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What I do know is—not in this area but in other areas of life—that small changes sometimes have big effects. Therefore, it is important for the new regime to enable the board to see the kind of changes being made and to be able to consider the effects being made. That was a decision we took.

Lord Kingsland: My Lords, I am most grateful to the noble Baroness for setting out the position that she previously set out at greater length, and perhaps with less continuity, than she has done this afternoon. She has not changed her position, but of course I always respect her for courageously sticking to her guns. However, her answer is not satisfactory to us. Although I shall not be seeking the opinion of the House on the matter today, I shall nevertheless consider whether it would be appropriate to return to the issue at Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 5 [Authorised persons]:

Baroness Ashton of Upholland moved Amendments Nos. 84 to 91:

“( ) The Association of Law Costs Draftsmen,” (a) P carries on the relevant activity by virtue of an employee of P (“E”) carrying it on in E’s capacity as such an employee, and (b) E is an authorised person in relation to the relevant activity. “Law costs draftsmen (a) the exercise of a right of audience; (b) the conduct of litigation.

On Question, amendments agreed to.



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Clause 22 [Transitional protection for non-commercial bodies]:

Baroness Ashton of Upholland moved Amendment No. 92:

On Question, amendment agreed to.

Clause 23 [Extension of the reserved legal activities]:

Baroness Ashton of Upholland moved Amendments Nos. 93 to 97:

On Question, amendments agreed to.

Clause 24 [Provisional designation as approved regulators and licensing authorities]:

Baroness Ashton of Upholland moved Amendments Nos. 98 to 102:

On Question, amendments agreed to.

Clause 25 [Recommendations that activities should cease to be reserved legal activities]:

Baroness Ashton of Upholland moved Amendments Nos. 103 to 107:

On Question, amendments agreed to.

Schedule 6 [Alteration of reserved legal activities]:

Baroness Ashton of Upholland moved Amendments Nos. 108 to 113:



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On Question, amendments agreed to.

Clause 27 [Approved regulator's duty to promote the regulatory objectives etc]:

[Amendment No. 114 not moved.]

Baroness Ashton of Upholland moved Amendments Nos. 115 and 116:

On Question, amendments agreed to.

Clause 28 [Prohibition on the Board interfering with representative functions]:

[Amendment No. 117 not moved.]

Clause 29 [Rules relating to the exercise of regulatory functions]:

Baroness Ashton of Upholland moved Amendment No. 118:

On Question, amendment agreed to.

Clause 30 [Performance targets and monitoring]:

Lord Kingsland moved Amendment No. 119:

The noble Lord said: My Lords, I shall also speak to all the other amendments in the group. At the risk of being accused of constant repetition, we believe it essential that the Bill reflects the Government’s declared policy that the Legal Services Board should take action against the approved regulators only where they are, to use the Government's words, “clearly failing”.

At present, it does not. The thresholds for intervention are far too low; at their present level, the Legal Services Board becomes simply a front-line regulator, like the Financial Services Authority. The potential for constant interference by the board would go completely against Sir David Clementi’s vision of the Legal Services Board as a small oversight body. Sir David Clementi said in his review of the legal services framework for England and Wales, published in 2004, at page 44:

Direct regulation by the Legal Services Board would also make the operation of the legislation inordinately costly.

The amendments would incorporate that policy in the Bill by raising the threshold for intervention in two respects. The first is that the power of the board to intervene is triggered by an assessment of adverse

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impact on the eight regulatory objectives considered as a whole rather than individually. For example, it would not be reasonable for the Legal Services Board to take action that had an adverse impact on competition if the approved regulator’s approach was necessary to improve access to justice and maintain adherence to the professional principles. However, it should be possible for the Legal Services Board to exercise power to act where the only adverse impact on the regulatory objectives was that it restricted competition, if that action could not be justified by reference to a benefit to the other regulatory objectives.

Amendments Nos. 119 and 120 would bring Clause 30 into line with Clause 3(2) and Clause 27(2), which require the board and approved regulators respectively, in discharging their duty, to promote the regulatory objectives so far as it is reasonably practical; to act in a way,

That form of words recognises that the regulatory objectives may pull in different directions. The approved regulator may have to balance the objectives, and, in the words of the noble and learned Baroness, Lady Butler-Sloss, on Second Reading,

Yet the Bill entitles the board to intervene to penalise a regulator who had exercised legitimate discretion in a balancing exercise.

In making its analysis, the Legal Services Board should trust the judgment of the approved regulator, unless it has good reason not to do so. This is especially so now that the regulatory and representative functions of the Law Society and the Bar Council have been clearly separated. The new approved regulators will have substantial lay representation, and all members will have to be selected on the basis of Nolan principles. In other words, the composition of these bodies will look very like the composition of the Legal Services Board. It must follow that the board should not exercise its powers simply because it would have reached a different decision on the same matter. The board should intervene only if it is clear that the conduct of an approved regulator in some way fell short of reasonableness.

I can deal much more telegraphically with the second line of issues to which the amendments give rise. There should be some qualifying adjective about the degree of adverse impact before the Legal Services Board invokes its powers. We have chosen the word “significant”, but “serious” or “substantial” would be equally acceptable. Almost any exercise of its function by an approved regulator will have at least some adverse effect on at least one of the regulatory objectives. I beg to move.

Lord Carlile of Berriew: My Lords, we on these Benches agree with the noble Lord, Lord Kingsland, that Clause 30 imposes too light a trigger on the exercise of what, on the face of it, are draconian powers that could lead to an approved regulator ceasing

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to be so approved. The concept of compatibility with the regulatory objectives as a whole is recognised as an holistic, inclusive concept in Clause 3. We believe that that concept should be in Clause 30. Indeed, it is plain common sense that there should be this inclusive view of what Clause 3 calls,

One can think of many examples in which there could be conflict between some of the regulatory objectives set out in Clause 1(1) but not with the regulatory objectives as a whole. A simple example of this is,

in Clause 1(1)(c). There may be very good reasons for a professional body saying that no lawyer should conduct a clinical negligence case unless that lawyer has some training and experience in conducting those cases. However, part of the regulatory objectives in Clause 1(1)(d) is to promote,

My understanding is that in north Wales, for example, only one solicitor—there may be more now, but certainly a few months ago there was only one—had the approval to carry out clinical negligence cases and so receive funding from the Legal Services Commission. There is plainly a conflict between competition and a decision that only people who are really competent to do certain types of cases should do them. The provisions we are considering could be triggered not by the consideration of those two regulatory objectives together but by one of them alone without considering the other. It seems a matter of practical common sense that the approach taken in Clause 3(2)(a) should be consistently applied throughout the Bill.

5.15 pm

Baroness Butler-Sloss: My Lords, I retain the concerns that I expressed earlier. This ought to be looked at. To have a single adverse impact is inadequate to achieve the light touch that is needed.

Lord Hunt of Wirral: My Lords, I agree. At paragraph 178 of the Joint Committee report on the draft Legal Services Bill we unanimously agreed that amendments of this type should be brought forward. We regret that the Minister has not yet done that and await her words with great interest.

Lord Campbell of Alloway: My Lords, I support this amendment, but I have to do so having moved Amendment No. 5, which is related to this amendment. There, I deal with the balance of the relevant regulatory objectives as the basis for a reasoned decision. This amendment rides totally in relation to that. It is very interesting that this balance was approved by the Minister on the first day of Report. She said:

There is not much between us on the fundamental principle. If there is, I do not know what it is. On that basis, I support the amendment.



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Lord Brennan: My Lords, this group of amendments deserves serious consideration by the Government. Here is a Bill to introduce a super-regulator, the Legal Services Board. They have said that it can be clothed and armed with heavyweight powers but that it will operate with a light touch. Such confidence in regulatory self-denial suggests inconsistency with ordinary human experience. I therefore invite the Minister to consider this state of affairs. If you have a series of separate objectives which can be separately considered, and any one of them will allow the trigger of intervention, the legal services world, to be so regulated, would reasonably expect the board at the very least to have a statement of policy on how it will implement these single objectives at any one time or in combination. These amendments suggest, by the introduction of the words “one or more” or “significant”, that you create a state of affairs where there is a policy base for the Legal Services Board to act on.

“Significant” is a pretty poor adjective, but if it is there to achieve compromise then it is better than nothing. It might be said that it is the kind of word which is so vague as to be incapable of challenge legally or intellectually, but I remind the House that in the Corporate Manslaughter and Corporate Homicide Bill we enacted the use of the word “substantial” as a core ingredient in the creation of a new criminal offence, confident that any jury would understand how it was to be understood and applied. I hope that in dealing with the amendments it will be accepted that this is a desire not to control power exercisable by the Legal Services Board but rather to seek a framework in which the legal services world can operate more efficiently.

Baroness Ashton of Upholland: My Lords, my ambition is that the Legal Services Board will never have to use its powers. The difficulty is that when one sets up in legislation a system that enables action to be taken when things go wrong, the implication or assumption is that the relationship will be a negative one. Our ambitions are more positive. We have talked about partnership, a light touch and how we expect the regulator to operate in an overarching and not an overbearing way. On that I think we are all agreed. Where the board might find itself having to use these powers, we are also all agreed that they should be used appropriately, expediently and efficiently. They should not be used in any inappropriate way, and that is why we have laid out in Clauses 30 to 34 what the powers are, how they are to be used and so forth, and why in Clause 48 we have enabled the board to produce policy statements about its powers and other matters. It is also why in Clause 3 we have said that the board must act within the best regulatory practice. We believe that the objective sought by noble Lords, particularly in the example given by the noble Lord, Lord Carlile, of medical negligence cases, would be covered by the combination of regulatory objectives and the way in which the board will operate. The noble Lord gave a good example of where I would not expect the board to use its power.


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