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We have heard repeated statements of policy, which of course we take at face value, stating that this is intended to be light-touch regulation. In Clause 48, we have a single clause that deals with the way in which policy statements are to be issued, and the approved regulators will look to this clause and what goes with it to understand their relationship with the Legal Services Board. If ever there was a place where the policy should be expressed and where it should be made clear that the policy is that there should be light-touch regulation, this is it. I hope that the Minister will accept that these amendments, whether or not the wording is perfect, are intended to ensure that, in this crucial policy section of the Bill, the approved regulators will see a demonstration of that light-touch approach. It is not anywhere in the Bill at present, and this surely is the place in which to position it.
Lord Hunt of Wirral: My Lords, I strongly agree with my noble friend Lord Kingsland who put this amendment and those linked with it in context. This is probably one of the most important debates that we are going to have. During the Joint Select Committee meetings, we spent considerable time seeking reassurance from the Minister that the regulator would administer a light-touch system of regulation. I recall that the Minister’s colleague, Bridget Prentice, emphatically told us just that,
“Where the approved bodies are operating effectively, the LSB will leave them to get on with that job properly”.
That has been the whole basis on which we have proceeded. I await the Minister’s words with great anticipation, as I sensed, during that important debate in Committee, that she was exceedingly sympathetic to the approach that we are now taking. I look forward to her accepting this important amendment.
Lord Mackay of Clashfern: My Lords, I had understood that the noble Baroness clearly embraced the principle of light touch—or however one cares to express it. So far, I have not found in the Bill anything that expresses that. I do not think that I would expect to find the expression “light touch” in the Bill but I would expect to find words that convey that impression to me. Up until now, I have not seen them. Maybe the Minister’s reply will demonstrate that for the first time.
Baroness Ashton of Upholland: My Lords, I am always trying to address concerns raised by the noble and learned Lord, Lord Mackay of Clashfern, with great trepidation. I hope that I will succeed, but I do
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I was and have been sympathetic to many of the issues raised because there is nothing between us in wanting to establish the right relationship with the supervisory regulator, one which is light-touch but with powers to act if necessary. The question is always how to translate that into legislation, as noble Lords who have stood at this Dispatch Box in more eminent positions than mine will know. It is also important that, in trying to further define legislation, one ends up changing, altering, constraining and restricting how a body may operate.
The Bill sets the board as an oversight regulator, and makes it supervisory in nature. We recognise the significant benefits in this model. It is entirely right that approved regulators have the freedom to make the right regulatory decisions, in keeping with their duties under Clause 27 and in line with best regulatory practice, but should the board need to—and I hope it does not—it must be able to take effective action. Trying to further define what is called the B+ model, with which noble Lords will be familiar, in statute may be potentially restrictive.
In Committee, I expressed concerns about the amendment to Clause 48, in particular about the formulation of limbs (b) and (c), which set new thresholds over and above those already in the Bill. For each of the regulatory powers, the board must already meet statutory criteria and we have set out clear procedures that must be followed before a power is used. Let us not forget that Clause 48 already obliges the board to make policy statements in respect of how it will exercise its powers under the Bill, and these will need to be consistent with the principles of transparency, proportionality and the other better regulatory principles in Clause 3, which apply to the exercise of all the board’s functions, including the making of policy statements.
Within the legislation, we have already met the objectives that the amendments seek to meet, through the role of the regulatory bodies in Clause 27 and how Clause 3 operates. My difficulty is that the amendments move us beyond that, to constrain and change in a way we would not be able to accept. I have enormous warmth towards the objectives behind these amendments, but they do not take us any further forward. Rather, they constrain.
Lord Carlile of Berriew: My Lords, I apologise for interrupting the Minister. She referred to Clause 27, which is a good example of the complaint that those of us who have spoken to the amendments are making. Where in Clause 27—or anywhere else in the Bill, for that matter—do we find any concession to the discretion, judgment and competence of approved regulators? They have been much praised in debate, but are barely recognised or praised in the Bill. The Minister speaks of a light touch, but Clause 27 has a heavy hand. Should not something in the Bill be seen to be statutory light touch?
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Baroness Ashton of Upholland: My Lords, my interpretation of Clause 27 may differ from that of the noble Lord. It says, of the approved regulator’s duty:
“In discharging its regulatory functions ... an approved regulator must comply with the requirements of this section”—
- “must, so far as is reasonably practicable, act in a way ... compatible with the regulatory objectives, and which the ... regulator considers most appropriate for the purpose of meeting those objectives” .
It then says that the regulator,
- “must have regard to ... the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed [and] any other principle appearing to it to represent the best regulatory practice, and ... the public interest”.
Within that context, that reflects the approved regulator’s duty and enables it to act within the principles set out in the Bill. The noble Lord may disagree with me—I realise he does from his expression and head movements—but we have achieved that, and I hope that the noble Lord, Lord Kingsland, will withdraw his amendment. We are on Report, I am sitting down.
Lord Kingsland: My Lords, I am grateful to the Minister. We know from what she said in Committee that she supports the principle behind the amendment. However, we have also heard today that she is reluctant to see that principle expressed in the Bill. She said that she was against any attempt to further define the relationship between the Legal Services Board and the approved regulator. However, my complaint and that of my noble and learned friend Lord Mackay is that there is no definition at all in the Bill of the relationship between the Legal Services Board and the approved regulator, reflecting the principle of lightness of touch, which all government Ministers have said ought to be the prevailing principle.
We have debated this matter at great length for many months. It is time to test the opinion of your Lordships’ House.
6.16 pm
On Question, Whether the said amendment (No. 174) shall be agreed to?
Their Lordships divided: Contents, 169; Not-Contents, 130.
Addington, L.
Anelay of St Johns, B.
Ashdown of Norton-sub-Hamdon, L.
Astor of Hever, L.
Attlee, E.
Avebury, L.
Barker, B.
Beaumont of Whitley, L.
Blackwell, L.
Blaker, L.
Bledisloe, V.
Bonham-Carter of Yarnbury, B.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Bruce-Lockhart, L.
Butler-Sloss, B.
Byford, B.
Cameron of Dillington, L.
Campbell of Alloway, L.
Carlile of Berriew, L.
Carnegy of Lour, B.
Cathcart, E.
Cavendish of Furness, L.
Clement-Jones, L.
Colville of Culross, V.
Colwyn, L.
Cope of Berkeley, L. [Teller]
Cotter, L.
Courtown, E.
Cox, B.
Craigavon, V.
Crathorne, L.
Crickhowell, L.
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Darcy de Knayth, B.
De Mauley, L.
Dean of Harptree, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
Dundee, E.
Dykes, L.
Eccles, V.
Eccles of Moulton, B.
Elliott of Morpeth, L.
Elton, L.
Falkland, V.
Ferrers, E.
Finlay of Llandaff, B.
Fookes, B.
Fowler, L.
Freyberg, L.
Garden, L.
Gardner of Parkes, B.
Garel-Jones, L.
Geddes, L.
Glasgow, E.
Glenarthur, L.
Glentoran, L.
Goodhart, L.
Goodlad, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Hanningfield, L.
Harris of Richmond, B.
Henley, L.
Higgins, L.
Hodgson of Astley Abbotts, L.
Hogg, B.
Howard of Rising, L.
Howe, E.
Howe of Idlicote, B.
Howell of Guildford, L.
Hunt of Wirral, L.
Hurd of Westwell, L.
Inglewood, L.
Kimball, L.
King of Bridgwater, L.
Kingsland, L.
Kirkwood of Kirkhope, L.
Lamont of Lerwick, L.
Lee of Trafford, L.
Lindsay, E.
Linklater of Butterstone, B.
Livsey of Talgarth, L.
Low of Dalston, L.
Lucas, L.
Luke, L.
McAlpine of West Green, L.
MacGregor of Pulham Market, L.
Mackay of Clashfern, L.
Mackie of Benshie, L.
McNally, L.
Maginnis of Drumglass, L.
Mar, C.
Mar and Kellie, E.
Marland, L.
Marlesford, L.
Masham of Ilton, B.
Mayhew of Twysden, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Miller of Hendon, B.
Monson, L.
Montrose, D.
Moore of Lower Marsh, L.
Morris of Bolton, B.
Moynihan, L.
Neill of Bladen, L.
Newby, L.
Newton of Braintree, L.
Noakes, B.
Northbrook, L.
Northover, B.
Norton of Louth, L.
O'Cathain, B.
Palmer, L.
Palumbo, L.
Park of Monmouth, B.
Patten, L.
Pilkington of Oxenford, L.
Rawlings, B.
Razzall, L.
Reay, L.
Redesdale, L.
Rees, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
St. John of Bletso, L.
St John of Fawsley, L.
Saltoun of Abernethy, Ly.
Sandwich, E.
Seccombe, B.
Selsdon, L.
Sharp of Guildford, B.
Shaw of Northstead, L.
Sheikh, L.
Shephard of Northwold, B.
Shutt of Greetland, L. [Teller]
Skelmersdale, L.
Slynn of Hadley, L.
Smith of Clifton, L.
Southwark, Bp.
Steinberg, L.
Stewartby, L.
Stoddart of Swindon, L.
Taylor of Holbeach, L.
Teverson, L.
Thomas of Swynnerton, L.
Thomas of Walliswood, B.
Thomas of Winchester, B.
Tonge, B.
Tope, L.
Tordoff, L.
Tugendhat, L.
Tyler, L.
Ullswater, V.
Verma, B.
Waddington, L.
Wakeham, L.
Wallace of Saltaire, L.
Walpole, L.
Walton of Detchant, L.
Wilcox, B.
Williams of Crosby, B.
Windlesham, L.
Acton, L.
Adonis, L.
Ahmed, L.
Amos, B. [Lord President.]
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B.
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Bhatia, L.
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Birt, L.
Boyd of Duncansby, L.
Bradley, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Campbell-Savours, L.
Carter of Coles, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Corbett of Castle Vale, L.
Crawley, B.
Cunningham of Felling, L.
David, B.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Drayson, L.
D'Souza, B.
Dubs, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Falconer of Thoroton, L. [Lord Chancellor.]
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Ford, B.
Foulkes of Cumnock, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Giddens, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Greengross, B.
Grocott, L. [Teller]
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haskins, L.
Haworth, L.
Henig, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Janner of Braunstone, L.
Joffe, L.
Judd, L.
King of West Bromwich, L.
Kingsmill, B.
Kirkhill, L.
Lea of Crondall, L.
Lipsey, L.
Lockwood, B.
Lofthouse of Pontefract, L.
McDonagh, B.
Macdonald of Tradeston, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
McKenzie of Luton, L.
Massey of Darwen, B.
Maxton, L.
Meacher, B.
Mitchell, L.
Moonie, L.
Morgan of Drefelin, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Murphy, B.
O'Neill of Clackmannan, L.
Parekh, L.
Patel, L.
Patel of Blackburn, L.
Pendry, L.
Pitkeathley, B.
Prosser, B.
Ramsay of Cartvale, B.
Randall of St. Budeaux, L.
Rea, L.
Rendell of Babergh, B.
Richard, L.
Rooker, L.
Rosser, L.
Royall of Blaisdon, B.
Scotland of Asthal, B.
Sewel, L.
Sheldon, L.
Simon, V.
Smith of Finsbury, L.
Snape, L.
Soley, L.
Stone of Blackheath, L.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Temple-Morris, L.
Thornton, B.
Truscott, L.
Tunnicliffe, L.
Turnbull, L.
Turner of Camden, B.
Wall of New Barnet, B.
Whitaker, B.
Whitty, L.
Williamson of Horton, L.
Woolmer of Leeds, L.
Resolved in the affirmative, and amendment agreed to accordingly.
6.30 pm
Baroness Ashton of Upholland moved Amendment No. 175:
On Question, amendment agreed to.
Clause 53 [Regulatory conflict with other regulatory regimes]:
[Amendment No. 176 not moved.]
18 Apr 2007 : Column 269
Lord Kingsland moved Amendment No. 176A:
“(2A) The Board may agree to exercise functions under regulatory arrangements made for the purposes of subsection (1)(b).
(2B) Any resolution of an external regulatory conflict in accordance with the regulatory arrangements of an approved regulator (whether by the Board or any other person)—
(2C) An approved regulator must consider any request made by an external regulatory body for the approved regulator to reconsider any provision made by its regulatory arrangements on the ground that the provision—
The noble Lord said: My Lords, I shall also speak to Amendments Nos. 176B and 176C, which are substitutes for Amendment No. 176.
During the debate of 23 January, the noble Baroness agreed to consider the principle behind the line of amendments preceding the ones now tabled. They centred on the obligations on approved regulators to co-operate with non-legal regulators over issues of regulatory conflict. In consultation with the Institute of Chartered Accountants, the Government indicated that the wording of Amendments Nos. 176A to 176C might be acceptable. While promoting consumer interests everywhere else, the Bill will put at a disadvantage consumers, providers of services from alternative business structures and indeed legal practices employing individuals with other regulatory obligations by not giving them the same rights to raise issues of conflict.
The Government’s justification for rejecting these amendments is apparently that the general duty is sufficient, but if it is sufficient for conflict between an approved regulator and an external regulator, why not for conflicts between two approved regulators? That distinction appears artificial. The Government, after a degree of prevarication have given the institute an explanation of their decision not to table an amendment to Clause 53. As I have just hinted, that is based on the assertion that the general duty for approved regulators to avoid regulatory conflict is sufficient.
The provision of legal services is already integrated with many other regulatory regimes. If the Bill is to have the right effect, providing for more flexible and innovative provision, such regimes will become even more integrated. I beg to move.
Baroness Ashton of Upholland: My Lords, I am grateful to the noble Lord for raising this issue. He is right that we have had a detailed conversation with the ICAEW and shared with it our thinking about what we might seek to do and our decision in the end. In all the areas that I have looked at further, I have thought through the policy implications, discussed them with the appropriate people and, where necessary, brought together ideas to see what an amendment might look
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Clause 53 places a duty on approved regulators to take account of other regulatory regimes. They are required not only to take steps to prevent regulatory conflict and avoid unnecessary duplication of regulatory requirements but also to provide for the resolution of regulatory conflicts. These duties apply to any approved regulator whose regulated practices include non-lawyer professionals, such as accountants or chartered surveyors. The Bill allows the board to play a role in resolving disputes between approved regulators and external regulatory bodies, provided that the board and the regulators consent and applicable statutory and other provisions allow it. Amendment No. 176A makes that more explicit, but it does not change the policy.
The amendments do little to help prevent regulatory conflict; Clauses 51 to 54 already provide for that. However, they would place a further burden on approved regulators, who would have an obligation not only to address regulatory conflict with external regulators but also to consider formally and act upon any applications about specific instances. They would increase the pressure on approved regulators, who might be concerned about the possibility of a legal challenge because they had failed fully to address approaches from external regulators. They would apply a potential further statutory burden on the board by requiring it to consider such additional references as may be generated as a result of these amendments.
One of the key reasons that bodies enjoy the status of approved regulator is that they are judged responsible; that is, as bodies of experience and substance which the Government, in taking forward Sir David Clementi’s B+ model, have clearly entrusted with the day-to-day regulation of members of the legal profession. Noble Lords will know that that background is an important aspect of what the Government seek to do. They are responsible bodies, and we expect them to behave as such—they do. We expect that approved regulators would not only want to deal with any cases of regulatory conflict—I think that most, if not all, already maintain comprehensive rules on dealing with conflicts of interest—but they would actively want to avoid or resolve any such conflicts.
We believe that the duties set out in the Bill are sufficient to encourage approved regulators and ensure that they take a proactive approach to dealing with external regulatory conflict. Having looked very carefully at what this amendment would do, I see no justification for change here. Within the framework that we have set up and with the rules that they will have, these responsible bodies are perfectly capable of resolving these issues. I hope the noble Lord will withdraw his amendment.
Lord Kingsland: My Lords, I am grateful for the Minister’s reply. She is reposing great confidence in the general duties, and she may prove to be right. However, she is well aware of the institute’s strength of feeling that, if special provisions are not in the Bill, co-operation and avoidance of conflict will not occur.
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Amendment, by leave, withdrawn.
[Amendments Nos. 176B and 176C not moved.]
Clause 58 [Referral of report by the Secretary of State to the Competition Commission]:
Baroness Ashton of Upholland moved Amendments Nos. 177 to 180:
On Question, amendments agreed to.
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