Legal Services Act 2007 (Chartered Institute of Legal Executives) (Modification of Functions) Order 2014

Lord Kennedy of Southwark Excerpts

Tuesday 25th November 2014 Grand Committee

[Lord Kennedy of Southwark (Lab)]

My Lords, the three orders that we are discussing today modify the functions of the Chartered Institute of Legal Executives, the Institute of Chartered Accountants in England and Wales, the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys in respect of regulatory matters to the extent necessary to modify their powers under the Legal Services Act 2007, and the one regulation extends the ban on the payment and receipt of referral fees in personal injury cases to include appropriately qualified practitioners who are members of the Charted Institute of Legal Executives.

CILEx is an approved body to award practice rights in the reserved legal activity area and this regulation will be undertaken by ILEX Professional Standards. It also has to have the ability to protect the interests of the public who use the services of its members, and this includes the power both to provide redress in the form of compensation to clients and to be able to intervene into legal practices. The order gives it the required powers to set up a compensation fund and collect the required fees and, secondly, to take appropriate enforcement action to protect the interests of consumers. I agree with my noble friend Lady Hayter of Kentish Town that this is good news for consumers in giving them a wider choice in the marketplace when looking for legal services and in providing the public with proper protection. It is a boost to legal executives seeking to widen the sphere of work that they undertake, particularly unsupervised work, as they can demonstrate that they have proper protections in place.

The order in respect of the Institute of Chartered Accountants in England and Wales provides for appeals to the First-tier Tribunal against decisions made by the institute as an approved regulator and as a licensing authority. It also changes its arrangements and increases its scope for using intervention powers. This again is a sensible measure, and the Opposition have no issues with what is proposed here. Giving consumers uniform protections and rights is in itself a sensible move and works towards improving the efficiency of the regulatory and protection framework for legal services.

The third order makes changes to the regulatory arrangements in respect of the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys acting as approved regulators and, if designated in the future, as licensing authorities. Again, the Opposition have no issue with what is proposed, but I have a few questions for the Minister. In respect of the order relating to CILEx, what work has the Ministry of Justice done to satisfy itself that the Legal Services Board has acted with due diligence in coming forward with this proposal and that CILEx has the range of competences required to undertake these new regulatory powers?

In respect of the order regarding the Institute of Chartered Accountants in England and Wales, what work has the MoJ done to satisfy itself that this order is appropriate and, again in respect of the third order, what specific work has been undertaken in the MoJ to satisfy itself that these measures are proportionate, they deliver the objectives being sought here and those objectives are right in practice?

I have no issues to raise in respect of the regulation adding CILEx-registered practitioners to those banned from the paying and receipt of referral fees.

[Lord Faulks]

My Lords, I am grateful for the contribution to this debate from the noble Baroness, Lady Hayter, and the noble Lord, Lord Kennedy, who I know broadly welcome all these changes by statutory instrument. I shall deal first with what the noble Baroness said about CILEx. She accurately described this as the next step in rolling out CILEx so that its increased role and activities can be used by more people. She rightly pointed out that many people will go to legal executives rather than spend more money on lawyers. There is increasing confidence in the standard of advice that they are giving. I have been to a number of events of theirs, and it is a profession that is in good health. The noble Baroness is also right to point to the range of diversity among their number. Although my figures do not precisely coincide with hers, as there were some CILEx members who chose not to provide information, I confirm that on the figures that the MoJ has, 74% of CILEx members are women and there is a higher than usual percentage of members from black and minority ethnic backgrounds—certainly not less than 16%, which is encouraging.

The noble Lord, Lord Kennedy, asked whether the Government were satisfied that CILEx had put effective and appropriate arrangements in place generally for these arrangements. He will appreciate that under the Legal Services Act 2007 the Legal Services Board was set up as a super-regulator. It was his Government who brought in that legislation, and it is not for the Government to regulate the regulator who then regulates the regulator, so we have to be satisfied that the Legal Services Board is in fact doing its job. Of course, as with all arm’s-length bodies, it is regularly reviewed.

The Ministry of Justice analysed each application made to it by the Legal Services Board before the Lord Chancellor agreed to make the specific orders that are before the Committee today. That included looking at the underlying regulatory framework. I can assure the noble Lord that that additional step was taken. The Ministry of Justice has to be satisfied with the overall framework of regulation that exists in relation to all these professions, whether it is legal executives or trade mark and patent attorneys. The Government are satisfied that effective and appropriate arrangements have been made in respect of the regulation and authorisation of CILEx members, and indeed in relation to compliance with the Legal Ombudsman, although the noble Lord did not specifically ask me about that.

The intention, by setting up the compensation fund and giving rights to intervention, is clearly to put such professionals in the same, more established position applying elsewhere and to provide additional security for consumers. That has been done, in so far as one can ever be 100% sure of these things.