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 3 — Reserved legal activities
8

(a)
a person who is authorised to carry on the relevant activity by a
relevant approved regulator in relation to the relevant activity (other
than by virtue of a licence under Part 5), or
(b)
a licensable body which, by virtue of such a licence, is authorised to
carry on the relevant activity by a licensing authority in relation to the
5
reserved legal activity.
(2)
A licensable body may not be authorised to carry on the relevant activity as
mentioned in subsection (1)(a).
(3)
But where a body (“A”) which is authorised as mentioned in subsection (1)(a)
becomes a licensable body, the body is deemed by virtue of this subsection to
10
continue to be so authorised from that time until the earliest of the following
events—
(a)
the end of the period of 90 days beginning with the day on which that
time falls;
(b)
the time from which the relevant approved regulator determines this
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subsection is to cease to apply to A;
(c)
the time when A ceases to be a licensable body.
(4)
Subsection (2) is subject to Part 2 of Schedule 5 (by virtue of which licensable
bodies may be deemed to be authorised as mentioned in subsection (1)(a) in
relation to certain activities during a transitional period).
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(5)
A person other than a licensable body may not be authorised to carry on the
relevant activity as mentioned in subsection (1)(b).
(6)
But where a body (“L”) which is authorised as mentioned in subsection (1)(b)
ceases to be a licensable body, the body is deemed by virtue of this subsection
to continue to be so authorised from that time until the earliest of the following
25
events—
(a)
the end of the period of 90 days beginning with the day on which that
time falls;
(b)
the time from which the relevant licensing authority determines this
subsection is to cease to apply to L;
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(c)
the time when L becomes a licensable body.
18
Exempt persons
In this Act, “exempt person”, in relation to an activity (“the relevant activity”)
which is a reserved legal activity, means a person who is, by virtue of Schedule
3, an exempt person for the purposes of carrying on the relevant activity.
35
19
Approved regulators and relevant approved regulators
(1)
In this Act, the following expressions have the meaning given by this section—
“approved regulator”;
“relevant approved regulator”.
(2)
“Approved regulator” means—
40
(a)
a body which is designated as an approved regulator by Part 1 of
Schedule 4 or under Part 2 of that Schedule (or both) and whose
regulatory arrangements are approved for the purposes of this Act, and
(b)
if an order under section 61(1)(a) has effect, the Board.

Legal Services Bill [HL]
Part 3 — Reserved legal activities
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(3)
An approved regulator is a “relevant approved regulator” in relation to an
activity which is a reserved legal activity if—
(a)
the approved regulator is designated by Part 1, or under Part 2, of
Schedule 4 in relation to that reserved legal activity, or
(b)
if the approved regulator is the Board, it is designated in relation to that
5
reserved legal activity by an order under section 61(1)(a).
(4)
An approved regulator is a “relevant approved regulator” in relation to a
person if the person is authorised by the approved regulator to carry on an
activity which is a reserved legal activity.
(5)
Schedule 4 makes provision with respect to approved regulators other than the
10
Board.

In that Schedule—
(a)
Part 1 designates certain bodies as approved regulators in relation to
certain reserved legal activities,
(b)
Part 2 makes provision for bodies to be designated by order as
15
approved regulators in relation to one or more reserved legal activities,
and
(c)
Part 3 makes provision relating to the approval of changes to an
approved regulator’s regulatory arrangements.
(6)
An approved regulator may authorise persons to carry on any activity which
20
is a reserved legal activity in respect of which it is a relevant approved
regulator.
20
Regulatory arrangements
(1)
In this Act references to the “regulatory arrangements” of a body are to—
(a)
its arrangements for authorising persons to carry on reserved legal
25
activities,
(b)
its arrangements (if any) for authorising persons to provide
immigration advice or immigration services,
(c)
its practice rules,
(d)
its conduct rules,
30
(e)
its disciplinary arrangements in relation to regulated persons
(including its discipline rules),
(f)
its qualification regulations,
(g)
its indemnification arrangements,
(h)
its compensation arrangements,
35
(i)
any of its other rules or regulations (however they may be described),
and any other arrangements, which apply to or in relation to regulated
persons, other than those made for the purposes of any function the
body has to represent or promote the interests of persons regulated by
it, and
40
(j)
its licensing rules (if any), so far as not within paragraphs (a) to (i),

(whether or not those arrangements, rules or regulations are contained in, or
made under, an enactment).
(2)
In this Act—
“compensation arrangements”, in relation to a body, means arrangements
45
to provide for grants or other payments for the purposes of relieving or
mitigating losses or hardship suffered by persons in consequence of—

Legal Services Bill [HL]
Part 3 — Reserved legal activities
10

(a)
negligence or fraud or other dishonesty on the part of any
persons whom the body has authorised to carry on activities
which constitute a reserved legal activity, or of employees of
theirs, in connection with their activities as such authorised
persons, and
5
(b)
failure, on the part of regulated persons, to account for money
received by them in connection with their activities as such
regulated persons;
“conduct rules”, in relation to a body, means any rules or regulations
(however they may be described) as to the conduct required of
10
regulated persons;
“discipline rules”, in relation to a body, means any rules or regulations
(however they may be described) as to the disciplining of regulated
persons;
“indemnification arrangements”, in relation to a body, means
15
arrangements for the purpose of ensuring the indemnification of those
who are or were regulated persons against losses arising from claims in
relation to any description of civil liability incurred by them, or by
employees or former employees of theirs, in connection with their
activities as such regulated persons;
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“practice rules”, in relation to a body, means any rules or regulations
(however they may be described) which govern the practice of
regulated persons;
“qualification regulations”, in relation to a body, means—
(a)
any rules or regulations relating to—
25
(i)
the education and training which persons must receive,
or
(ii)
any other requirements which must be met by or in
respect of them,

in order for them to be authorised by the body to carry on an
30
activity which is a reserved legal activity,
(b)
any rules or regulations relating to—
(i)
the education and training which persons must receive,
or
(ii)
any other requirements which must be met by or in
35
respect of them,

in order for them to be authorised by the body to provide
immigration advice or immigration services, and
(c)
any other rules or regulations relating to the education and
training which regulated persons must receive or any other
40
requirements which must be met by or in respect of them,
(however they may be described).
(3)
In this section “regulated persons”, in relation to a body, means any class of
persons which consists of or includes—
(a)
persons who are authorised by the body to carry on an activity which
45
is a reserved legal activity;
(b)
persons who are not so authorised, but are employees of a person (other
than an individual) who is so authorised.
(4)
In relation to an authorised person other than an individual, references in
subsection (2) and (3) to employees of the person include managers of the
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person.

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Part 3 — Reserved legal activities
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Continuity of existing rights and transitional protection
21
Continuity of existing rights to carry on reserved legal activities
Schedule 5 makes provision for the continuity of existing rights and for certain
persons to be deemed, during a transitional period, to be authorised by
approved regulators to carry on certain activities.
5
22
Transitional protection for non-commercial bodies
(1)
During the transitional period, a body within subsection (2) is entitled to carry
on any activity which is a reserved legal activity.
(2)
The bodies are—
(a)
a not for profit body,
10
(b)
a community interest company, or
(c)
a trade union.
(3)
The transitional period is the period which—
(a)
begins with the day appointed for the coming into force of section 13,
and
15
(b)
ends with the day appointed by the Secretary of State by order for the
purposes of this paragraph.
(4)
Different days may be appointed under subsection (3)(b) for different
purposes.
(5)
An order may be made under subsection (3)(b) only on the recommendation of
20
the Board.
Alteration of reserved legal activities
23
Extension of the reserved legal activities
(1)
The Secretary of State may, by order, amend section 12 or Schedule 2 (reserved
legal activities) so as to add any legal activity to the activities which are
25
reserved legal activities for the purposes of this Act.
(2)
An order under subsection (1) may only be made on the recommendation of
the Board.
(3)
Schedule 6 makes provision about the making of recommendations for the
purposes of this section.
30
(4)
Where a recommendation is made in relation to an activity, the Secretary of
State must—
(a)
consider the report containing the recommendation given to the
Secretary of State under paragraph 16(3)(a) of that Schedule,
(b)
decide whether or not to make an order under this section in respect of
35
the activity, and
(c)
publish a notice of that decision,

within the period of 90 days beginning with the day on which the report was
given to the Secretary of State.

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Part 3 — Reserved legal activities
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(5)
Where the Secretary of State decides not to make an order under this section in
respect of an activity, the notice under subsection (4)(c) must state the reasons
for that decision.
24
Provisional designation as approved regulators and licensing authorities
(1)
The Secretary of State may, by order, make provision—
5
(a)
enabling applications to be made, considered and determined under
Part 2 of Schedule 4 or Part 1 of Schedule 10 in relation to a provisional
reserved activity, as if the activity were a reserved legal activity;
(b)
enabling provisional designation orders to be made by the Secretary of
State in respect of a provisional reserved activity, as if the activity were
10
a reserved legal activity.
(2)
An order under subsection (1) may, in particular, provide that Part 2 of
Schedule 4 or Part 1 of Schedule 10 is to apply, in relation to such cases as may
be specified by the order, with such modifications as may be so specified.
(3)
The Secretary of State may also, by order, make provision—
15
(a)
for the purpose of enabling applications for authorisation to carry on an
activity which is a provisional reserved activity to be made to and
considered and determined by—
(i)
a body in respect of which a provisional designation order is
made, or
20
(ii)
the Board in its capacity as a licensing authority;
(b)
for the purpose of enabling persons to be deemed to be authorised to
carry on an activity which is a new reserved legal activity by a relevant
approved regulator in relation to the activity, or by the Board in its
capacity as a licensing authority, for a period specified in the order.
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(4)
For this purpose—
“provisional reserved activity” means an activity in respect of which a
provisional report under paragraph 10 of Schedule 6 states that the
Board is minded to make a recommendation for the purposes of section
23;
30
“provisional designation order” means an order made by the Secretary of
State under Part 2 of Schedule 4 or Part 1 of Schedule 10 which is
conditional upon the Secretary of State making an order under section
23 in respect of the provisional reserved activity, pursuant to a
recommendation made by the Board following the provisional report;
35
“new reserved legal activity” means a legal activity which has become a
reserved legal activity by virtue of an order under section 23.
25
Recommendations that activities should cease to be reserved legal activities
(1)
The Board may recommend that an activity should cease to be a reserved legal
activity.
40
(2)
Schedule 6 makes provision about the making of recommendations for the
purposes of this section.
(3)
The Secretary of State must consider any recommendation made by the Board
for the purposes of this section (but nothing in section 198 (minor and
consequential provision etc) authorises the Secretary of State to give effect to
45
such a recommendation).

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(4)
Where the Secretary of State disagrees with a recommendation (or any part of
it), the Secretary of State must publish a notice to that effect which must include
the Secretary of State’s reasons for disagreeing.
Part 4
Regulation of approved regulators
5
Introductory
26
Regulatory and representative functions of approved regulators
(1)
In this Act references to the “regulatory functions” of an approved regulator
are to any functions the approved regulator has—
(a)
under or in relation to its regulatory arrangements, or
10
(b)
in connection with the making or alteration of those arrangements.
(2)
In this Act references to the “representative functions” of an approved
regulator are to any functions the approved regulator has in connection with
the representation, or promotion, of the interests of persons regulated by it.
General duties of approved regulators
15
27
Approved regulator’s duty to promote the regulatory objectives etc
(1)
In discharging its regulatory functions (whether in connection with a reserved
legal activity or otherwise) an approved regulator must comply with the
requirements of this section.
(2)
The approved regulator must, so far as is reasonably practicable, act in a way—
20
(a)
which is compatible with the regulatory objectives, and
(b)
which the approved regulator considers most appropriate for the
purpose of meeting those objectives.
(3)
The approved regulator must have regard to—
(a)
the principles under which regulatory activities should be transparent,
25
accountable, proportionate, consistent and targeted only at cases in
which action is needed,
(b)
any other principle appearing to it to represent the best regulatory
practice, and
(c)
the public interest.
30
Separation of regulatory and representative functions
28
Prohibition on the Board interfering with representative functions
(1)
Nothing in this Act authorises the Board to exercise its functions in relation to
any representative function of an approved regulator.
(2)
But subsection (1) does not prevent the Board exercising its functions for the
35
purpose of ensuring—
(a)
that the exercise of an approved regulator’s regulatory functions is not
prejudiced by its representative functions, and

Legal Services Bill [HL]
Part 4 — Regulation of approved regulators
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(b)
that decisions relating to the exercise of an approved regulator’s
regulatory functions are, so far as reasonably practicable, taken
independently from decisions relating to the exercise of its
representative functions.
29
Rules relating to the exercise of regulatory functions
5
(1)
The Board must make rules (“internal governance rules”) setting out
requirements to be met by approved regulators for the purpose of ensuring—
(a)
that the exercise of an approved regulator’s regulatory functions is not
prejudiced by its representative functions, and
(b)
that decisions relating to the exercise of an approved regulator’s
10
regulatory functions are so far as reasonably practicable taken
independently from decisions relating to the exercise of its
representative functions.
(2)
The internal governance rules must require each approved regulator to have in
place arrangements which ensure—
15
(a)
that the persons involved in the exercise of its regulatory functions are,
in that capacity, able to make representations to, be consulted by and
enter into communications with the Board, the Consumer Panel, the
OLC and other approved regulators, and
(b)
that the exercise by those persons of those powers is not prejudiced by
20
the approved regulator’s representative functions and is, so far as
reasonably practicable, independent from the exercise of those
functions.
(3)
The internal governance rules must also require each approved regulator—
(a)
to take such steps as are reasonably practicable to ensure that it
25
provides such resources as are reasonably required for or in connection
with the exercise of its regulatory functions;
(b)
to make such provision as is necessary to enable persons involved in
the exercise of its regulatory functions to be able to notify the Board
where they consider that their independence or effectiveness is being
30
prejudiced.
(4)
The first set of rules under this section must be made before the day appointed
by the Secretary of State by order for the purposes of this section.
Performance targets
30
Performance targets and monitoring
35
(1)
The Board may—
(a)
set one or more performance targets relating to the performance by an
approved regulator of any of its regulatory functions, or
(b)
direct an approved regulator to set one or more performance targets
relating to the performance by the approved regulator of any of its
40
regulatory functions,

if the Board is satisfied that the conditions in subsection (2) are satisfied.
(2)
Those conditions are—