuance of the direction, as the approved regulator is reasonably
able to give.
(3)
On an application by the specified person (or a person appointed by the
10
specified person to act on its behalf) a judge of the High Court, Circuit judge or
justice of the peace may issue a warrant authorising that person to—
(a)
enter and search the premises of the approved regulator, and
(b)
take possession of any written or electronic records found on the
premises.
15
(4)
The person so authorised may, for the purpose of the exercise by the specified
person of the relevant function, take copies of written or electronic records
found on a search carried out by virtue of the warrant.
(5)
The judge or justice of the peace may not issue the warrant unless satisfied that
its issue is necessary or desirable for the exercise by the specified person of the
20
relevant function.
(6)
The Lord Chancellor must make regulations—
(a)
specifying further matters which a judge or justice of the peace must be
satisfied of, or matters which a judge or justice of the peace must have
regard to, before issuing a warrant, and
25
(b)
regulating the exercise of a power conferred by a warrant issued under
subsection (3) or by subsection (4) (whether by restricting the
circumstances in which a power may be exercised, by specifying
conditions to be complied with in the exercise of a power, or otherwise).
(7)
Regulations under subsection (6)(b) must in particular make provision as to the
30
circumstances in which written or electronic records of which a person has
taken possession by virtue of a warrant issued under subsection (3) may be
copied or must be returned.
(8)
But the Lord Chancellor may not make regulations under subsection (6)
unless—
35
(a)
they are made in accordance with a recommendation made by the
Board, or
(b)
the Lord Chancellor has consulted the Board about the making of the
regulations.
(9)
In this section “the specified person” means the Board or, where a person is
40
nominated by it as mentioned in section 41(2), that person.
(10)
The Board must make rules as to the persons a specified person may appoint
for the purposes of subsection (3).