Draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Institute of Chartered Accountants in England and Wales) Order 2014
Draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions)(Chartered Institute of Patent Attorneys and Institute of Trade Mark Attorneys) Order 2014
Draft Legal Services Act 2007 (Approved Regulator) Order 2014
The Committee consisted of the following Members:
Ainsworth, Mr Bob (Coventry North East) (Lab)
† Beith, Sir Alan (Berwick-upon-Tweed) (LD)
† Colvile, Oliver (Plymouth, Sutton and Devonport) (Con)
† Cunningham, Mr Jim (Coventry South) (Lab)
Dowd, Jim (Lewisham West and Penge) (Lab)
† Evennett, Mr David (Lord Commissioner of Her Majesty's Treasury)
† Heaton-Harris, Chris (Daventry) (Con)
† Lefroy, Jeremy (Stafford) (Con)
† Liddell-Grainger, Mr Ian (Bridgwater and West Somerset) (Con)
McDonnell, John (Hayes and Harlington) (Lab)
Paisley, Ian (North Antrim) (DUP)
† Scott, Mr Lee (Ilford North) (Con)
† Slaughter, Mr Andy (Hammersmith) (Lab)
† Stephenson, Andrew (Pendle) (Con)
Sutcliffe, Mr Gerry (Bradford South) (Lab)
† Turner, Karl (Kingston upon Hull East) (Lab)
† Vara, Mr Shailesh (Parliamentary Under-Secretary of State for Justice)
† Ward, Mr David (Bradford East) (LD)
Katy Stout, Committee Clerk
† attended the Committee
Seventh Delegated Legislation Committee
Monday 14 July 2014
[Mr Gary Streeter in the Chair]
Draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Institute of Chartered Accountants in England and Wales) Order 2014
6 pm
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara): I beg to move,
That the Committee has considered the draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Institute of Chartered Accountants in England and Wales) Order 2014.
The Chair: With this it will be convenient to consider the draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Chartered Institute of Patent Attorneys and Institute of Trade Mark Attorneys) Order 2014 and the draft Legal Services Act 2007 (Approved Regulator) Order 2014.
Mr Vara: It is a pleasure to serve under your chairmanship again, Mr Streeter, as always, although I have to say that the arrangements in the room are a little baffling—usually, it is not this sort of scenario.
The Chartered Institute of Patent Attorneys, which I will refer to hereafter as CIPA, and the Institute of Trade Mark Attorneys, or the ITMA, made a joint application to the Legal Services Board to be designated as licensing authorities for the reserved legal activities for which they are approved regulators, which are the exercise of a right of audience, the conduct of litigation, reserved instrument activities and the administration of oaths. On 6 December 2013, the LSB recommended to the Lord Chancellor that a designation order be laid. On 6 March, I issued a decision notice agreeing to lay the draft order.
Before CIPA and the ITMA may be designated as licensing authorities, there must be an appellate body with the power to hear appeals against their decisions made in relation to alternative business structures, which, in brief, are bodies that carry out reserved legal activities and that are partly or wholly owned or controlled by non-lawyers. CIPA and the ITMA have opted to use the first-tier tribunal as the appellate body.
Additionally, the Institute of Chartered Accountants in England and Wales, or the ICAEW, applied to the LSB to be designated as an approved regulator and licensing authority for the reserved legal activity of probate activities. On 11 December 2013, the LSB recommended to the Lord Chancellor that designation orders be laid. On 6 March, I issued decision notices agreeing to lay two draft orders. The ICAEW has also opted to use the first-tier tribunal to hear and determine appeals against its decisions as a licensing authority.
The purpose of the appeals orders is to make provision for the first-tier tribunal to act as the appellate body for the purpose of appeals from decisions made by CIPA, the ITMA and the ICAEW in their capacity as a licensing authority. As required by the 2007 Act, the orders are made on the recommendation of the LSB, following a public consultation. The draft orders will provide individuals and businesses that are subject to CIPA, ITMA and ICAEW licensing decisions with an opportunity to appeal those decisions through an independent and impartial appellate body.
The purpose of the designation order is to designate the ICAEW as an approved regulator under the Legal Services Act 2007 for the reserved legal activity of probate activities. I confirm that, should the draft order be approved, a further order will be laid in the near future to designate the institute as a licensing authority for probate activities, so that it may license alternative business structures. That should promote increased competition and innovation in the legal services market.
The ICAEW is a regulator and professional membership body for the accountancy profession in England and Wales. The institute applied to the LSB in December 2012 to be designated as an approved regulator for probate activities. It also applied simultaneously to be designated as a licensing authority for probate activities.
During 2013, the LSB tested the institute’s proposals against the criteria in the 2007 Act. The LSB assessed that the institute has both the capacity and the capability to undertake a regulatory role in the legal services sector. As required by the 2007 Act, the LSB took advice from the mandatory consultees, including the Lord Chief Justice, the Legal Services Consumer Panel and the Office of Fair Trading, which is now the Competition and Markets Authority.
The LSB sought assurances that the governance arrangements proposed by the institute met the relevant criteria to ensure that its regulatory arrangements are independent from its representative functions—a key element of the 2007 Act. That is an important point, on which concerns were raised during the consultation, but the board has tested the issue and is satisfied with the arrangements; it is satisfied that the institute has in place the safeguards required to regulate authorised bodies and to protect the providers and users of such bodies.
The Government recognise the importance of the legal services market and want to encourage its growth. We believe that designating a new regulator that has the appropriate safeguards for consumer protection will help to achieve that, and that the ICAEW will be a capable and effective regulator in the legal services market. Its entry into the field will help to contribute to the growth of the legal services market and bring further innovations, leading to benefits for the consumers of legal services.
6.6 pm
Mr Andy Slaughter (Hammersmith) (Lab): It is a pleasure to serve under your chairmanship, Mr Streeter. The Whips have us working late on these matters and in conditions of extreme privation up on the second floor. I am not sure that I will get used to this room because it reveals that the Government have a rather better subs bench tonight than we have—I am not sure that that is all fair tactics.
Members will be pleased to hear that I can deal with these matters speedily, not least because the regulations arise from the Legal Services Act 2007, which is an excellent piece of legislation of which the Government should make more use. In relation to CIPA and ITMA—the Minister avoided using the term “ITMA”, but I will use it if I may—it is correct that we are dealing with bodies that are already approved regulators for the reserved legal actives and that what we are discussing is simply the necessary appellate structure that must be put in place to deal with that. That must be right.
I note with interest that we have the luxury of impact assessments for the draft appeals orders; we often do not get them, even for highly contentious matters. I guess we have them because the costs for these measures fall on the professional bodies, not on the Government, so they do not really mind us knowing what is going on. Nevertheless, I cannot fault the logic or the necessary structure that has been put in place.
This is a departure and a new move regarding the Institute of Chartered Accountants in England and Wales. The draft order has been around for some time, and back in March, the institute described its effect, along with the other measure that the Minister said will be coming in due course, as follows:
“The Lord Chancellor has broken new ground in approving our application as the first non-legal body to be able to regulate probate services and licence ABS.”
The Lord Chancellor is often breaking things—usually the legal system—but on this occasion, I cannot fault his logic. However, it is right to mark that the logic of the 2007 Act is to provide more ability for non-legal bodies, as in this case, or other legal bodies. A series of statutory instruments, which we welcome, will be coming in the near future to extend the powers of the Chartered Institute of Legal Executives.
Although these measures may be incremental, they represent quite a radical shift in the way in which legal services are run and regulated, and it is therefore appropriate to keep an eye on them. Such measures seem to be coming forward in a piecemeal fashion, so the Government might want to go away, think about the overall effect of the regulations that they are proposing under the 2007 Act and consider presenting them as a package, rather than have us meet on a series of occasions to approve them on a piecemeal basis.
I cannot disagree that the ICAEW is a highly respectable professional body, and it is right for it to have the powers provided here. Logically, it is therefore also right
that the appellate jurisdiction is evoked. I understand that the costs will fall on the professional bodies, rather than on the state, but I should be grateful to the Minister if he clarified whether I am wrong about that. Beyond that, we are content with the instruments as drafted and the drift of regulation under the 2007 Act, which is radical but appropriate.The Chair: I sense that the Minister may wish to clarify the point raised by the hon. Gentleman.
6.11 pm
Mr Vara: I certainly will clarify that point and I will be brief. I thank the hon. Member for Hammersmith for his support for these important measures. I assure him that we will keep an eye on matters and that there will be no cost to the state.
The order designating the ICAEW as a new approved regulator demonstrates our commitment to growth and innovation in the legal services market, which we see as the way forward. The two appeals orders form a key component of the licensing arrangements of CIPA, the ITMA and the ICAEW, to ensure that regulated providers are treated as fairly as they are robustly.
Draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Chartered Institute of Patent Attorneys and Institute of Trade Mark Attorneys) Order 2014
That the Committee has considered the draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Chartered Institute of Patent Attorneys and Institute of Trade Mark Attorneys) Order 2014.—(Mr Vara.)
DRAFT LEGAL SERVICES ACT 2007 (APPROVED REGULATOR) ORDER 2014
That the Committee has considered the draft Legal Services Act 2007 (Approved Regulator) Order 2014.—(Mr Vara.)