Joint Committee on The Draft Legal Services Bill Minutes of Evidence


Memorandum by the General Council of the Bar (Ev 01)

  1.  The Bar Council welcomes this opportunity to comment on the draft Legal Services Bill.

  2.  The Bar Council established the Bar Standards Board (BSB), chaired by Ruth Evans, in January 2006 to undertake its regulatory work. The BSB will be providing its own submissions to the Committee.

  3.  The establishment of the BSB, with its strong lay element, goes a considerable way towards meeting the objectives set out in the report of Sir David Clementi, on which the Bill is based. The Committee should be aware of the strengths of the Bar's existing system of regulation and of the way in which the Bill could adversely affect these.

EXECUTIVE SUMMARY

  4.  The Bar Council welcomes the Bill and supports the regulatory objectives in Clause 1.

  5.  The Bar Council's principal concerns are in the following three areas:

    (a)  the powers of the Legal Services Board (LSB);

    (b)  the arrangements for complaints handling; and

    (c)  the cost of the new system.

The powers of the LSB

  6.  The Bar Council believes that the main danger is that the LSB will become a heavy-handed regulator micro-managing the "front line regulators" (FLRs) (referred to in the Bill as "approved regulators"). The focus should be on allowing the FLRs to do their work without inappropriate intervention.

  7.  The Bill sets the bar for intervention by the LSB too low. If amendments are not made, the LSB will effectively become a front-line body, wastefully duplicating the activities of the FLRs and the opposite of what Sir David Clementi recommended.

  8.  We propose that the threshold for each of the Board's powers should form a graduated range, matched to the particular mischief at which the Bill is directed:

    (a)  The Bill should make clear that the power to set targets should be the first stage in dealing with an FLR, where the Board considers that it is not performing any of its regulatory tasks satisfactorily.

    (b)  The Bill should also provide that the powers to punish an FLR and intervene in its activities should be based on the "need to avoid demonstrable harm to the regulatory objectives".

    (c)  The Bill should provide expressly that financial penalties should only be imposed where it is clear that the FLR has culpably failed to co-operate with directions or to meet targets.

    (d)  The Bill should provide that an intervention direction or a recommendation to cancel designation can only be made where the LSB is satisfied that "serious harm would be caused to the regulatory objectives".

  9.  We make detailed proposals below for:

    (a)  Additional ways by which the Bill could provide for the accountability of the LSB.

    (b)  Improvements to the provisions in the Bill regarding appeals from decisions of the LSB.

    (c)  Removal of the LSB's power to approve the practising certificate fees of authorised regulators (which is unnecessary, given the LSB's powers of direction).

The arrangements for Complaints Handling

  10.  The Bar Council believes that the proposals for the OLC are inflexible and unlikely to provide the best results for consumers.

  11.  The Bar Council proposes two alternative ways of improving the Bill's central provisions:

    (a)  The handling of all complaints should, where the LSB is satisfied that this is appropriate, be left to the FLRs.

    (b)  Alternatively, the complainant should be able to choose whether the FLR or the OLC resolves the complaint.

  Both alternatives would require the FLR to be permitted (in consumers' interests) to award redress.

  12.  The Bar Council also believes that:

    (a)  It is inappropriate for the OLC to be able to award redress to individuals who are not the lawyer's clients.

    (b)  An appeal process from any decision of the Ombudsman is essential under Article 6 of the ECHR.

The cost of the new system

  13.  The Bar Council believes that the estimated cost of the new system are speculative and optimistic and that the proposed system may adversely affect a number of practitioners. It recommends the following changes:

    (a)  Many of the Board's functions involve public policy considerations which ought to be funded by the taxpayer. We, therefore, propose that the Government should fund at least 33 per cent of the total cost of the LSB (as is the case with the Financial Reporting Council).

    (b)  The cost of the new regime should be split fairly between the various professions and should not cost them more.

    (c)  The professions must be involved in the process for setting the costs.

    (d)  The arrangements for apportioning costs should not adversely affect those who are vulnerable to unmeritorious complaints, as a result of the nature of their work. This particularly affects members of the criminal Bar.

INTRODUCTION

  14.  The Bar Council supports the broad thrust of the Bill and has worked closely with Sir David Clementi and the Department for Constitutional Affairs on the development of the Bill's provisions. In particular, it has already taken action to carry out one of Clementi's central recommendations: that there should be a split between the regulatory and representative elements of the Council's work. The BSB was established in January this year, with members being appointed on Nolan principles and a lay chair. Details about the BSB are at Annex A. [Submitted but not printed].

  15.  The creation of the BSB needs to be taken into account in considering the operation of the Bill. The separation of regulation from representation is designed to remove the concerns of consumers about the previous system and enable us to build on our acknowledged record in regulating barristers.

  16.  The Bar Council has always tried to place the public interest at the forefront of its approach to regulation. The operation of its complaints system has consistently been the subject of approval from the Legal Services Ombudsman, and we continue to review our systems and rules to ensure that they are fit for purpose. We anticipate that the BSB will take this process forward; for example, the new Complaints Commissioner will be conducting a full review of the complaints system.

  17.  A description of the Bar's complaints procedure is at Annex B. One of its crucial features is the involvement of experienced barristers, including QCs, in providing (cost free, or pro bono) support. This involves high quality analysis of the complaint and the issues raised. Consideration of complaints involves a high degree of participation from lay people. The result is a robust system of regulation at low cost to the profession and, critically, to the consumer.

THE BILL OVERALL

  18.  There are many positive things in the Bill. First, we welcome the role for the professions as what Clementi and the White Paper called Front Line Regulators (FLRs—referred to in the Bill as "approved regulators"). Second, the establishment of the LSB will take the legal sector out of the direct political influence of the Secretary of State, which is desirable. Third, the proposals for setting proper timetables for consideration of rule changes are sensible. Fourth, we support encouragement of greater choice for consumers and believe that, if issues of potential conflict of interest can be resolved, Alternative Business Structures (ABSs) may provide this, as well as greater service opportunities for the Bar, and for the legal profession generally.

  19.  Our principal concerns arise over (a) the powers of the LSB; (b) the arrangements for complaints handling; and (c) the cost of the new system.

  20.  In respect of cost, it is recognised that there are a considerable number of imponderables, all of which are likely to raise costs unless there are firm mechanisms for control. Causes for concern are:

    (a)  The extent to which the LSB will use its powers and, instead of being a light touch regulator, become an expensive regulator seeking to micro-manage the FLRs.

    (b)  The number of complaints likely to be received by the OLC and the efficiency of its procedures in dealing with those complaints, particularly those which are unmeritorious.

    (c)  The fact that the FLRs themselves may well want to modernise their arrangements at increased cost or need to respond to initiatives from the LSB.

    (d)  The assumption of efficiency savings in the OLC, which we think are unrealistic.

  21.  We consider it crucial that strong means exist for ensuring the accountability of the LSB and the OLC and for ensuring that costs are properly controlled. We deal with this below.

REGULATORY OBJECTIVES

  22.  We support the regulatory objectives set out in Clause 1.

LEGAL SERVICES BOARD

  23.  We support the proposal that the LSB should exist as a flexible oversight regulator (what was described in Clementi's original proposal as a "light touch" regulator). We support the view that the main work of regulation should be undertaken by the FLRs. We think, however, that there is a real danger that the LSB will become a heavy-handed regulator micro-managing the FLRs. We particularly note that under the Bill as it presently stands:

    (a)  there is a danger of the LSB taking a "one size fits all" approach to the FLRs;

    (b)  the LSB's accountability to stakeholders is unclear and inadequate;

    (c)  the thresholds for use by the LSB of its various powers are set too low; and

    (d)  the availability of legal recourse (appeals etc) against decisions and actions of the LSB is inadequate.

  24.  We have a diverse legal system in which the various branches of the wider legal profession act in different ways to meet the needs of their various consumers. The proposal for FLRs to continue to regulate individual branches of the profession seeks to retain this diversity. It must be recognised, however, that different FLRs may choose to regulate in different ways—according to the particular conditions in which those they regulate practise and the degree of risk involved. This difference in approach should be permitted to continue—unless it causes harm to the regulatory objectives.

Accountability

  25.  Much of Part 4 of the Bill[1] is concerned with draconian powers of intervention, with little statutory guidance or control over the exercise of those powers. Nor is the LSB required to work in partnership with others, particularly the FLRs. The fact that public interest-led FLRs already exist suggests that such extensive powers are unnecessary and that the focus should be on allowing the FLRs to do their work without inappropriate intervention.

  26.  A direct comparison with the Financial Services Authority is inappropriate because it regulates practitioners directly, but the LSB will affect practitioners and many aspects of the accountability of the FSA would be suitable for this model. In addition, therefore, to the provisions set out in Part 2 of the Bill (objectives and principles to be observed by the LSB, an annual report to Ministers (and thence to Parliament) and a Consumer Panel), there should be provision akin to those in the Financial Services and Markets Act 2000 (FSMA) for:

    (a)  A Practitioner Panel (cf. FSMA, section 9[2]).

    (b)  Ministerial action where there is unease about the way in which the LSB is conducting its affairs in terms of economy, efficiency and effectiveness (cf FSMA section 12).

    (c)  Internal machinery for ensuring efficient and economic discharge of functions (FSMA Schedule 1 paragraph 4[3]).

    (d)  A Complaints Commissioner to consider complaints about the activities of the LSB (FSMA, Schedule 1 paragraph 7).

    (e)  An annual public meeting (ibid. paragraph 11).

    (f)  Involvement of the fee payers in the process of settling the financial needs of the LSB/OLC as a whole and in the distribution of the burden among the various sources of payment—at the very least, there needs to be consultation with the relevant fee-paying bodies, and preferably with the public at large (cf FSMA Schedule 1 paragraph 17 and section 155[4]; and the recent approach taken by the Healthcare Commission).

    (g)  Provision to encourage a cooperative and constructive approach to regulation. [5]

Triggers for Exercise of the LSB's Powers

  27.  It is striking that in Part 4 of the Bill almost all the powers, with the exception of setting performance targets, are triggered by much the same set of threshold conditions (including failing to perform functions to an "adequate standard" or to "comply with any requirement imposed on it"). Only two of the powers require any further, more substantial trigger: these are the extreme powers of an "intervention direction" and a "recommendation to cancel designation". Both require the LSB to be satisfied that the measure is "appropriate" and that the failures cannot be adequately addressed by other means. By their nature, it is unlikely that these will be exercised except in the most extreme circumstances. This means that, in practice, the Board will be exercising its powers through directions.

  28.  If the bar for intervention by the LSB is set too low, the LSB will effectively become a front-line body, wastefully duplicating the activities of the FLRs. It is important that the Bill carefully pitch the threshold for each of the Board's powers, ensuring that they form a graduated range, sensibly matched to the particular mischief at which the Bill is directed.

  29.  The power to set targets could easily prove to be a way of imposing unnecessary burdens on the sector and for second-guessing the way in which the FLRs do their work. Setting targets should be the first stage in dealing with an FLR, where the Board considers that it is not performing any of its regulatory tasks satisfactorily. This should be made clear on the face of the Bill.

  30.  Beyond that, the powers to punish an FLR and intervene in its activities should be based on the need to avoid demonstrable harm to the regulatory objectives. Financial penalties should be imposed only where it is clear that the FLR has culpably failed to co-operate with directions or to meet targets. In the case of an intervention direction or a recommendation to cancel designation, the LSB should be satisfied that serious harm would be caused to the regulatory objectives unless it exercised its power.

Appeals

  31.  It is surprising that, in the entirety of the clauses about the powers of the LSB in relation to approved regulators[6], there is only one mention of any power to challenge a decision of the LSB by judicial proceedings. Moreover, that provision[7], permitting an appeal to the High Court against the imposition or amount of a penalty, is drafted in as restricted a way as could be devised[8]. There is no equivalent challenge in the High Court in cases of manifest unfairness or irrationality by the Board or if the Board itself has acted in contravention of the regulatory objectives in reaching its decisions or in setting a penalty. We understand that in other regulatory regimes there is an appeal on the merits from a decision of the regulator to a specialist tribunal, but it would be cumbersome and costly to create yet another regulatory body here. We therefore suggest that the appropriate solution would be to allow an appeal on the merits to the High Court, but only with the permission of the High Court, so as to deter unnecessary appeals.

  32.   No doubt the remainder of Part 4 is still open to challenge by way of judicial review, but that is wholly inadequate for the kind of decisions to be taken by the LSB, many of which will affect the livelihoods of thousands of people.

Power to Approve FLR Fees

  33.  We consider that the provisions at clause 43(5) and (6) are unnecessary. If an FLR is to plan properly, it needs to be able to budget for its activities with certainty. The involvement of the LSB will only create delay and uncertainty. Moreover, it is unnecessary. The LSB would only need to interfere if, in particular circumstances, it considered that (a) the fee was too low and jeopardised the FLR's regulatory ability or (b) the FLR was using money inappropriately. In such cases, its powers of direction would be sufficient to enable it to take action.

Compensation Fund

  34.  We recognise that schemes to compensate consumers for negligence and dishonesty need to exist. It is right that lawyers should contribute to such funds if their consumers are at risk from their activities. However, some lawyers (such as barristers) do not handle clients' money, and so the risk of the consumer losing money is negligible. It would thus be inappropriate to require them to subscribe to such a fund. The powers for the Board to consider such issues are properly drawn and we would expect the Board to operate proper risk-based regulation in the decisions that it takes.

COMPLAINTS

  35.  We believe that the proposals for complaints handling are inflexible and unlikely to provide the best level of service for consumers. While it is clearly right that there should be an oversight regulator to ensure that complaints are handled properly, there are strong arguments for greater flexibility so that, where appropriate in the view of the LSB, complaints handling can be left to the FLRs. This is because:

    (a)  FLRs should be involved in the full range of complaints made against their members so that they can provide guidance or rule changes if necessary—this is a crucial part of a regulator's role.

    (b)  About 70 per cent of complaints against barristers involve allegations that, if true, would require both compensation and proceedings for misconduct. The FLRs should be in a position to deal with both aspects if this is appropriate. It is at best inconvenient for consumers if they have to deal with two different bodies in respect of different aspects of their complaints. Examples of these mixed complaints are set out in Annex B.

    (c)  Complainants do not just want redress. Complainants contacting the Bar Council also want to see the barrister reprimanded or disciplined. The FLRs have a range of powers from advice as to future conduct to disbarment, including the power to award redress, which are far wider than those proposed for the OLC. This enables them to ensure that the most appropriate remedy or sanction is provided through a single procedure.

    (d)  Where a complaint discloses cause for serious concern, then the FLR needs to be aware of this urgently—no matter how efficient the OLC is, there will be an unnecessary and potentially damaging delay.

    (e)  Where the OLC decides that disciplinary action is necessary, there is likely to be duplication of work between it and the FLR and the complainant may well be confused by the fact that two bodies are dealing with essentially the same complaint. There is a danger of inconsistency and considerably greater expense.

  36.  Part 6 of the Bill enables service complaints against practitioners to be dealt with, if the complainant so wishes, by an independent ombudsman rather than an FLR. That serves the regulatory objectives by steering complaints away from an approved regulator whose own complaints-handling record fails to earn public confidence. But the apparent element of choice in clause 102(1)(b) is seriously undermined by clause 127, which prohibits an FLR from granting redress for a complaint. The result is that, in reality, all complaints will be removed from the FLR and into the ombudsman scheme, no matter how demonstrably effective an individual FLR's complaints-handling machinery may be. This approach is unlikely to benefit consumers. It will fetter the FLR's power to act appropriately in individual cases (particularly if it considers that the OLC's response has been too lenient). It will also mean that if, as we fear, the OLC becomes a cumbersome, inefficient bureaucracy, the consumer will have no alternative other than the courts (which will decide the complaint on strictly legal grounds, rather than on the wider basis envisaged for the OLC).

  37.  The best course would be for Part 6 of the Bill to begin from the same starting point as Part 4: that is, the FLR should undertake the front-line function unless the LSB considers that that function should be removed in the public interest. Complaints should not fall within the (de facto compulsory) jurisdiction of the ombudsman scheme, nor should the FLR lose its power to grant redress, unless the Board, on appropriately framed grounds, gives a direction to that effect. It may be that one or more FLRs, as at the commencement of the Bill, would prefer to relinquish complaints-handling functions; or the LSB may decide that a direction removing those functions from them is apposite from the outset. But that does not undermine the principle. FLRs whose complaints-handling currently works well should have the opportunity to continue to serve the public under the new regime. Clearly the OLC or the LSB would need appropriate monitoring arrangements to ensure that the FLRs were carrying out their tasks appropriately.

  38.  An alternative would be to give the consumer a choice of either the FLR or the OLC route to resolution of a complaint. This would require qualification of the removal from FLRs of the power to grant redress. As a bare minimum, a slight modification could be made to the present scheme of the Bill, involving the use of scheme rules made by the OLC. Clause 102(5)(e) already enables the OLC, by scheme rules, to provide for a complaint to be considered and determined by a body other than an ombudsman. That would include an FLR and would enable complaints needing both redress and conduct proceedings to be handled holistically. To enable that to work effectively, it would be necessary to make an exception to clause 127(1) to enable an FLR to grant redress in respect of complaints referred under scheme rules providing for determination of complaints by the FLR. This route, however, is likely to be less satisfactory than one enabling the FLR to continue to award redress.

  39.  The proposals in the Bill will be particularly unfortunate so far as the Bar is concerned. Relying on its own expertise it has established and for many years maintained a complaints handling service which is widely acknowledged to be of a very high standard. In her Annual Report for 2004, the Legal Services Ombudsman, Zahida Manzoor CBE, said that the Bar Council achieves a very high satisfaction rating from her office, one that is substantially higher than that of the other professional bodies. She found the Bar Council to work in a very open and cooperative manner. Its approach left her office with a strong impression that it is confident about its existing complaints handling capabilities but is nonetheless far from complacent and is constantly seeking to make improvements to its operations. The Bar Council, she concluded, seeks to ensure not only that it is complying with its own procedures but that it offers a fair, consistent and good quality service generally to the consumers who use its services.

  40.  The proposed new system will be radically different, will involve decision making by non-lawyers who are unlikely to be able to supply the level of analysis and expertise which—for the sake of complainants—is now provided. It will moreover involve the Bar—unlike other branches of the profession, who have not had the same level of cost-free input—in very significant extra expense.

Redress

  41.  We are further concerned by what appears to be a power to enable the OLC to award redress to individuals who are not the lawyer's client. We consider that this will put further pressure on the lawyer/client relationship. Lawyers often have to do things on their client's instructions, to which a third party will object. To put the lawyer under the additional threat of having to pay redress to that person (or, at least, to pay for the investigation of a complaint) will put further pressure on the client/lawyer relationship and will enable opponents to make threats which jeopardise that relationship.

Qualifications of the Chief Ombudsman

  42.  We are puzzled by the provision that the Chief Ombudsman and assistant ombudsmen may not be lawyers. Most ombudsmen in similar schemes are lawyers because the training and experience they have enables them to analyse cases properly (in the sense of the rules relating to decision making) and to reach appropriate decisions. While we can understand the perception that lawyers may be inclined to favour their own, we do not believe that this is a charge that can be made convincingly against individuals otherwise appropriately qualified to undertake this task.

Appeals

  43.  In our view an appeal process from the decision of the Ombudsman is essential under Article 6 of the ECHR, particularly if the compensation limit is to be raised to £20,000. We attach at Annex C [submitted but not printed] a copy of a note that we have received to this effect.

COSTS

  44.  We have five main concerns about costs:

    (a)  The estimates are speculative and, in our view, optimistic.

    (b)  Some central Government funding is required to ensure that the professions are not subject to unjust burdens;

    (c)  Costs for the Bar are likely to increase;








    (d)  Apportionment of costs between FLRs needs to be fair and to be transparently handled; and

    (e)  The Bill's definition of a "polluter" in the context of "the polluter pays" principle could work real injustice.

  45.  The estimated costs in the Regulatory Impact Assessment are lower than those included with the original report by Sir David Clementi. While this is to be welcomed as a gesture of intent, these estimates cannot be binding on the LSB. Moreover, the assumption that the OLC will be able to achieve efficiency savings of the level suggested in the report is optimistic. The Bill appears to give the LSB the effective power to tax the profession, with no apparent control, beyond the retrospective scrutiny of the Public Accounts Committee. This is unacceptable.

Central Government Funding

  46.  The proposals in the White Paper and subsequent statements (and, indeed, clause 131 of the Bill) indicate that the Government considers that the full cost of the LSB should be borne by the sector. It is noteworthy that this transfers a good deal of expense currently borne by the taxpayer (because it is done by the DCA) to the regulated sector. We believe that there should continue to be some funding by the taxpayer (on the lines of the Financial Reporting Council, to which the taxpayer contributes 33 per cent of the cost), as Sir David Clementi pointed out[9]. This is for the following reasons:

    (a)  it will provide a further level of accountability for the LSB;

    (b)  it will add to the perception of the system's independence from the profession, a point made by Sir David Clementi; and

    (c)  there are a number of functions which it would be inappropriate to ask the professions to fund.

  47.  The third point needs elaboration. The LSB will have a duty to consider whether individual activities ought to be brought within the regulatory framework. Presumably, this will typically be because the conduct of people outside the framework is giving cause for concern. The LSB has a duty to do so if asked by the Secretary of State and other individuals (not including the FLRs or their representative equivalents). The cost of such an investigation could be considerable and there are general public interest questions involved. It will be difficult, if not impossible, to collect the costs of the investigation from the unregulated sector, particularly if the decision is not to bring the activity within the net. It would be unconscionable to expect the professions to pay for investigations which they did not initiate and which they might consider unnecessary.

Costs for the Bar

  48.  The Regulatory Impact Assessment concludes that the cost of regulation will not increase overall after a transitional period. It projects an increase on the LSB side of £3 million to £5 million, and possible savings on the OLC side of £8 million to £12 million.[10] Transitional costs of £25 million are mentioned. Even if these figures turn out to be near the mark, there is at present little analysis of how the costs and savings, if achieved, will impinge on different sectors. There is a real danger that the approach to the OLC in particular will have serious adverse effects on the Bar. The costs of the Bar's complaints system, depending largely on unpaid volunteer work, are around £640 per complaint, compared with what would appear to be around £1,000 per complaint under the new system.[11] Even if efficiency savings are made, which seems questionable, the effect in terms of cost on individual members of the Bar, and on the profession as a whole, is likely to be seriously adverse. The cost of staff needed by the new organisation to undertake the work done voluntarily by barristers is likely to be considerably in excess of any savings to the Bar Council. This will result in increased cost to the Bar, even if the overall system may be cheaper. Moreover, there is no guarantee that the task will be more effectively performed by OLC staff, and some may feel that there is reason to fear the contrary.

Apportionment of costs.

  49.  It is vital that the process of apportioning, between the different FLRs, the costs of the LSB and, if necessary, of the OLC, is carefully considered. The process needs to produce a fair outcome and must avoid any element of cross subsidy. The Bill does not yet secure this. It does not, for instance, appear to embrace the desirable principle that those who do not provoke increases in costs should not have to pay for them. The basis on which apportionment takes place should be clearly and publicly stated. For instance, most of the charges should reflect the costs to the system that the paying parties themselves have provoked, though a small amount could be regarded as base costs and recovered on a basis of headcount or turnover.

  50.  As we indicate at, paragraph 26(f), the Bill needs to contain provision to ensure that the stakeholders, and in particular the FLRs, are involved not only in the process of setting that suggested policy, but also in its periodic application. As it stands, Part 8 of the Bill is deficient in both these respects.

The Bill's approach to "the polluter pays"

  51.  Clause 106 requires the LSB to make rules governing the payment of charges by respondents to complaints. We understand that the proposal is that the alleged "polluter" should pay towards the costs of the complaint, even if the complaint proves groundless. This is not only conspicuously unfair, it is also contrary to the Clementi recommendation on this point.[12] A person who is found not to have committed any wrong is not a "polluter"; by contrast, his accuser may very well be one. The Regulatory Impact Assessment recognises that there are some sectors, particularly barristers specialising in criminal law, which are particularly susceptible to complaints which tend to be unfounded. In the Bar Council's view it is entirely inappropriate that those who are the subject of a complaint that is not upheld should be required to pay directly towards the costs of investigating it.

ALTERNATIVE BUSINESS STRUCTURES

  52.  The Bar Council is in favour of the liberalisation of services (and, indeed, has made a number of reforms of its own rules to permit easier access to barristers). The proposed new ABSs may well provide improved ways for consumers to access legal services and provide new sources of work for barristers. We have expressed concerns, however, that there is a danger that organisations in which non-lawyer owners or managers work with lawyers, may give rise to conflicts of interest or to conflicts of rules which may adversely affect consumers. The Bill's solution is to leave it to the LSB and the licence regulators to decide whether or not individuals are suitable to hold these posts, with the posts of Head of Legal Practice (HOLP) and Head of Finance and Administration (HOFA) with duties to ensure compliance. It is essential that individuals operating within an ABS, whether lawyers or non-lawyers, maintain appropriate standards of conduct. The regulatory provisions in the Bill should achieve this so far as lawyers are concerned. The extent to which, through the Bill or otherwise, non-legal participants will be appropriately regulated will merit careful examination.

Legal Professional Privilege

  53.  We are concerned that clause 139 of the Bill may not adequately deal with the needs of ABSs in respect of legal professional privilege. We attach a note that we have received on this point at Annex D.

COMPETITION

  54.  With regard to clauses 46-50 of the Bill, we would refer the Committee to the concerns set out in paragraphs 16-21 of our response to the White Paper. For ease of reference these are attached at Annex E. [Submitted but not printed].

OFFENCES

  55.  The offences set out at clauses 11 and 12 are generally appropriate, but we are concerned that they do not provide similar protection to consumers in respect of the title "barrister" as is provided by the Solicitors Act 1974 in respect of solicitors. The provisions in the Solicitors Act 1974, making it an offence for anyone other than a practising solicitor to use the title when offering legal services, appear to be unaffected by the Bill. There is no equivalent prohibition protecting the title of barrister. Under these provisions an individual could legally claim to be a barrister when offering unrestricted legal services (eg simply supplying legal advice) or when asserting that he or she is particularly credit-worthy, without committing an offence. The title should have equivalent protection to that of "solicitor".

General Council of the Bar

June 2006






1   Except for clauses 22 and 23 on the functions and duties of the front line (approved) regulators, clauses 46 to 50 on competition matters, and 51 to 56 on the LSB as a front line (approved) regulator in its own right. Back

2   The Financial Services Authority (FSA) has to consider their representations and explain any disagreement it has to each of them. In the Bill the provision is one sided. Back

3   For a slightly different set of internal controls see Section 3 of the Bank of England Act 1998. Back

4   For the Financial Ombudsman Service, the same duty on the FSA to consult is provided by section 234 (read with section 155). Back

5   The Bill does not have the standard provision about cooperation between regulatory authorities of the sort in the Financial Services Act 1986, at paragraph 5 of Schedule 7. Back

6   Clauses 24 to 45. Back

7   In clause 32, especially subsection (4). Back

8   The only grounds are, broadly, excess of power, and procedural irregularity causing substantial prejudice. Back

9   Review of the Regulatory Framework for Legal Services in England and Wales, paragraphs 35-26. Back

10   The Committee will no doubt wish to test some of the underlying assumptions about economies of scale, efficiency savings and a "steady state" in relation to the numbers of complaints. Back

11   This assumes around 16,000 complaints per year, which we understand to be the current figure for solicitors. Complaints against other professionals will add around 500 to that amount. Back

12   ibid. Paragraph 71. Back


 
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