Professional Qualifications Bill [HL]

Baroness Noakes Excerpts

2nd reading
Tuesday 25th May 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, the Minister explained that the Bill applies only to professions regulated by law. At his helpful briefing meeting last week, he undertook to let me have a list of the bodies covered by the Bill as I found it a bit difficult to work out what was covered and what was not. I am most grateful that this list arrived over the weekend—at 5.30 pm on Sunday afternoon, to be precise, which demonstrates real commitment by the Bill team.

I have a particular interest in whether the Bill applies to the Institute of Chartered Accountants in England and Wales, of which I am a non-practising member. It is a body governed by royal charter and the noble Lord, Lord Bilimoria, might like to know that it is not on the Minister’s list. Many chartered accountants act as auditors and the ICAEW is a recognised professional body and a recognised supervisory body for those members who wish to practise as auditors. The Financial Reporting Council, which is on the Minister’s list, oversees the regulation of auditors rather than carrying it out itself. I believe a similar approach applies to insolvency practitioners. Hence the Bill is rather complicated in its scope, certainly for chartered accountants and, I imagine, for other professions as well.

To turn the Bill itself, there is one very good thing in it, one rather dodgy thing and some other things which I am on the whole puzzled about. The best things about the Bill are Clauses 5 and 6. As my noble friend explained, these clauses allow us to remove some more EU-retained law from our statute book and thereby remove the obligation to recognise EEA and Swiss professional qualifications. I support any legislation which allows us to frame our laws in a way which suits the UK. Even though I support Clauses 5 and 6, however, I am not convinced that the Henry VIII powers are accompanied by sufficient parliamentary oversight. The EU’s distinction between primary and secondary legislation is not necessarily a good guide to determining how our Parliament should be involved. This concern applies throughout the Bill and not just to Clauses 5 and 6. I believe we are still waiting for the report of the Delegated Powers and Regulatory Reform Committee, and I shall reserve final judgment until I see it.

The dodgy bit of the Bill is Clause 3, which allows the Government to override existing approaches and procedures for the recognition of non-UK qualifications if they have been covered in a trade treaty. This is explicitly presented in the Government’s policy paper as strengthening the UK’s ability to negotiate international trade treaties. It is some time since I was president of the ICAEW, but the recognition of overseas qualifications was a thorny issue then and I expect it still is. In addition, the landscape has changed and become more complicated since my day, with the arrival of the FRC to oversee the regulation of auditors.

Many countries have chartered accountancy qualifications which simply do not match the UK’s. Sometimes that is due to the technical coverage of the qualifications, at other times to the areas of practical experience and ethical training, and sometimes to all three. The Bill must not try to ignore that fact. Let us suppose that our enthusiastic and energetic Secretary of State for International Trade negotiated a trade treaty with one of those countries for which recognition had not been granted already in the UK. That might be in relation to chartered accountancy in general or for audit purposes. Clause 3 might allow the Government to tell the ICAEW or the FRC to recognise those qualifications, even if they would not be prepared to do so themselves because of the factors I mentioned. Clause 3 does not seem limited to telling the regulator of a regulated profession what to do; it seems capable of applying to both the ICAEW, which is not on the list, and the FRC, which is. This would drive a coach and horses through the ability of professions to guard the standards and quality of their qualifications, and I do not think that this concern will be confined to chartered accountants or auditors; I expect other professions will have similar issues.

My noble friend may say that we can rely on the CRaG processes to stop the Government doing stupid things in trade agreements, but he will know that CRaG is basically a rubber-stamping process, with only the blunderbuss of a weapon of the other place refusing to approve a whole agreement. Alternatively, either House might use the nuclear weapon of refusing to agree any regulations made under Clause 3. In the context of a major trade treaty, these are wholly unsatisfactory safeguards and unlikely to protect UK professions. That is why we need to look again at the power in Clause 3.

I shall briefly cover three puzzling areas. First, I am far from convinced that the new assistance centre set up by Clause 7, which is a reincarnation of an EU requirement, is necessary or that the costs are justified. The costs are borne by the taxpayer and we need to see a stronger case made for it than has appeared in the documents so far. Secondly, Clause 8 requires the regulator of regulated professions to publish a load of information. Not all professions are covered by the Bill, so it could create an unbalanced universe, with some but not all professions needing to comply. It also seems quite onerous on those bodies, such as the FRC, which oversee regulation but do not themselves do the detailed regulation. Why should the FRC gather and publish all the information already available at the ICAEW? That will serve only to increase costs. I have yet to see any explanation for the need for this clause. Are there any real concerns that regulated professions hide information about how to access membership? Who, if anyone, is policing this and what are the penalties for non-compliance? More profoundly, is this a solution in search of a problem, to which the noble Lord, Lord Trees, referred in the context of the veterinary profession?

Lastly, Clause 9 covers the exchange of information by regulators and seems a helpful provision underpinning the UK’s internal market in services, but I ask the Minister to reflect on whether its scope—largely excluding the chartered professions—makes it fit for purpose. In my specific example of the FRC and the ICAEW, it would seem largely ineffective, since the FRC will not hold data relating to individuals. A similar criticism appears to apply to Clause 10 as well.

I would like to be enthusiastic about the Bill, but I fear that it is creating a new division between professions covered by the Bill and those which are not. I also dislike its focus on a big government solution to a series of relatively minor problems in a few professions, which is all that the call for evidence actually revealed. On that basis, it is not a very Conservative Bill, and encouraging the Benches opposite to view it in that light may be the best help that I can give my noble friend in getting the Bill through.