Legal Services Bill [HL]

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Legal Services Bill [HL]

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102
Intervention
Schedule 14 confers powers of intervention on licensing authorities.
103
Regulatory conflict and the Board as licensing authority
(1)
Sections 52 and 54 (regulatory conflict between approved regulators and
between approved regulators and other regulators) apply in relation to the
5
Board in its capacity as a licensing authority and its licensing rules as they
apply in relation to an approved regulator (including the Board in its capacity
as approved regulator) and its regulatory arrangements.
(2)
Section 68 (regulatory conflict and the Board as approved regulator) applies in
relation to the Board in its capacity as a licensing authority and its licensing
10
rules as it applies in relation to the Board in its capacity as an approved
regulator and its regulatory arrangements.
104
Prevention of regulatory conflict: accounts rules
(1)
Where a licensed body carries on an activity through a solicitor, the rules made
under paragraph 20 of Schedule 11 apply instead of those made under sections
15
32 to 34 of the Solicitors Act 1974 (c. 47).
(2)
Where a licensed body carries on an activity through a licensed conveyancer,
the rules made under paragraph 20 of Schedule 11 apply instead of those made
under sections 22 and 23 of the Administration of Justice Act 1985 (c. 61).
Special kinds of body
20
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 an independent trade union.
(2)
Schedule 13 (ownership) does not apply in relation to an applicant for a licence,
25
or a licensed body, which is an independent 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)
an independent trade union,
(b)
a not for profit body,
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(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.
(2)
A body to which this section applies may apply to the relevant licensing
35
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
such modifications as may be specified in the order;
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(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
order which the authority—
5
(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
case, the licensing authority must in particular have regard to—
10
(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,
(c)
any non-authorised persons who have an interest or an indirect interest
15
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
licensing rules or Schedule 13 or both (as the case may be) have effect in
20
relation to that body in accordance with that order.
(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
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licence);
(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);
30
(f)
paragraph 24(1), (2), (3) and (8) (grounds for suspending and revoking
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).
35
(8)
The licensing authority may not make an order under subsection (3)(a) which
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 (f);
(b)
paragraph 1 of Schedule 11 (applications for licences);
40
(c)
paragraph 4(3) of that Schedule (renewal of licences);
(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
45
body to have—
(a)
a Head of Legal Practice approved by the licensing authority, or

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(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.
107
Modifications under section 106: supplementary
5
(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
to which that section applies.
10
(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
(b)
of its own motion.
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(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).
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.
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(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.
(3)
The ownership condition is that—
(a)
the proportion of shares in B held by non-authorised persons is less
than 10%, and
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(b)
the proportion of the voting rights in B which non-authorised persons
are entitled to exercise, or control the exercise of, is less than 10%, and
(c)
if B has a parent undertaking (“P”)—
(i)
the proportion of shares in P held by non-authorised persons is
less than 10%, and
30
(ii)
the proportion of the voting rights in P which non-authorised
persons are entitled to exercise, or control the exercise of, is less
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 of that
35
Act).
109
Foreign bodies
The Lord Chancellor may by order make provision for the modification of any
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
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Wales.

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Supplementary provision
110
Reporting requirements relating to Part 5
(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.
5
(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.
(3)
In this section “annual report” and “financial year” have the same meaning as
in section 6.
111
Interpretation of Part 5
10
(1)
In this Part—
“licensed activity”, in relation to a licensed body, means an activity—
(a)
which is a reserved legal activity, and
(b)
which the licensed body is authorised to carry on by virtue of its
licence;
15
“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;
“relevant appellate body”, in relation to decisions made by a licensing
authority under this Part, means the body having power to hear
20
appeals from those decisions (whether by virtue of an order under
section 80 or otherwise).
(2)
The following persons are within this subsection—
(a)
an authorised person in relation to an activity which constitutes a
reserved legal activity,
25
(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
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
30
Wales),
(d)
a body which provides professional services such as are provided by
persons within paragraph (a) or lawyers of other jurisdictions, and all
the managers of which and all the persons with an interest in which—
(i)
are within paragraphs (a) to (c), or
35
(ii)
are bodies in which persons within paragraphs (a) to (c) are
entitled to exercise, or control the exercise of, more than 90% of
the voting rights.
(3)
In subsection (2)(c) “the Directive” means Directive 98/5/EC of the European
Parliament and the Council, to facilitate practice of the profession of lawyer on
40
a permanent basis in a Member State other than that in which the qualification
was obtained.

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Part 6 — Legal Complaints
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Part 6
Legal Complaints
Complaints procedures of authorised persons
112
Complaints procedures of authorised persons
(1)
The regulatory arrangements of an approved regulator must make provision
5
requiring each relevant authorised person—
(a)
to establish and maintain procedures for the resolution of relevant
complaints, or
(b)
to participate in, or make arrangements to be subject to, such
procedures established and maintained by another person,
10

and provision for the enforcement of that requirement.
(2)
The provision made for the purposes of subsection (1) must satisfy such
requirements as the Board may, from time to time, specify for the purposes of
that subsection.
(3)
In this section—
15
“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—
20
(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
25
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;”.
30
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
35
(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
40
(b)
no disciplinary action may be taken against the respondent.

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(3)
Section 157 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
of an approved regulator, or the Board in its capacity as a licensing authority,
5
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.
The Office for Legal Complaints
10
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.
115
The ombudsman scheme
15
(1)
The scheme provided for by this Part is to be administered by the OLC in
accordance with this Part and with scheme rules made under this Part.
(2)
In this Part “scheme rules” means rules made by the OLC.
(3)
The scheme is to be operated under a name (which must include the word
“ombudsman”) chosen by the OLC, and is referred to in this Act as “the
20
ombudsman scheme”.
116
General obligations
(1)
In discharging its functions the OLC must comply with the requirements of
this section.
(2)
The OLC must, so far as is reasonably practicable, act in a way—
25
(a)
which is compatible with the regulatory objectives, and
(b)
which it considers most appropriate for the purpose of meeting those
objectives.
(3)
The OLC must have regard to any principles appearing to it to represent the
best practice of those who administer ombudsman schemes.
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117
Corporate governance
In managing its affairs, the OLC must have regard to such generally accepted
principles of good corporate governance as it is reasonable to regard as
applicable to it.
118
Annual report
35
(1)
The OLC must prepare a report (“the annual report”) for each financial year.
(2)
The annual report must deal with—

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(a)
the discharge of the functions of the OLC,
(b)
the extent to which, in the OLC’s opinion, the OLC has met the
regulatory objectives, and
(c)
such other matters as the Board may from time to time direct.
(3)
The OLC must include in the annual report a copy of the report prepared by
5
the Chief Ombudsman under section 123 for the financial year in question.
(4)
As soon as reasonably practicable after the end of each financial year, the OLC
must give the Board a copy of the annual report prepared for that year.
(5)
The Board must give a copy of the annual report to the Lord Chancellor.
(6)
The Lord Chancellor must lay a copy of the annual report before Parliament.
10
(7)
In this section “financial year” means—
(a)
the period beginning with the day on which the OLC is established and
ending with the next following 31 March, and
(b)
each successive period of 12 months.
119
Supplementary powers
15
The OLC may do anything calculated to facilitate, or incidental or conducive
to, the carrying out of any of its functions.
120
Reporting to the Board
(1)
The Board may require the OLC to prepare and give the Board, within a
specified period, a report in respect of any specified matter relating to the
20
functions of the OLC.
(2)
In subsection (1) “specified” means specified in the requirement.
(3)
The Board must publish any report given to it under this section.
121
Performance targets and monitoring
(1)
The Board may—
25
(a)
set one or more performance targets relating to the performance by the
OLC of any of its functions, or
(b)
direct the OLC to set one or more performance targets relating to the
performance by the OLC of any of its functions.
(2)
A direction under subsection (1)(b) may impose conditions with which the
30
performance targets must conform.
(3)
The Board must publish any target set or direction given by it under this
section.
(4)
The OLC must publish any target set by it pursuant to a direction under
subsection (1)(b).
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(5)
The Board may take such steps as it regards as appropriate to monitor the
extent to which any performance target set under this section is being, or has
been, met.