Legal Services Bill [HL]

House of Lords

Session 2006 - 07
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Other Bills before Parliament

Legal Services Bill [HL]

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
29

(2)
An application under this section is an application made to the Board for the
Board to exercise its powers under section 31 to direct the conflicting
regulator—
(a)
to take steps to modify, in such manner as may be specified in the
direction, the provision made by its regulatory arrangements to
5
prevent a regulatory conflict with the applicant regulator, or
(b)
if its regulatory arrangements do not make any such provision, to make
such provision as may be specified in the direction to prevent such a
conflict.
(3)
An approved regulator must consider any request made by an affected
10
person—
(a)
for the approved regulator to reconsider the provision made by its
regulatory arrangements to prevent a regulatory conflict with another
approved regulator, or
(b)
for the approved regulator to make an application under this section.
15
(4)
An “affected person”, in relation to an approved regulator, means—
(a)
a person authorised by the approved regulator to carry on a reserved
legal activity;
(b)
an employee or manager of such a person.
(5)
Where an application is made under this section, the Board—
20
(a)
must give the applicant regulator and the conflicting regulator an
opportunity to make representations, and
(b)
may consult any persons it considers appropriate.
(6)
The Board must decide whether or not to give a warning notice in response to
the application.
25
(7)
The Board must make that decision before the end of the period of 6 months
beginning with the day on which the application is received by it.
(8)
The Board must give notice of its decision, and the reasons for it, to the
applicant regulator and the conflicting regulator.
(9)
For the purposes of this section “warning notice” means a notice given under
30
paragraph 2(1) of Schedule 7 (warning of proposed direction under section 31).
53
Regulatory conflict with other regulatory regimes
(1)
The regulatory arrangements of an approved regulator must make such
provision as is reasonably practicable and, in all the circumstances,
appropriate—
35
(a)
to prevent external regulatory conflicts,
(b)
to provide for the resolution of any external regulatory conflicts which
arise, and
(c)
to prevent unnecessary duplication of regulatory provisions made by
an external regulatory body.
40
(2)
For the purposes of this section, an external regulatory conflict is a conflict
between—
(a)
a requirement of the regulatory arrangements of the approved
regulator, and

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
30

(b)
a requirement of any regulatory provision made by an external
regulatory body.
(3)
For this purpose “external regulatory body” means a person (other than an
approved regulator) who exercises regulatory functions in relation to a
particular description of persons with a view to ensuring compliance with
5
rules (whether statutory or non-statutory) by those persons.
(4)
Regulatory arrangements made for the purposes of subsection (1)(b) may, with
the consent of the Board, provide for the Board to exercise functions in
connection with the resolution of conflicts.
Information
10
54
Provision of information to the Board
(1)
The Board may, by notice, require an approved regulator—
(a)
to provide any information, or information of a description, specified in
the notice, or
(b)
to produce documents, or documents of a description, specified in the
15
notice.
(2)
A notice under subsection (1)—
(a)
may specify the manner and form in which any information is to be
provided;
(b)
must specify the period within which any information is to be provided
20
or document is to be produced;
(c)
may require any information to be provided, or document to be
produced, to the Board or to a person specified in the notice.
(3)
The Board may, by notice, require a person representing the approved
regulator to attend at a time and place specified in the notice to provide an
25
explanation of any information provided or document produced under this
section.
(4)
The Board may pay to any person such reasonable costs as may be incurred by
that person in connection with—
(a)
the provision of any information, or the production of any document,
30
by that person pursuant to a notice under subsection (1), or
(b)
that person’s compliance with a requirement imposed under
subsection (3).
(5)
The Board, or a person specified under subsection (2)(c), may take copies of or
extracts from a document produced pursuant to a notice under subsection (1).
35
(6)
For the purposes of this section and section 55, references to an approved
regulator include a body which was, but is no longer, an approved regulator.
55
Enforcement of notices under section 54
(1)
Where an approved regulator is unable to comply with a notice given to it
under section 54(1), it must give the Board a notice to that effect stating the
40
reasons why it cannot comply.
(2)
If an approved regulator refuses, or otherwise fails, to comply with a notice
under section 54(1), the Board may apply to the High Court for an order

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
31

requiring the approved regulator to comply with the notice or with such
directions for the like purpose as may be contained in the order.
(3)
This section applies in relation to a person to whom a notice is given under
section 54(3) as it applies in relation to an approved regulator to whom a notice
is given under section 54(1).
5
Competition
56
Reports by the OFT
(1)
If the OFT is of the opinion that the regulatory arrangements of an approved
regulator (or any part of them) prevent, restrict or distort competition within
the market for reserved legal services to any significant extent, or are likely to
10
do so, the OFT may prepare a report to that effect.
(2)
A report under subsection (1)—
(a)
must state what, in the OFT’s opinion, is the effect, or likely effect, on
competition of the regulatory arrangements or part of them to which
the report relates, and
15
(b)
may contain recommendations as to the action which the Board should
take for the purpose of ensuring that the regulatory arrangements of
the approved regulator do not prevent, restrict or distort competition.
(3)
Where the OFT makes a report under subsection (1), it must—
(a)
give a copy of the report to the Board, the Consumer Panel and the
20
approved regulator, and
(b)
publish the report.
(4)
Before publishing a report under subsection (3)(b), the OFT must, so far as
practicable, exclude any matter which relates to the private affairs of a
particular individual the publication of which, in the opinion of the OFT,
25
would or might seriously and prejudicially affect the interests of that
individual.
(5)
The OFT may exercise any of the powers conferred on it by section 174(3) to (5)
of the Enterprise Act 2002 (c. 40) (investigation powers) for the purpose of
assisting it in exercising its functions under this section.
30
(6)
For the purposes of the law of defamation, absolute privilege attaches to any
report of the OFT under this section.
57
The Board’s response to OFT report
(1)
This section applies where a report is made by the OFT under section 56 in
respect of an approved regulator.
35
(2)
The Board must allow the approved regulator a period of 28 days beginning
with the day on which the copy of the report is given to the approved regulator
under section 56, or such longer period as the Board may specify in a particular
case, to make representations to the Board about the OFT’s report.
(3)
The Consumer Panel may give the Board such advice as the Consumer Panel
40
thinks fit regarding the OFT’s report.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(4)
Having considered any representations made under subsection (2) and any
advice given under subsection (3), the Board must notify the OFT of the action
(if any) it proposes to take in response to the report.
58
Referral of report by the Secretary of State to the Competition Commission
(1)
This section applies where the OFT is satisfied that the Board has failed to give
5
full and proper consideration to a report made by the OFT, in respect of an
approved regulator, under section 56.
(2)
The OFT may give a copy of its report to the Secretary of State.
(3)
The OFT must notify the Board and the approved regulator if it gives a copy of
its report to the Secretary of State.
10
(4)
On receiving a report under subsection (2), the Secretary of State must—
(a)
give the Competition Commission a copy of the report, and
(b)
seek its advice on what action (if any) should be taken by the Secretary
of State under section 60.
59
Duties of the Competition Commission
15
(1)
Where the Secretary of State seeks the advice of the Competition Commission
under section 58, the Commission must investigate the matter.
(2)
The Commission must then make its own report on the matter unless it
considers that, as a result of any change of circumstances, no useful purpose
would be served by a report.
20
(3)
If the Commission decides in accordance with subsection (2) not to make a
report, it must make a statement setting out the change of circumstances which
resulted in that decision.
(4)
The Commission must comply with subsection (2) or (3) within the period of 3
months beginning with the day on which it receives a copy of the OFT’s report
25
under section 58(4)(a).
(5)
A report made under this section must state the Commission’s conclusion as to
whether any of the matters which is the subject of the report has or is likely to
have the effect of preventing, restricting or distorting competition within the
market for reserved legal services to a significant extent.
30
(6)
A report under this section stating the Commission’s conclusion that there is,
or is likely to be, such an effect must also—
(a)
state whether or not the Commission considers that that effect is
justified, and
(b)
if it states that the Commission considers that it is not justified, state its
35
conclusion as to what action, if any, ought to be taken by the Board.
(7)
When determining under subsection (6)(b) any action to be taken by the Board,
the Commission must ensure—
(a)
that the action stated is action which the Board has power to take, and
(b)
so far as reasonably possible, that the action stated is compatible with
40
the functions conferred, and obligations imposed, on the Board by or
under this Act.

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
33

(8)
A report under this section must contain such an account of the Commission’s
reasons for its conclusions as is expedient, in the opinion of the Commission,
for facilitating proper understanding of them.
(9)
Sections 109 to 115 of the Enterprise Act 2002 (c. 40) (investigation powers)
apply in relation to an investigation under this section as they apply in relation
5
to an investigation made on a reference made to the Commission under Part 3
of that Act (mergers), but as if—
(a)
in section 110(4) of that Act, the reference to the publication of the
report of the Commission on the reference concerned were a reference
to the Commission making a report under subsection (2) or a statement
10
under subsection (3), and
(b)
in section 111(5)(b)(ii) of that Act the day referred to were the day on
which the Commission makes that report or statement.
(10)
If the Commission makes a report or a statement under this section it must—
(a)
give a copy to the Secretary of State, the Board, the Consumer Panel and
15
the approved regulator to which the OFT’s report relates, and
(b)
publish the report or statement.
60
Secretary of State’s power to give directions
(1)
The Secretary of State may direct the Board to take such action as the Secretary
of State considers appropriate in connection with any matter raised in a report
20
made by the OFT under section 56.
(2)
Before giving a direction under subsection (1), the Secretary of State must
consider any report from the Competition Commission under section 59 on
that matter.
(3)
When exercising the power to give a direction under subsection (1), the
25
Secretary of State must ensure—
(a)
that the action stated is action which the Board has power to take, and
(b)
so far as reasonably possible, that the action stated in any direction is
compatible with the functions conferred, and obligations imposed, on
the Board by or under this Act.
30
(4)
The Secretary of State must publish a direction given under this section.
The Board as approved regulator
61
The Board as an approved regulator
(1)
The Secretary of State may by order—
(a)
designate the Board as an approved regulator in relation to one or more
35
reserved legal activities;
(b)
modify the functions of the Board, and make such other provision
relating to those functions as the Secretary of State considers necessary
or expedient, with a view to enabling the Board to discharge its
functions as an approved regulator effectively and efficiently;
40
(c)
cancel the Board’s designation as an approved regulator in relation to
one or more reserved legal activities.
(2)
But the Secretary of State may make an order under subsection (1) only if—

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
34

(a)
the Board has made a recommendation in accordance with section 65,
and
(b)
the order is in the same form as, or in a form which is not materially
different from, the draft order annexed to that recommendation.
(3)
If the Secretary of State decides not to make an order pursuant to a
5
recommendation made under section 65, the Secretary of State must—
(a)
give the Board a notice stating the reasons for that decision, and
(b)
publish the notice.
(4)
In discharging its functions as an approved regulator the Board must take such
steps as are necessary to ensure an appropriate financial and organisational
10
separation between the activities of the Board that relate to the carrying out of
those functions and the other activities of the Board.
(5)
An order under this section may make such modifications of provision made
by or under any enactment (including this Act or any Act passed after this Act)
as the Secretary of State considers necessary or expedient.
15
62
The Board’s designation under section 61(1)(a)
(1)
This section applies in relation to an order under section 61(1)(a) (an order
designating the Board as an approved regulator).
(2)
Subject to subsection (3), the order may designate the Board as an approved
regulator in relation to a reserved legal activity only where—
20
(a)
a body’s designation as an approved regulator in relation to the activity
is cancelled under section 44, or
(b)
the activity becomes a reserved legal activity by virtue of an order
under section 23.
(3)
Subsection (2) does not prevent the order having effect in advance of an event
25
within paragraph (a) or (b) of that subsection for the purpose of enabling the
Board to authorise persons to carry on activities which constitute the reserved
legal activity in question with effect from the occurrence of the event.
(4)
The order must ensure that the Board, acting as an approved regulator, may
make regulatory arrangements or modify its regulatory arrangements only
30
with the approval of the Board (acting otherwise than in its capacity as an
approved regulator or as a licensing authority under Part 5).
63
Modification of the Board’s functions under section 61(1)(b)
(1)
This section applies in relation to an order under section 61(1)(b) (an order
modifying the functions of the Board).
35
(2)
The order may include (among other things) provision conferring on the Board
powers to do any of the following—
(a)
to authorise (otherwise than by the grant of a licence under Part 5)
persons or any category of persons (whether corporate or
unincorporate) to carry on one or more activities which are reserved
40
legal activities in relation to which the Board is designated as an
approved regulator;
(b)
to make qualification regulations;

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
35

(c)
to make provision as to the educational, training and other
requirements to be met by regulated persons who are not relevant
authorised persons;
(d)
to make practice rules and conduct rules;
(e)
to make disciplinary arrangements in relation to regulated persons
5
(including discipline rules);
(f)
to make rules requiring the payment of fees specified in or determined
in accordance with the rules;
(g)
to make indemnification arrangements;
(h)
to make compensation arrangements;
10
(i)
to make rules as to the treatment of money (including money held in
trust) which is received, held or dealt with for clients, or other persons,
by regulated persons, and as to the keeping by such persons of accounts
in respect of such money;
(j)
to take steps for the purpose of ascertaining whether or not the
15
provisions of rules or regulations made, or any code or guidance
issued, by the Board in its capacity as an approved regulator are being
complied with, and to make rules requiring relevant authorised
persons to produce documents and provide information for that
purpose;
20
(k)
to delegate any of the functions exercisable by the Board in its capacity
as an approved regulator to such persons as it considers appropriate.
(3)
The order may—
(a)
provide for any provision of Schedule 14 (licensing authority’s powers
of intervention)—
25
(i)
to apply in relation to the Board (in its capacity as an approved
regulator) and regulated persons as it applies in relation to a
licensing authority and licensed bodies (or managers or
employees of such bodies), or
(ii)
to so apply with such modifications as are prescribed by the
30
order, or
(b)
make provision, in relation to the Board (in that capacity) and regulated
persons, corresponding to any of the provisions made, in relation to
licensing authorities and licensed bodies (or managers or employees of
such bodies), by that Schedule.
35
(4)
For the purposes of providing such indemnity, and enabling such grants or
other payments to be made, as are mentioned in subsection (2)(g) and (h), the
order may authorise the Board to make rules—
(a)
authorising or requiring the Board to establish and maintain a fund or
funds;
40
(b)
authorising or requiring the Board to take out and maintain insurance
with authorised insurers;
(c)
requiring relevant authorised persons or relevant authorised persons of
any specific description to take out and maintain insurance with
authorised insurers.
45
(5)
In this section—
“authorised insurer” means a person within any of the following
paragraphs—