Schedule
3
Exempt
persons
Bridget
Prentice:
I beg to move amendment No. 129, in
schedule 3, page 130, line 14, leave
out from ‘individual’ to ‘in’ in line 15
and insert ‘whose work includes
assisting’.
The
Chairman:
With this it will be convenient to discuss
Government amendments Nos. 130 to 133.
Bridget
Prentice:
These are technical amendments—I know
that some people get a little worried when they hear that—that
correct anomalies in the current exemption provisions in schedule 3.
They relate specifically to exemptions for persons working under the
supervision of authorised persons in relation to rights of audience,
reserved instrument activities and probate activities.
Although all the applicable
exemptions are currently effective to cover employees working under
supervision of authorised persons, they do not always effectively cover
partners or other managers in the same way.For some
bodies—for example, licensed bodies under part 5—the
exemptions cover both mangers and employees, while in other cases, such
as solicitors’ partnerships, they do not. In
other cases, the application of the exemption is not as clear as it
might be.
The Law
Society tells me that there are practical as well as legal reasons for
achieving greater consistency. For example, under the current
provisions, if a legal executive is employed by a firm of solicitors,
he or she will not be authorised to conduct reserved instrument
activities, but may nevertheless do so under supervision of a
solicitor, by virtue of the exemption in schedule 3. If that legal
executive became a partner, that would no longer be possible, because
the exemption would cease to apply, which is clearly an inconsistency.
I see no reason why partners or other managers should notin
principle benefit from the same exemptions as employees. The amendment
is therefore intended to make the position clearer and more consistent.
On that basis, I commend it to the
Committee.
Mr.
Djanogly:
We agree to the amendment.
Amendment
agreed
to.
Amendments
made: No. 130, in schedule 3, page 131, line 37, leave out
paragraph (b).
No.
131, in
schedule 3, page 131, line 39, leave
out paragraphs (d) to (f) and
insert—
‘( ) P is a manager
or employee of a body which is an authorised person in relation to the
activity, and E is also a manager or employee of that
body.’.
No.
132, in
schedule 3, page 133, line 10, leave
out paragraph (b).
No.
133, in
schedule 3, page 133, line 12, leave
out paragraphs (d) and (e) and
insert—
‘( ) P is a manager
or employee of a body which is an authorised person in relation to the
activity, and E is also a manager or employee of that
body.’.—[Bridget
Prentice.]
Schedule
3, as amended,
agreed to.
Clause
20
ordered to stand part of the
Bill.
Schedule
4
Approved
regulators
Robert
Neill:
I beg to move amendment No. 255, in
schedule 4, page 142, line 14, leave
out sub-paragraph (3) and insert—
‘(3) Alterations are exempt unless the Board
has directed that they are not to be treated as exempt for the purposes
of this paragraph.’.
By way of work sharing on the
Opposition Benches, I have been asked to move the amendment, the effect
of which would be to change the wording of paragraph 19(3) of the
schedule, on page 142, and insert fresh wording. We seek to reverse the
presumption that the advance approval of the Legal Services Board
should be required to changes to approved regulators’ regulatory
arrangements. That has been suggested to us by—and it is
supported by—the Law Society, which is particularly involved in
that type of work.
We have taken
on board the logic of the Government’s own position. They have
repeatedly made it clear that the primary responsibility for regulation
should rest with the approved regulators and that the Legal Services
Board should have a supervisory role over them. If that structure is to
work in a meaningful way, it is important that we should start from the
presumption that the approved regulators can be trusted, as they are
the people in whose hands we place the bulk of the day-to-day
operation.
Under the
Bill, regulatory functions will have to be separated from any
representative function that the approved regulator already holds. As
some of us mentioned earlier, that has already been done by the Law
Society and the Bar Council, under existing regulation. For example,
all the members of the Law Society’s regulatory arm, the
Solicitors Regulation Authority, are appointed on merit rather than
elected, as members of the Law Society’s council are. Members of
the Law Society’s representative council—people who are,
in effect, elected by solicitors—are ineligible to serve upon
the Solicitors Regulation Authority, so there is a separation. The Bar
Council has achieved the same result as far its part of the profession
is concerned.
Furthermore, the approved
regulators will, I hope as a matter of ordinary good practice, consult
on proposed changes to their regulatory arrangements before they are
made. That consultation will include representatives of consumers and
of the regulated sector. It would be perfectly possible to ensure that
the Legal Services Board was included by the approved regulators in
those consultations if they intended to make any such
changes.
Under those
circumstances, the schedule’s requirement to secure approval by
the LSB before changes to regulatory arrangements come into effect
seems unnecessarily burdensome and regulatory. Every time one wants to
change one’s internal regulations, one will have to secure
advance approval from the LSB—not just consult it. We are
concerned that that requirement may significantly clog decision making,
which will make it harder for approved regulators to respond
appropriately to changing circumstances.
It is important to bear in mind
that the legal profession is a dynamic profession, and that the market
for legal services is dynamic. Circumstances change rapidly, and as we
have already discussed, we are responding to an intensely competitive
international market. It is important that the approved regulatory
bodies can respond swiftly and flexibly to their circumstances within
the consumer protection framework, on which we are all
agreed.
Past experience gives us some
concern. The legal services consultative panel was established in the
Access to Justice Act 1999, and that procedure for making changes was
found to be complicated, convoluted and lengthy. It was even worse than
its predecessor body, the Advisory Committee on Legal Education and
Conduct, which I remember from when I still practised at the Bar. For
example, it took several years for the ACLEC process to deal with the
Law Society’s rules on rights of audience, and a similar length
of time for the society’s recent revisions to its rule book to
go through the legal services consultative panel. I am sure that
Ministers do not intend to introduce a process for making sensible
changes to the operation of the rule book which could take that amount
of time.
The Bill
already permits the LSB to designate particular categories of changes
to regulatory arrangements as exempt from prior approval. The precedent
is already in the Bill, but it is inevitable that as a new body, fresh
on the turf, the LSB will be cautious in the exercise of its power. Few
categories of rule are likely to be exempted to start with, and the
process of securing LSB approval is likely to become a significant
obstacle to desirable change. It will be a regrettable unintended
consequence of the legislation, which does not fit with its overall
intention.
There are
also considerable potential resource implications for the requirement
to seek advance approval for those changes. There is a process for
considering the merits of proposed changes throughout the range of
regulatory arrangements. The schedule already sets out a large number
of approved regulators, so a number of bodies will be caught by the
legislation, which is likely to be time-consuming and expensive. If we
return to our proposition that the approved regulators are people who
we are satisfied can be trusted, are properly constituted and have
robust internal systems, how much added value will we receive for such
expense and potential delay?
We can tackle that practical
issue by reversing the presumption that changes require the approval of
the board in advance. Instead, under our amendment, changes would be
exempt unless the LSB designated them as requiring advance approval.
The last point is important for balance. If it became apparent that the
category of rule change might be controversial and raise new and
difficult issues, the Law Society would still be able to
designate—
The
Chairman:
Order. This afternoon, the Chair will pass to
Sir Nicholas Winterton. Confident, of course, that the Committee will
treat Sir Nicholas with the same respect and good humour that you have
displayed towards me, I wish you well in the continuation of your
deliberations.
It
being One o’clock, The Chairman
adjourned the
C
ommittee without Question
put, pursuant to the Standing Order.
Adjourned till this day at
Four
o’clock.
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