Legal Services Act 2007 (Approved Regulator) (No. 2) Order 2014

Baroness Buscombe Excerpts

Thursday 23rd October 2014 Grand Committee

[Lord Ashton of Hyde (Con)]

My Lords, the purpose of the order is to designate the Chartered Institute of Legal Executives—CILEx—as an approved regulator under the Legal Services Act 2007 for the reserved legal activities of reserved instrument activities and probate activities. This will allow its members to conduct these activities without the supervision of solicitors and, once appropriate regulatory arrangements are in place, to establish its own practices to conduct these services.

By way of background and to give a complete picture, the Legal Services Board, which is the oversight regulator for approved regulators and licensing authorities under the 2007 Act, made a recommendation to the Lord Chancellor on 19 September this year that he make an order under Section 69 of that Act to modify the functions of CILEx. If the order is made it will provide CILEx with powers to allow it to make rules to provide for a compensation fund and also give it intervention powers via seeking an order of the High Court to intervene in a regulated entity.

The Lord Chancellor accepted the recommendation on 7 October and the Section 69 order was laid on 13 October, with the intention of it being commenced by the end of the year. If granted, it will allow CILEx, through ILEX Professional Standards, CILEx’s independent regulatory arm, to regulate entities as well as individuals. If both these orders come into force they will enable increased competition and innovation in the legal services market.

The Legal Services Act 2007 governs the regulation of legal services in England and Wales and established a new regulatory framework for legal services. The intention of the 2007 Act was to put the consumer at the heart of legal services and deliver a more effective and competitive market. It established a number of regulatory objectives that the Legal Services Board and approved regulators must promote, including the requirement to protect and promote the public interest and the interests of consumers, encouraging an independent, strong, diverse and effective legal profession and promoting competition in the provision of legal services by authorised persons.

The 2007 Act enabled the widening of the legal services market to allow for different regulators to regulate legal services and for different types of legal businesses to provide those services. Under the 2007 Act, only a person who is authorised by an approved regulator or licensing authority may carry on a reserved legal activity, unless they are covered by one of the limited exceptions. Approved regulators are responsible for ensuring that the persons authorised by them act in a way that is consistent with the regulatory objectives set out in the Act.

The Chartered Institute of Legal Executives offers one of the most flexible routes into the legal profession, allowing people from a variety of backgrounds to enter the legal profession, a fact that is reflected in its diverse membership. CILEx is already an approved regulator under the Act and has been able to authorise chartered legal executives to administer oaths and exercise rights of audience since the commencement of the Act. CILEx was also designated as an approved regulator for the conduct of litigation in May 2011 and is a designated qualifying regulator for immigration advice and services.

CILEx applied to the Legal Services Board in March 2013 to be designated as an approved regulator for reserved instrument activities and probate activities. The LSB then tested CILEx’s proposals against the criteria set out in the 2007 Act and they assessed that CILEx has both the capacity and the capability to undertake an extended regulatory role in the legal services sector. The LSB took advice from the mandatory consultees, as required by the Act: the Lord Chief Justice, the Legal Services Consumer Panel and the Office of Fair Trading.

The LSB is satisfied that CILEx has met the requirements of the Legal Services Act in that it has appropriate internal governance procedures in place so that regulatory decisions will be taken independently of representative ones; that CILEx will be competent and have sufficient resources to perform the role; and that CILEx’s regulatory arrangements make appropriate provision for the regulation of those it wishes to authorise and that provision has been made to prevent regulatory conflicts. Furthermore, the LSB is satisfied that appropriate complaints procedures will be in place, including mandatory co-operation with the Legal Ombudsman, and that CILEx will promote the regulatory objectives set out in Section 1 of the Act.

The LSB is satisfied that there will be no lowering of standards or lessening of consumer protection. It is satisfied that ILEX Professional Standards will be a capable and effective regulator in the legal services market. Its expansion in this field will help to contribute to the growth of the legal services market and bring further innovations, leading to benefits to the consumers of legal services. Following its consideration, the LSB made a recommendation to the Lord Chancellor on 9 December 2013, and earlier this year my honourable friend Shailesh Vara MP agreed in principle to make the present order designating CILEx as an approved regulator for the reserved legal activities of reserved instrument activities and probate activities under the 2007 Act.

Following the draft order being laid on 23 June of this year, the order was debated in the House of Commons on 8 September and gained committee approval. The order has been brought before this House at the earliest opportunity. This order will provide a greater choice of regulator for properly qualified and trained practitioners to carry on the reserved legal activities of reserved instrument activities and probate activities. It will pave the way for the continuing widening of the legal services market. I therefore commend the order to the Committee and beg to move.

[Baroness Buscombe (Con)]

My Lords, I very much welcome this order granting the Chartered Institute of Legal Executives, through the regulator, ILEX Professional Standards, the power to authorise individual practitioners to provide probate and conveyancing activities under the Legal Services Act 2007. As we have heard from the Minister, there are many reasons to support this order. What will it change? It will cut red tape and enable suitably qualified and competent CILEx members to be authorised to provide probate and conveyancing services. This will mean that businesses employing CILEx practitioners can be more efficient and flexible and can cut the unnecessary bureaucracies in place to sign off their work.

IPS currently regulates individual CILEx members. The order will enable them to regulate entities as well, meaning that CILEx members will be able to set up their own businesses and provide legal services to the public across the full range of reserved and regulated activities.