Clause
28
Approved
regulator’s duty to promote the regulatory objectives
etc
Question
proposed, That the clause stand part of the
Bill.
4.15
pm
Mr.
Henry Bellingham (North-West Norfolk) (Con): A warm
welcome to you this afternoon, Sir Nicholas.
We debated amendment No. 244,
which, if the Committee recalls, was grouped with amendmentNo.
206 in the debate about clause 3. The Minister will recall the
discussion about the
phrase
“so far as is
reasonably practicable”.
She charmingly said that she would
consider my wording to see whether she could accept it. I was wondering
whether, at this stage, she could fill us in and say whether she had
been able to take the matter further.
John
Mann (Bassetlaw) (Lab): The word
“transparent” comes up in clause 28(3)(a). Will the
Minister clarify that “transparent”
includes transparent to consumers and complainants, as well as to
regulators and the board?
Bridget
Prentice:
I can absolutely assure my hon. Friend and
guarantee that “transparent” applies so that the
consumers as well as the regulators are clear about what is going
on.
On the issue of
“reasonably practicable”, I must tell the hon. Member for
North-West Norfolk that I have not had time to consider his wording in
detail, but I shall most certainly come back to him on it
shortly.
Question
put and agreed to.
Clause 28 ordered to stand
part of the Bill.
Clause
29
Prohibition
on the Board interfering with representative
functions
Mr.
Bellingham:
I beg to move amendment No. 245, in
clause 29, page 14, line 26, leave
out ‘prejudiced’ and insert ‘improperly
constrained or
influenced’.
It
is vital that the representative functions of the approved regulators
operate smoothly. The regulators must be proactive and imaginative, and
we supportthe Clementi recommendations that the professional
bodies separate their regulatory responsibilities from their
representational role; that makes manifest sense. We support also the
requirements in clause 30 that the board make rules on internal
governance.
The
amendment would ensure that the Legal Services Board interfered only
with the regulatory functions of the approved regulators, not with the
representative arms of those bodies. I am sure that that is Her
Majesty’s Government’s intention, but I am concerned
about the use of “prejudiced” in clause 29. For example,
if a professional body properly provides a service to its members such
as defending them in the event of disciplinary action, along similar
lines to the work of the Medical Defence Union, one would hope that the
regulatory arm would regard it as a perfectly proper exercise of the
representative body’s role and that it would recognise the
importance of properly representing people who face serious
disciplinary charges.
However, the regulatory arm may
take a different view, particularly if the defence service’s
actions led to a number of people being cleared of disciplinary
charges. In those circumstances, the regulatory board might argue that
its effectiveness was being prejudiced by the representational
side’s activities. For that reason, we are suggesting a better
wording. The use of the word “prejudiced” in this context
is too wide. It is an altogether stronger term than the phrase that we
are recommending should be substituted for it:
“improperly constrained or influenced”. That substitution
would make a great deal of sense. We are putting in wording that more
neatly and succinctly meets HMG’s requirements.
John
Hemming:
We will support the amendment—that is, I
will support the amendment for the moment, and “we” will
support it if my hon. Friend the Member for North Southwark and
Bermondsey turns up
later.
Mr.
Bellingham:
Where is the
“we”?
John
Hemming:
He will be here soon. It is not a game; I think
going into the “we” is out of
order.
The point in
English law is that it is the perception of external
influence—the perception of bias—which is the key driver.
Although it has been argued that “prejudiced” is a
stronger word and it may have more emotive value than other words, it
is actually much easier to prove improper influence than it is to prove
prejudice, which presumes that a matter has been prejudged. To that
extent, the amendment would tighten up the legislation and, although it
may be a probing amendment, the Minister should look on it
favourably.
Bridget
Prentice:
A lot of consideration has gone into the use of
the word “prejudiced” in the clause. It has been argued
that it would not be unusual for representative bodies to seek to
influence regulatory decisions, if it is in the interests of their
members to do so. As the approved regulator is the body recognised in
the Bill as responsible for both representative and regulatory
functions, I would argue that it should accept certain responsibilities
as part of that role. It might be reasonable for the representative arm
to try to influence regulatory decisions, but it is important that the
board is able to take appropriate action where it considers that the
approved regulator is allowing representational interests to prejudice
the exercise of regulatory
functions.
It is
important to ensure that the board is able to act where, for example,
the actions of the representative side discredit the regulatory arm,
resulting in damage to consumer confidence. Clause 29(2) is necessarily
and deliberately wide in definition to ensure that the board is not
prevented from taking such appropriate action. Therefore the use of the
word “prejudiced” is correct in the
context.
The hon.
Member for North-West Norfolk has raised specific concerns. To suggest
that the board may use its powers only where exercising the
representative functions has “improperly constrained or
influenced” the regulatory functions implies that there may be
circumstances where it is “proper” for representative
interests to constrain or influence regulatory functions.
I do not think that that is appropriate.
Furthermore, the proposed formulation suggests that there must be an
element of wilfulness, but again that might notbe the case.
There might be no intent whatsoever on the part of the regulator, but
that does not mean that the board should be prevented from acting if
necessary. I understand
that these are often are very fine definitions, but
“prejudiced” is more appropriate than “improperly
constrained or influenced”, because the latter wording would
narrow the definition just a little bit too
much.
Mr.
Bellingham:
I am grateful to the Minister. In her
inimitable charming way, she has persuaded me that the use of the word
“prejudiced” will not have some of the unintended
consequences that I had envisaged. On that basis, therefore, I beg to
ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
The
Chairman:
The hon. Member for Bassetlaw was a little late
rising—perhaps it is to do with the
heat.
John
Mann:
It was my left leg—the old war wound, Sir
Nicholas. I beg to move amendment No. 278, in
clause 29, page 14, line 30, at
end add—
‘(3) When acting
under subsections (1) and (2) of this section the Board must satisfy
itself that approved regulators have established organisational
structures and procedural practices which distinguish sufficiently
clearly between their regulatory and representative
functions.’.
The
Chairman:
With this it will be convenient to discuss
amendment No. 246, in clause 30, page 15, line 16, at end
insert—
‘(3A) When making
rules under subsections (1) to (3), the Board must satisfy itself that
approved regulators have established organisational structures and
procedural practices which distinguish sufficiently clearly between
their regulatory and representative
functions.’.
John
Mann:
By tabling the amendment I wished to highlight one
of the major consequences of the Bill and to offer the Minister an
opportunity to strengthen it mildly in the Government’s own
direction of travel, with the backing of the Opposition parties and
following Clementi’s recommendation that regulatory and
representative functions need to be clearly distinct and separate. I
wish to ask a question or two of the Minister, and to throw a wider
challenge out to the Committee and to readers of
Hansard.
When a
complaint is made to the Law Society and is passed to its regulatory
arm to examine, it may well—individually or
generically—also be a complaint to the Bar Standards Board. For
example, there was the case of Hobson and others v. AMS and
others, which was adjudicated by the Law Society. In that case,
counsel’s opinion was fundamental. The complaint was made
against the solicitor, but it could have been made against the
barrister had the complainants had known counsel’s opinion and
who the barrister involved
was.
Similarly, the
myriad complaints concerning hearing loss cases that are beginning to
arrive at the Law Society could also go to the Bar Standards Board, as
happened last week. There is a suggestion that there is
unhealthy collusion between firms of solicitors and barristers on how
counsel’s opinion affects consumers. In a lot of cases involving
industrial deafness, a solicitor might tell someone, “You have a
case,” and the case goes all the way, but the employer defends
the case and resists the claim. Before the case goes to court, the firm
might get counsel’s opinion at the request of the solicitor,
which is usually a requirement built into a small clause of the
insurance policy. The solicitor then says, “Oh no,
there’s no case—absolutely no case whatsoever.” On
that basis, insurance funding is withdrawn and the case does not go to
court. If there were
many such cases and a pattern emerged, the matter might be deemed
worthy of investigation, but by whom? The regulatory arms covering
solicitors and barristers should look at such issues together and work
through both policy and remedy, but my experience suggests that that
does not happen. Although solicitors’ regulatory and
representative arms are close, as are those of barristers, there is a
distance in the relationship between the two regulatory arms and they
do not come together as regulators. That coming together is essential
if the consumer is to be protected, particularly in the more complex
and insidious cases in which patterns of potential
consumer disquiet emerge. Mildly strengthening such measures in the
Bill might well be within the ambit of the Government’s intent,
so I politely invite the Minister to consider the
amendment.
4.30
pm
Mr.
Bellingham:
Amendment No. 246, which stands in my name and
that of my hon. Friends, including the shadow Secretary of State, as
well as the name of the shadow Minister in the Liberal Democrats, is
very similar to the lead amendment. The amendment moved by the hon.
Member for Bassetlaw would insert anew subsection (3) in
clause 29, which is headed, “Prohibition on the Board
interfering with representative functions” Our amendment would
insert a new subsection (3A) in clause 30, which is headed,
“Rules relating to the exercise of regulatory
functions”.
Our
aim is very straightforward: to reinforce the point that there must be
a separation between representative and regulatory roles. We are
requesting that proper separation be included in the Bill. Obviously,
some approved regulators will have a separate building and be a
separate team of people—there will be a manifest separation from
the representative function. However, some of the smaller
organisations, such as the Chartered Institute of Patent Attorneys and
the Institute of Trade Mark Attorneys, will find it quite difficult to
have a separate building or arm to the operation, and they will be
looking at something more like a Chinese wall, which operates very
effectively in many City organisations.
What we are proposing is common
sense. I will not elaborate further because the hon. Member for
Bassetlaw has put a very strong case. I am delighted that we are on the
same side of the argument.
Mr.
David Burrowes (Enfield, Southgate) (Con): Is not the
argument strengthened by Sir David Clementi, not only in his intention
but in his comments and evidence to the Joint Committee, and by the
Joint
Committee’s own response and recommendations? The separation
between the representative and regulatory bodies should be more
explicit in the Bill, notwithstanding the fact that existing bodies,
such as the Law Society and Bar Council, have already put their own
house in order.
Mr.
Bellingham:
Indeed. It is quite interesting that the
Baroness Ashton of Upholland noted that very point in the debate in the
other place. Unfortunately, she did not accept a very similar amendment
in the House of Lords that was proposed by our noble and learned Friend
Lord Kingsland. We are trying to make progress. The Minister is in a
good mood this afternoon. I hope that she will accept our
amendment.
John
Hemming:
My name is on one of the
amendments. Watching how the General Medical Council regulates the
medical profession, it is very obvious to me that it does not
investigate certain things that it finds too embarrassing. That
illustrates the importance of separating regulatory and representative
roles. We need procedures that create something more substantial than a
Chinese wall.
Bridget
Prentice:
If I am in a good mood this afternoon, it
is because we are all on the same side on the issue of separation
between regulatory and representative functions. It is absolutely
fundamental to the B+ model of regulation proposed by Sir David
Clementi. Since the draft Bill was published, we have strengthened the
legislation in this area. I am very persuaded by the arguments put
forward by all sides, but clause 30 ensures that there is separation
between regulatory and representative functions. Among other things,
the rules require that the approved regulators adequately resource
their regulatory arms and that the people exercising the regulatory
functions can make representations to the board, the consumer panel,
the Office for Legal Complaints and other regulators.
The clause takes into account
the recommendations of the Joint Committee, and makes it clear that
once the board is established, it will need to set out more detailed
criteria for the separation of regulatory and representative functions
of approved
regulators.
My small
“but” relates to the point made by the hon. Member for
North-West Norfolk. The small regulators would need Chinese walls
because their functions would not quite be separated. I want to
consider whether the additions suggested by the h G and my hon. Friend
the Member for Bassetlaw would make life easier for the small
regulators yet still ensure that the regulatory and representative
functions of the bigger boys in the playground were clearly
separated.
I ask my
hon. Friend to withdraw the amendment, but I am happy to consider the
matter further.
John
Mann:
I hear a strong echo of my suggestion that the
regulatory arms, particularly of barristers and solicitors, should
indeed work closely together, and not hide away in their new and
distinct buildings. On that basis, I trust the Minister—on this
and all matters, future as well as past. I beg to ask leave to withdraw
the amendment.
Amendment, by leave,
withdrawn.
Clause
29
ordered to stand part of the
Bill.
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