Clause
41
Intervention
directions
Amendment
proposed: No. 4, in clause 41, page 21, line 9, leave out from
‘have,’ to ‘and’ in line 10 and
insert
‘an adverse impact
on one or more of the regulatory
objectives,’.—[Bridget Prentice.]
The
Committee divided: Ayes 10, Noes
6.
Division
No.
16
]
Foster,
Mr. Michael
(Worcester)
Question
accordingly agreed to.
Clause 41, as amended,
ordered to stand part of the
Bill.
Clause
42
Intervention
directions: further
provision
Question
proposed, That the clause stand part of the
Bill.
Simon
Hughes:
I rise because I was wound up to speak to an
amendment that was tabled by the hon. Member for Bassetlaw, but it was
not moved.
I wish to
ask a question, which of course is not directly related to the
amendment but was promptedby it. The clause is about further
provision for intervention directions and, therefore, gives options for
interventions. The hon. Gentleman obviously thought about ways in which
powers of entry and other things could provide opportunities for
intervention.
I would
be grateful if the Minister gave some examples of the sort of further
provision that she envisages will result from the Bill. What would be
an extreme example of a regulation under the Bill? Thisis an
enabling clause to allow secondary regulation. Clause 42(6) states that
regulations will be made by the Lord Chancellor, but will all
regulations be made by him? Will the Minister say what kinds of
measures she envisages will be introduced under the
clause?
Bridget
Prentice:
As the hon. Gentleman said, this is an enabling
clause, behind which lies the idea that, if an approved regulator
failed or refused to provide the information that the board required,
it could apply to the court for a warrant to search premises and to
seize materials.
The
clause gives the Lord Chancellor a power to make regulations about what
the judge or justice of the peace should consider before granting a
warrant, and how such a warrant might be executed. The Lord Chancellor
must consult with or, indeed, receive the recommendation of the board
before he makes regulations. I do not quite know whether that answers
the hon. Gentleman’s
question.
Simon
Hughes:
I expected the Minister to say what she said, but
I would like to ask some further questions. Elsewhere in the Ministry
of Justice portfolio, there is a Tribunals, Courts and Enforcement
Bill, which I anticipate will be discussed on the Floor of the
House
on Report and Third Reading in the relatively near future. One of the
issues with that Bill is powers of entry, to which the clause also
relates. We should not legislate to give powers of entry without people
knowing clearly who will come to enter and what powers they will have.
Such people should be clearly identifiable as people with
authority.
What
protection will the Bill provide for a citizen or
organisation—by definition, it could be an individual or a
company? What does the Bill provide to ensure that people know that a
person coming to enter comes with authority? I am troubled because a
recent review of current powers of entry under law showed that there
are hundreds and that they relate to different people and
organisations. The ordinary woman or man should know that people who
come to enter do so with authority, and how to check that. How would a
person know that another was authorised and what would they have to do
to find out? I appreciate that that might be a secondary legislation
point, but giving more powers willy-nilly to people to knock on doors
and to enter is dangerous, unless we protect citizens against it,
except for in the most extreme circumstances. People should know
exactly what the score is and have the ability to avoid such
action.
Bridget
Prentice:
The hon. Gentleman makes a point that is
important for two reasons. First, as he says, if someone comes knocking
at one’s door, one ought to be able to know why and under what
power they are there. Secondly, we should ensure that the Bill does not
contradict the Tribunals, Courts and Enforcement Bill. The Lord
Chancellor’s consideration of the judge or the justice of the
peace is one aspect of the issue, but by way of reassurance to the hon.
Gentleman, I shall consider the way in which the provision fits in with
the Tribunals, Courts and Enforcement Bill, so that there is
consistency. I shall write to the Committee about that at a later
stage.
Question put
and agreed to.
Clause 42 ordered to stand
part of the Bill.
Clauses 43 and 44 ordered to
stand part of the Bill.
Schedule 8 agreed
to.
Clause
45
Cancellation
of designation as approved
regulator
Amendment
proposed: No. 5, in clause 45, page 23, line 29, leave out from
‘have,’ to ‘and’ in line 30 and
insert
‘an adverse impact
on one or more of the regulatory
objectives,’.—[Bridget
Prentice.]
The
Committee divided: Ayes 10, Noes
6.
Division
No.
17
]
Foster,
Mr. Michael
(Worcester)
Question
accordingly agreed to.
Clause 45, as amended,
ordered to stand part of the Bill.
Schedule 9 agreed
to.
Clauses 46
to 48 ordered to stand part of the
Bill.
Clause
49
The
board’s policy
statements
Bridget
Prentice:
I beg to move amendment No. 6, in
clause 49, page 27, line 1, leave
out subsection (3) and
insert—
‘( ) In preparing a
statement of policy, the Board must have regard to the principle that
its principal role is the oversight of approved
regulators.
( ) The statement
of policy prepared under subsection (1)
must—
(a) take account
of the desirability of resolving informally matters which arise between
the Board and an approved regulator,
and
(b) specify how, in
exercising the functions mentioned in that subsection, the Board will
comply with the requirements of section 3(3) (regulatory activities to
be proportionate, consistent and targeted only at cases in which action
is needed,
etc).’.
I
hope that the amendment will not be controversial. It tries to clarify
the drafting of an amendment, which was made in the other place, about
the board’s policy statements. I hope that the revision sets out
more accurately the relationship between the board and the approved
regulators. As I have said on many occasions, we have
accepted Sir David Clementi’s recommendation of the B+ model for
oversight regulation, which should be the basis of the new regulatory
framework. That principle allows existing regulators to continue to
authorise people in respect of certain legal activities and to regulate
those persons. Overseeing that front-line regulation is the Legal
Services Board, which will take over many of the functions currently
undertaken by a number of the existing oversight regulators, including
the Secretary of State, the Master of the Rolls, the immigration
services commissioner and the Archbishop of Canterbury. The board may
move to regulate authorised persons directly only where there is no
other suitable or willing regulator to carry out that
role.
6.15
pm
It is my
understanding that the amendment introduced in the other place in many
respects sought to achieve the kind of thing that I have just
described. In trying to get the B+ model in the Bill, it is vital that
we should not inadvertently compromise the existing provisions. For
example, the Lords amendment provided that policy statements
must
“respect the
principle that primary responsibility for regulation rests with the
approved
regulators”.
Except in
those extreme cases where the board may have to regulate directly, it
will have quite different responsibilities from those of the approved
regulators.
However, different as those
functions may be, I do not want to give the Committee the impression
that they are not as important, or that the board should not have any
primary responsibility for regulation. A strong and independent
oversight regulator is what consumers have long been calling for. We
owe it to them to deliver just that. I do not want to be part of
anything that relegates the board to being a regulatory also ran. I
want to ensure that the role of the approved regulators is concerned
with direct regulation of authorised persons, whereas the role of the
board is principally one of oversight. I hope that
the amendment makes that
clear.
The other aspect
of the Lords amendment was the reasonableness test. I felt that that
had the potential to restrict the board from taking the appropriate
regulatory action in some circumstances. For example,
an approved regulator may make a number of decisions
that in themselves all appear to be reasonable, but the overall effect
of those decisions may have an adverse impact on the regulatory
objectives. That may mean that the board would have to take action. In
such a case, the reasonableness test might not be satisfied, which
would then leave the board unable to take appropriate action.
Finally, we have always
maintained that issues should be resolved informally before resorting
to more formal statutory powers, in line with best regulatory practice.
The Bill already provides for that by requiring the board to have
regard to the principles in clause 3, including proportionality and
targeting activities only where action is needed. However, I understand
the desire of regulators to ensure that the board should highlight how
those principles are achieved when setting out its policy statements. I
have tabled the amendment to set that out, albeit without affecting the
thresholds already set out in clauses 31 to 45 and in clause
76.
Simon
Hughes:
The amendment is a Government amendment to a Lords
amendment. Can the Minister say whether she, colleagues or civil
servants have had an opportunity to talk to those who argued for the
amendment that the Lords made? Can she report back on the view of
stakeholders or interested parties on whether the amendment has the
benefits that she has argued for, without the disbenefits that they
might say exist?
Bridget
Prentice:
My noble Friend Baroness Ashton has had
discussions with colleagues in the Lords. I cannot say for sure whether
the discussions wentinto the detail of the difference between
the two amendments, but it was accepted that they would be happy to see
an amendment if it gave general force to the principle behind the
original one. We have now worded things in a way that provides the
components necessary for the board to be able to set out the policy
statements on how much it takes into account its oversight role, and
the principle that the issues that should be resolved informally are
resolved informally, using proportionality as the test before
exercising the other powers.
As always, the amendment has
gone before our consumer panel, which supported this wording rather
than the one that appeared in the other place. As far as
I am aware, it has also gone some way to addressing the Law
Society’s concerns. We have tried to ensure that people who had
issues with the amendment have had sight of where we are
moving.
Mr.
Bellingham:
I am grateful to the Minister for her
explanation as to why the Government have proposed the amendment. I
admit that what they are proposing is better than what was originally
in the Bill, but the amendment inserted by their lordships House was
sensible. I take on board the Minister’s concern about the words
“could reasonably have taken” in subsection (3)(b), but
if one examines the overall impact of the Lords amendment, one sees
that it explains things in more detail than the Government
amendment.
The Minister
mentioned that she believed thatthe Law Society was happy with
the Government amendment. It has made its position clear, stating in
writing to members of the Committee:
“The Committee should
therefore reject the Government’s amendment, and retain the
provision passed by the House of
Lords.”
I agree
with the hon. Member for North Southwark and
Bermondsey that Which? is an excellent organisation. All of us read
Which? magazine from time to time. As the Minister rightly keeps
telling us, the Bill is about giving consumers a better deal. It is
worth pointing out that Which? told me that it does not oppose the
inclusion of the Lords amendment in the Bill as a cosmetic reassurance
to the legal professions. That might be a touch grudging, but it
indicates that Which? does not see any need to remove the current
wording.
It is worth
having a close look at why the House of Lords made the changes. It did
so because it wanted to incorporate in the Bill the statements about
the relationship between the board and the approved regulators, which
the Government had made in other contexts. We should consider what the
Legal Services Board is all about and then examine what the Joint
Committee said. It
said:
“We
believe it is important that the LSB has an effective range of powers,
but it is also important that the Draft Bill ensures that they are only
used where necessary, in order to avoid undue micro-managing of the
approved regulators...The Draft Bill should ensure
that—consistent with the Government’s policy that lead
responsibility should rest with the approved regulators—the
Legal Services Board acts in
partnership”
—I
like that word
“partnership”—
“with
the approved regulators, seeking to resolve differences by agreement
wherever possible”.
It is also worth pointing out
something that the Government said in response to the Joint Committee.
My hon. Friend the Member for Enfield, Southgate served on it, as did
the hon. Member for Wirral West. The hon. Member for Bassetlaw was not
put on it, despite applying, and that was a pity, given his knowledge
and experience. The Government’s response was that the
LSB
“should...work in
partnership with authorised regulators, leaving them with the
responsibility for day to day
regulation.”
Looking at
the way in which the Government responded to the Joint Committee, , I
find it strange that they are trying to remove the Lords
amendment.
Let us look
at the essence of Sir David Clementi’s recommendation. He could
have gone for an all-singing, all-dancing unitary system of regulation,
rather like the Financial Services Authority. However, he decided not to
do that for the simple reason that he took the view that regulation had
to be independentof Government. He rightly took the view that
the professional bodies were well established, so it would make no
sense to build such bodies from scratch, and that it was important to
get the professionals in the different parts of the legal services
world to buy in to regulation and to secure the maximum good will and
confidence in the new system from the word go. Bearing that in mind, their
lordships looked carefully at the measure, and came up with an
amendment that I think is workable. It was discussed at great length
and road-tested before a number of experts; it was not just put forward
on the back of a fag packet. We should be aware that the Minister
hinted that it might be possible for the Government to issue further
guidance if need be. It is not on for the Government to give guidance
to the board; any suggestion of that is a little disturbing. It might
be appropriate in some cases for guidance to be given to bodies that
undertake what are effectively Government functions, but that is
manifestly not the case in relation to the approved regulators. Far
from it.
Mr.
Kevan Jones (North Durham) (Lab): Will the hon. Gentleman
give
way?
Mr.
Bellingham:
I am going to conclude my remarks, because I
want to hear what the Minister has to say, and the Government Whip
keeps looking at me.
One has also to consider the
costs. We do not want the LSB to be a primary regulator or to treat the
approved regulators as its administrative outposts. We want it to have
a working relationship with them that is based on confidence and trust,
not on micro-managing and trying to second-guess everything that they
try to do, or laying down detailed templates as to whatthey
should do. That is why the Lords came upwith a pragmatic,
imaginative, sensible and workable amendment, and the Government should
not be trying to remove it at this stage. We will listen carefully
tothe Minister, but our inclination is to reject the
Government’s
amendment.
John
Hemming:
We are uncomfortable with the Government’s
amendment. It does something that we will not oppose at this point, but
might come back to later on the Floor of the House.
We always ask to what extent the
principles, as defined in the Bill, are enforceable through judicial
review. We have issues about the parameters established by subsection
(3)(b), because any policy determined by the board can be used as a
basis for judicial review under the principle of
procedural legitimate expectation. Therefore, the measure has quite a
substantial impact on the Bill.
Personally, I am not completely
comfortable with subsection (3)(b) because it is a bit too wide.
Although we are not happy with the Government amendment, we are not
going to oppose it at this stage. We may come back to it on the Floor
of the House. It is important to determine the relationship between the
LSB and the regulators. This is an important engine house of that
process because of the facility to take issues to judicial review under
the principle of procedural legitimate
expectation. The board needs to have the ability to exercise powers
other than in circumstances in which the individual regulators could
not reasonably do
so. 6.30
pm
Mr.
Jones:
I support the amendment, and I do so for a
practical reason that can be illustrated by the miners’
compensation cases. This legislation is taking away the legal services
ombudsman. She has been the only person in the current system to have
said to the regulatory authorities, “You have got this
wrong,” or “You are dealing with cases too
strongly.” If the Legal Services Board does not have the
ultimate say, or some backstop, to enforce and say to regulators that
they are too slow on cases or that they are dealing with them
inappropriately, who will stand up for the consumer?
The Bill will take away the
legal services ombudsman, but we need to retain that ombudsman’s
powers in some form. That is why I support the amendment and the
Government’s position. The Legal Services Board has to have that
backstop position so that it can ultimately say, “I’m
sorry, but you are not doing your regulatory job correctly—get
on with it,” sometimes question regulators’ effectiveness
and stand up for the consumer. At the end of the day, as the Minister
has said on a number of occasions, the champion of the consumer in this
Bill will be the Legal Services
Board.
John
Hemming:
I should like to add one other little point. If
we maintained the current situation in respect of the Lord Chief
Justice and the appointment of the Legal Services Board, I would not
want the change at all.
Bridget
Prentice:
We have established that we all agree that Sir
David’s B+ model is the appropriate system for regulating the
legal profession, that the approved regulators should be able to get on
withthe role of regulating authorised persons and that the
board should oversee that. It is important that any provisions that set
out those principles do not contradict or lead to confusion about
existing principles already set out in the Bill. It is vital that we
take care to ensure that amendments are compatible with the rest of the
Bill. I think that this amendment is.
Throughout the debates
in the House of Lords, peers pressed regularly for provisions that more
clearly set out the relationship between the board and the approved
regulators. Those threshold amendments were inserted following a vote,
and the combination of restricting the board’s powers and the
recognitionof the B+ model in policy statements
developeda confusion. We have tabled the amendment
understanding that it is important to show that the board is an
oversight regulator, as opposed to the approved regulators that do the
day-to-day work; as the hon. Member for North-West Norfolk rightly
said, the board does not micro-manage what is going on.
The hon. Member for Birmingham,
Yardley makes an important point about subsection (3)(b). That
causes problems because it sets a threshold, a
Wednesbury test, that is too difficult for the board to achieve. It
also adds
further confusion. The test is difficult to meet and as a result, it
could be difficult for the board to take appropriate action. It is
important that we take that bit
out. I hope that the
Committee feels able to support the amendment, which has been drafted
in good faith. It tries to achieve what the other place was asking for,
but in a way that is compatible with the rest of the Bill and clearly
sets out the role of the oversight regulator, as opposed to that of the
approved regulators doing their day-to-day work. On that basis, I ask
the Committee to agree to the
amendments.
Question
put, That the amendment be
made:—
The
Committee divided: Ayes 9, Noes
5.
Division
No.
18
]
Foster,
Mr. Michael
(Worcester)
Question
accordingly agreed to.
Clause 49, as amended,
ordered to stand part of the
Bill.
Clause 50
ordered to stand part of the
Bill.
| 
