APPENDIX 6: LEGAL SERVICES BILL [HL]
Letter from Bridget Prentice MP, Parliamentary Under
Secretary of State, Department for Constitutional Affairs, to
the Chairman.
1. I am writing in response to the section on
the Legal Services Bill in the Delegated Powers and Regulatory
Reform Committee's Third Report of the Session. I am very grateful
to you and the members of your committee for the work you have
done.
2. The Government accepts the Committee's recommendations
and the following amendments have been tabled to be brought forward
during Committee stage of the Bill in the House of Lords:
Clause 36(3) - that rules
which set the maximum penalty that the Legal Services Board can
impose on approved regulators will not only require the consent
of the Secretary of State but also be contained in a statutory
instrument subject to negative resolution. Under the Bill as drafted,
the rules are made by the Legal Services Board, with the consent
of the Secretary of State, without any provision for Parliamentary
scrutiny.
Clause 79 - that the power
which enables the Secretary of State by order to create an appellate
body or bodies to hear appeals against licensing authority decisions
be made subject to an affirmative resolution. Under the Bill as
drafted, the power is subject to a negative resolution.
Clause 93(3) and (4) -
that the Board's power to make rules as to the maximum financial
penalty that can be levied against a licensed body or an individual
by a licensing authority be made subject to negative resolution.
Under the Bill as drafted, the power is subject only to the Secretary
of State's consent.
Clause 107 - that the
power to amend Part 5 as it applies to foreign bodies be made
subject to affirmative resolution. Under the Bill as drafted,
the power is subject to negative resolution.
Clauses 149(3)(g) and 161(3)(g)
- that the power of the Secretary of State by order to prescribe
further persons to whom restricted information be disclosed be
amended so as to be restricted to prescribing persons exercising
regulatory functions (on the model of the analogous provisions
in section 86 of the Pensions Act 2004).
Clause 166 - that "levy
rules" made by the Legal Services Board under clause 166
will, as with rules under clause 36(3) as described above, be
contained in a statutory instrument subject to negative resolution.
Clause 176 - that the
Secretary of State's power by order to amend section 83(3) of
the Trade Marks Act 1994, to require the register to be kept by
a person specified in the order, will be made by affirmative rather
than negative resolution.
Clause 177 - that the
Secretary of State's power by order to amend section 275(3) of
the Copyright, Designs and Patents Act 1988 to require the register
to be kept by a person specified in the order, will be made by
affirmative rather than negative resolution.
3. There were a number of other points raised
by the Committee on which it may be helpful if I set out the Government's
position:
Schedule 3, paragraph (8)
4. The Committee, at paragraph 49 of the report,
brought the power at Schedule 3, paragraph 8, to the attention
of the House. In particular, the Committee felt that a fuller
justification of the power was needed. We will of course be happy
to provide further detail on this power during the Lords' Committee
stage. However, I hope it will be useful if I expand on the explanation
given in the memorandum in advance of any discussion in Parliament
on this issue.
5. As the Committee mentioned, the power to exempt
certain categories of person from regulation is not without precedent.
The Compensation Act 2006, section 6(2), provides for an order
of the Secretary of State to exempt certain persons, or classes
of persons, subject to the affirmative resolution procedure. An
order under this section has subsequently been laid in the House
and is due to be debated in the near future. For example, the
order exempts persons already regulated by the Financial Services
Authority and Legal Practitioners so we can avoid duplication
of regulation.
6. The power at Schedule 3 of the Bill serves
a similar purpose to that at section 6 of the Compensation Act,
in that it provides a mechanism by which specific persons can
be excluded, or brought into, the regulatory framework, subject
to Parliamentary oversight. Under existing legislation there are
already a number of types of "exempt" persons who are
able to carry out reserved legal activities, by virtue of their
office, without committing an offence. For instance, officials
working for local authorities have limited rights of audience
in specified circumstances (see section 60 of the County Court
Act 1984). Under the Bill, such persons are exempt under paragraph
1 (6) of Schedule 3. It would not be proportionate to require
local authority officers to be authorised persons, as defined
in clause 17, or to be regulated by an approved regulator.
7. It is also reasonable to assume that there
will be similar persons, or classes of persons, that would need
to be exempted from regulation in the future where a new reserved
service has been brought under the regime. In addition, it might
be that the exemptions set out in Schedule 3 require amending
as a result of changes to reserved legal activities, such as the
existing exemption for Commissioners for oaths at paragraph 6.
The Government will expand further on these points as the Bill
progresses through the House. However, for the reasons set out
above I consider that the power at Schedule 3, paragraph (8) is
appropriate and, although broad, is subject to the right level
of Parliamentary scrutiny.
Clauses 29 and 50
8. I note the Committee's points at paragraphs
67 to 70 of the report and in particular look forward to hearing
the views of the House in relation to the powers at clauses 29
and 50.
Clauses 93(1), 84, 99, and 142
9. I am pleased note the Committee's observations
at paragraph 77 about rules to be made under clauses 93(1) (circumstances
for imposing financial penalty), 84 (circumstances for modifying
licences), 99 (circumstances for suspending or revoking a licence),
and 142 (co-operation with ombudsman), and the conclusion in paragraph
79 of the report that none of them seems inappropriate.
10. It may help the Committee if I point out
that clause 142 applies both to the Board in its capacity as a
licensing authority, and to other licensing authorities (because
they all have to be approved regulators). In paragraph 74, the
Committee said that it had no objection to the way the duty applied
to approved regulators via regulatory arrangements, and did not
draw the duty to Parliament's attention. Licensing rules are part
of regulatory arrangements (as provided in clause 20) and are
subject to the same degree of scrutiny during the designation
process as regulatory arrangements for a body seeking to become
an approved regulator.
Clause 124
11. In paragraph 82 of the report, the Committee
queried whether Parliamentary oversight might be justified in
respect of the Office for Legal Complaints' power in clause 124
to exclude particular descriptions of complaint from the jurisdiction
of the ombudsman scheme and, in addition, in respect of scheme
rules made under clause 133 to require respondents to pay charges.
We have noted the Committee's points and look forward to hearing
the views of the House.
12. In relation to clause 124, the power to make
rules excluding certain types of complaint from the scheme is
limited by 124(2) and is subject to the oversight of the Legal
Services Board. Our intention is to allow the Office for Legal
Complaints the flexibility to enable it to operate effectively
and it would seem somewhat anomalous to allow it to be able to
make rules about the operation of the complaints scheme without
parliamentary oversight with the sole exception of this clause.
13. In relation to clause 133, the current provisions
are based on the Financial Services and Markets Act 2000 and,
as such, a precedent already exists whereby fees may be set or
waived in accordance with rules made by a complaints handling
body. We would prefer the Office for Legal Complaints to have
flexibility to set the case fees and to alter the rules for waiving
case fees, subject of course to Legal Services Board oversight
and the consent of the Secretary of State through clause 152.
14. Finally, I have referred throughout this
letter to the Secretary of State as the minister with responsibilities
under the Bill. However, I should draw your attention to the fact
that, during Lords Committee on 9 January, my colleague Baroness
Ashton accepted amendments which transfer responsibility for certain
functions under the Bill from the Secretary of State to the Lord
Chancellor. I mention this point, not because I consider that
it materially affects any of the matters under consideration,
but simply because I thought that you would wish to know.
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