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Noble Lords will recall that, throughout all the stages in your Lordships’ House, we repeatedly challenged the noble Baroness, Lady Ashton, that the Government put their money where their mouth was; that is, to express in concrete terms in the Bill what they had said in their response to the Clementi report. Unfortunately, we were insufficiently persuasive, so we had by amendment to achieve our objective. We achieved all our objectives by amendment; they have for the most part been reversed in another place. In the case of one of them, we ought to put the words back in the Bill.
One of the amendments would have introduced “significant” to qualify the adverse impact. We thought that one approach would be to require the LSB to intervene only when the adverse impact had been significant. We took into account all those observations made in your Lordships' House, which carried great weight and said that “significant” is a difficult word for the judiciary to interpret. We have therefore left that aside and decided not to reintroduce it, but wish to reintroduce the other amendment, Amendment No. 15A, which would add a paragraph (c) to Amendment No. 15 to,
- “ensure that the board exercises its powers only where it considers that the action or inaction of an approved regulator is not an approach which the approved regulator could reasonably have taken”.
We feel completely justified in tabling the amendment, because the Minister will see that the composition of all the approved regulators reflects most accurately the composition of the Legal Services Board. The professions have separated their representative from their regulatory function; a substantial number of individuals on the approved regulatory board is lay; and all the members of the authorised regulators will be selected on the basis of the Nolan principles. So it would be only in rare circumstances that the LSB would be required to second-guess the activities of the approved regulators. Those circumstances are set out in Amendment No. 15A. I draw a great deal of support for my proposal from what the Minister said when addressing the thresholds at Third Reading in another place two days ago. She said that the LSB,
“should not be in the business of micro-managing or second-guessing approved regulators”.—[Official Report, Commons, 15/10/07; col. 655.]
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We have tabled the amendment to ensure that the Legal Services Board behaves exactly as the Minister wishes it to do in the way that she expressed it two days ago. I beg to move.
Moved, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 15, at end insert “but do propose Amendment No. 15A as an amendment to Commons Amendment No. 15”.—(Lord Kingsland.)
Lord Borrie: My Lords, the noble Lord, Lord Kingsland, has put his points forward with his customary reasonable and succinct style, which is always very effective. He knows, as all of us in this House know, that we are discussing the balance between the roles of the approved regulators and the oversight regulator. I recognise the point that the noble Lord made: in the regulatory aspects of their role changes have been introduced that ensure that there is a large element of laymen and laywomen—independent people—along with the members of the profession concerned, which I am sure is very welcome to the Minister as well as to others.
In the amendment moved by the noble Lord, Lord Kingsland, he is erecting a hurdle too far in imposing on the oversight regulator the obligation of saying that the approved regulator could not reasonably have come to a decision. When it gets down to reasonableness, it is perfectly possible for two bodies of well intentioned people of considerable integrity to come to two different points of view. Given the structure of the Bill as it relates to the oversight regulator, the board, and the approved regulators, it is perfectly reasonable and would be possible in an ultimate and no doubt extreme situation for the oversight regulator to say that even though the approved regulator has behaved reasonably it thinks, exceptionally, that it should be overruled.
Viscount Bledisloe: My Lords, I rise to support the amendment. There are only two ways in which a body asked to overrule a decision of a lower body can act. It can say either, “Well, I wouldn’t have done that so we will change the decision”, or, “That was not a reasonable decision to make and therefore we will overrule it”. The noble Lord, Lord Borrie, says that in an exceptional situation the body can say that although the decision was reasonable it will overrule it. But if the situation was exceptional and the other body has come to an unacceptable decision, the decision was not in fact reasonable, however much it thought that it was.
The example that the Minister gave is just not a real example. He said that the bodies might have two alternative views and that either might be reasonable—but then he said that the view arrived at would have very adverse consequences. If the view taken is going to have adverse consequences, it was not a reasonable view; if the body has not taken those adverse consequences into account properly, it has not come to a reasonable decision. There are no compromises in the middle. Unless the body is not going simply to say, “That is not what we would have done and therefore we will do something different”, the amendment must be right.
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Lord Campbell of Alloway: My Lords, having taken part in this discussion at previous stages—a most important part of our general discussion—I could not have heard the argument better expressed than today by my noble friend Lord Kingsland and the noble Lord, Lord Thomas of Gresford, so I have no more to say about that. I wholly accept the way in which it has been put, and I could not have done it as well. However, what concerns me is the intervention of the noble Lord, Lord Borrie. It seems to me incredible to object to the use of the word “reasonably” when the only way that any form of statutory body’s conduct can be controlled is if the High Court thinks that it is unreasonable. I assume that the noble Lord does not wish to have unreasonable conduct controlled. If he does, then I do not understand his argument.
5.15 pm
Lord Hunt of Wirral: My Lords, this is a very important discussion because, as my noble friend Lord Kingsland pointed out, throughout the Bill Ministers have always made it clear that the Legal Services Board should not intervene unless an approved regulator is acting unreasonably. That is exactly what my noble friend wishes to write into the Bill. We should not forget that we are dealing with an independent body. The Legal Services Board will look to the statute to clarify for its members how it should act. My noble friend Lord Campbell of Alloway is right to point out that if the noble Lord, Lord Borrie, is right in what he says, there is nothing to stop the Legal Services Board substituting its judgment for that of the approved regulator wherever the board takes a different decision. As the noble Viscount pointed out—
Lord Thomas of Gresford: My Lords, does the noble Lord agree that it would be difficult for anybody to consider whether the board’s decision was reasonable in substituting its decision for what it regards to be a reasonable decision? Who controls the board?
Lord Hunt of Wirral: My Lords, I hope that the House is rapidly getting the impression that we are trying to avert confusion and to make the matter as simple as possible. The noble Viscount is right. The wording of my noble friend’s amendment—even now the noble Lord, Lord Hunt of Kings Heath, may be thinking carefully about whether he can accept it—is exactly what Ministers have always said should happen. It is very important that the new independent body, the Legal Services Board, should be able to look to the statute rather than to what is said by Ministers in debate. It is very important to get this absolutely right in the statute. That is why I so strongly support my noble friend’s amendment.
Lord Hunt of Kings Heath: My Lords, we Lord Hunts are very reasonable people but I am not sure that I can go as far as the noble Lord, Lord Hunt of Wirral, suggested. Of course, I very much understand the importance of this discussion. I cannot disagree
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However, I say to the noble Lord, Lord Kingsland, that our advice is that his amendment would require the board to ensure that before it takes any decision whether to exercise its powers it should apply the Wednesbury test of unreasonableness—the test that gives the decision maker a very wide margin of appreciation; in effect, any decision may validly be taken so long as no error of law or process is made and a reasonable decision maker could have taken it. The problem is that were the board required to pass this test before being able to take any action, it would have to be satisfied that a judicial review of the acts or omissions of the approved would succeed on the grounds that no reasonable approved regulator could have thought that action or inaction appropriate. The problem with that is that it would place a very great inhibitor on action by the board unless and until an approved regulator was near collapse or was brazenly flouting principles of good regulation, by which time serious damage might have been done to the regulatory objectives. That is the point that my noble friend Lord Borrie made. I do not accept that without a “reasonable” test the board would seek to or be able to second-guess approved regulators or impose its own policies where it does not agree with the decisions of approved regulators. I say to the noble Lord, Lord Hunt, that the board will be required—
Lord Campbell of Alloway: My Lords, if it was to second-guess, what on earth could be done about it? That is the defect in the argument of the noble Lord.
Lord Hunt of Kings Heath: My Lords, first, the duties under Clause 3 require its regulatory activities to be proportionate, accountable and targeted only at cases in which action is needed. The threshold conditions on the use of board powers ensure that the board can take action only where in all circumstances of the case it is the appropriate action to take and the additional provisions tabled requiring the board to consider the impact of taking action on the other regulatory bodies, which we have just discussed. The other policy statements require the board to respect its oversight role and the principle that matters should be resolved informally.
It is also important to note that, as a public body, it will be required to act in a proportionate manner when any convention rights of the approved regulators are engaged. It will be open to approved regulators judicially to review decisions of the board that are prima facie irrational, unreasonable or disproportionate.
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Viscount Bledisloe: My Lords, the noble Lord said that he agrees with many of the objectives of the noble Lord, Lord Kingsland, but he thinks that the amendment goes a bit too far. Would the sensible thing not be for him formally to make no objection to the amendment for the moment, and for it then to be discussed—the matter has got to come back to us anyway because of the previous vote—to try to find some compromise wording halfway between the two of them?
Lord Hunt of Kings Heath: My Lords, the noble Viscount is very seductive, but the Government believe that we have got the balance right with the amendments that I have moved. Accepting the amendment proposed by the noble Lord, Lord Kingsland, would send us over that balance. I am afraid that, alluring as his offer is, I cannot accept it.
Lord Kingsland: My Lords, I am most grateful to the Minister and to all noble Lords who have engaged in this debate. The arguments of the noble Lord, Lord Borrie, are always beguiling. However, on this occasion, I did not find him as persuasive as I often do. He suggested that there might be a situation in which the position of the front-line regulator was reasonable but it would, nevertheless, be reasonable for the LSB to intervene. I pray in aid in response to that the remarks made by the Minister in the House of Commons—I apologise for repeating myself—who said that the LSB,
- “should not be in the business of micro-managing or second-guessing approved regulators”.—[Official Report, Commons, 15/10/07; col. 655.]
If the approved regulator makes a reasonable decision, for the LSB to intervene in those circumstances would be second-guessing its decision; it can be described in no other way. In those circumstances, I think that I am entitled to test the opinion of the House.
5.24 pm
On Question, Whether the said amendment (No. 15A) shall be agreed to?
Their Lordships divided: Contents, 180; Not-Contents, 138.
Addington, L. [Teller]
Anelay of St Johns, B. [Teller]
Arran, E.
Ashcroft, L.
Astor of Hever, L.
Attlee, E.
Baker of Dorking, L.
Barker, B.
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Bledisloe, V.
Bonham-Carter of Yarnbury, B.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Bridges, L.
Brooke of Sutton Mandeville, L.
Brookeborough, V.
Burnett, L.
Byford, B.
Campbell of Alloway, L.
Carlile of Berriew, L.
Carnegy of Lour, B.
Cathcart, E.
Chidgey, L.
Clement-Jones, L.
Colville of Culross, V.
Colwyn, L.
Cope of Berkeley, L.
Cotter, L.
Courtown, E.
Crathorne, L.
Crickhowell, L.
De Mauley, L.
Dean of Harptree, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
D'Souza, B.
Dykes, L.
Eccles, V.
Eccles of Moulton, B.
Eden of Winton, L.
Elles, B.
Elton, L.
Falkland, V.
Falkner of Margravine, B.
Feldman, L.
Ferrers, E.
Fookes, B.
Freeman, L.
Freyberg, L.
Geddes, L.
Glentoran, L.
Goodlad, L.
Greaves, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Hannay of Chiswick, L.
Harris of Richmond, B.
Hayhoe, L.
Henley, L.
Hodgson of Astley Abbotts, L.
Hooper, B.
Hooson, L.
Howard of Rising, L.
Howe, E.
Hunt of Wirral, L.
Inglewood, L.
James of Blackheath, L.
Jenkin of Roding, L.
Jones of Cheltenham, L.
Jopling, L.
Kimball, L.
King of Bridgwater, L.
Kingsland, L.
Kirkham, L.
Kirkwood of Kirkhope, L.
Laing of Dunphail, L.
Laird, L.
Lamont of Lerwick, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Lindsay, E.
Linklater of Butterstone, B.
Liverpool, E.
Livsey of Talgarth, L.
Luke, L.
Lyell, L.
Lyell of Markyate, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
Mackay of Clashfern, L.
Mackie of Benshie, L.
Maclennan of Rogart, L.
McNally, L.
Mar, C.
Marland, L.
Marlesford, L.
Masham of Ilton, B.
Mawson, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Miller of Hendon, B.
Monson, L.
Montgomery of Alamein, V.
Morris of Bolton, B.
Naseby, L.
Neill of Bladen, L.
Neuberger, B.
Newby, L.
Newton of Braintree, L.
Northesk, E.
Northover, B.
Norton of Louth, L.
O'Cathain, B.
Oppenheim-Barnes, B.
Park of Monmouth, B.
Patten, L.
Perry of Southwark, B.
Pilkington of Oxenford, L.
Platt of Writtle, B.
Plumb, L.
Quinton, L.
Rawlings, B.
Razzall, L.
Reay, L.
Redesdale, L.
Rees, L.
Rennard, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rogan, L.
Roper, L.
Rotherwick, L.
St. John of Bletso, L.
St John of Fawsley, L.
Saltoun of Abernethy, Ly.
Sanderson of Bowden, L.
Sandwich, E.
Scott of Needham Market, B.
Seccombe, B.
Selkirk of Douglas, L.
Selsdon, L.
Sharman, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Shephard of Northwold, B.
Shutt of Greetland, L.
Skelmersdale, L.
Smith of Clifton, L.
Soulsby of Swaffham Prior, L.
Steel of Aikwood, L.
Stewartby, L.
Stoddart of Swindon, L.
Taylor of Holbeach, L.
Thatcher, B.
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Thomas of Swynnerton, L.
Thomas of Walliswood, B.
Thomas of Winchester, B.
Tope, L.
Tordoff, L.
Trefgarne, L.
Trenchard, V.
Trimble, L.
Tyler, L.
Ullswater, V.
Verma, B.
Waddington, L.
Wade of Chorlton, L.
Wakeham, L.
Wallace of Saltaire, L.
Walmsley, B.
Walpole, L.
Walton of Detchant, L.
Wilcox, B.
Williamson of Horton, L.
Windlesham, L.
Acton, L.
Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Amos, B.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B. [Lord President.]
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Billingham, B.
Bilston, L.
Borrie, L.
Boyd of Duncansby, L.
Bradley, L.
Bragg, L.
Brennan, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burlison, L.
Campbell-Savours, L.
Carter of Coles, L.
Christopher, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Corbett of Castle Vale, L.
Crawley, B.
Darzi of Denham, L.
David, B.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Donoughue, L.
Drayson, L.
Dubs, L.
Eatwell, L.
Elder, L.
Evans of Parkside, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Gibson of Market Rasen, B.
Giddens, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Greengross, B.
Grocott, L. [Teller]
Harris of Haringey, L.
Hart of Chilton, L.
Haskel, 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.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L.
Janner of Braunstone, L.
Jones, L.
Jones of Whitchurch, B.
King of West Bromwich, L.
Kirkhill, L.
Lea of Crondall, L.
Leitch, L.
Lipsey, L.
Lofthouse of Pontefract, L.
Low of Dalston, L.
Macaulay of Bragar, L.
McDonagh, B.
Macdonald of Tradeston, L.
McIntosh of Haringey, L.
McKenzie of Luton, L.
Mallalieu, B.
Massey of Darwen, B.
Maxton, L.
Meacher, B.
Moonie, L.
Morgan of Drefelin, B.
Morgan of Huyton, B.
Morris of Manchester, L.
Murphy, B.
Ouseley, L.
Patel of Blackburn, L.
Pendry, L.
Pitkeathley, B.
Puttnam, L.
Quin, B.
Radice, L.
Ramsay of Cartvale, B.
Rendell of Babergh, B.
Richard, L.
Robertson of Port Ellen, L.
Rooker, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Simon, V.
Smith of Gilmorehill, B.
Snape, L.
Soley, L.
Stone of Blackheath, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Thornton, B.
Tomlinson, L.
Triesman, L.
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Tunnicliffe, L.
Turner of Camden, B.
Vadera, B.
Warner, L.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
Wedderburn of Charlton, L.
West of Spithead, L.
Whitaker, B.
Whitty, L.
Williams of Elvel, L.
Young of Norwood Green, L.
Resolved in the affirmative, and amendment agreed to accordingly.
5.36 pm
“( ) to make regulations or rules providing for appeals to the High Court or another body against decisions made by the Board in its capacity as an approved regulator (including regulations or rules providing for a decision on such an appeal to be final and for orders as to payment of costs).”(a) is a manager of B, or(b) has an interest in B.(a) another body (“A”) is a manager of B, or has an interest in B, and(b) non-authorised persons are entitled to exercise, or control the exercise of, at least 10% of the voting rights in A.(a) the person holds shares in the body, or(b) the person is entitled to exercise, or control the exercise of, voting rights in the body.(2C) For the purposes of this Act, a non-authorised person has an indirect interest in a licensable body if the body is licensable by virtue of subsection (2) and the non-authorised person is entitled to exercise, or control the exercise of, voting rights in A.”
Lord Hunt of Kings Heath: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 16 to 18.
Moved accordingly, and, on Question, Motion agreed to.
“( ) provision as to how the licensing authority, when considering the regulatory objectives (in compliance with its duties under section 3(2) or 28(2)) in connection with an application for a licence, should take account of the objective of improving access to justice,”Lord Hunt of Kings Heath: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 19.
We now turn to the very important matter of access to justice in the ABS context. I understand that this has been debated extensively in both Houses and we all agree that we do not want new business structures to put access to justice at risk.
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