Legal Services Act 2007 (Appeals from Licensing Authority Decisions) Order 2011

Baroness Hayter of Kentish Town Excerpts

Monday 27th June 2011 Grand Committee

[Lord Thomas of Gresford]

My Lords, I confess to being slightly confused. The Minister has addressed the orders in a different order from that in which they appear on today’s Order Paper—and they do have different aspects. As I understand it, the Law Society and the Council for Licensed Conveyancers are content with the modification of functions order, but the SRA is not content with the other order, which covers appeals against licensing authority decisions. Therefore, we are dealing with both bodies in relation to one order and one body in relation to the other.

I see no reason to object in any way to the proposal that there should be changes, to the powers of, first, the Law Society to enable it to make compensation arrangements, and to those of the council. Both seek to provide a fund for people who are damaged either by Law Society-regulated bodies or Council for Licensed Conveyancers bodies. They will have a common fund, as I understand it, from which compensation can be paid.

I will raise a single point that was put forward by the Law Society in its parliamentary brief, namely its concern about arrangements to ensure that the prospective owners of alternative business structure firms are fit and proper persons.

It is important that the Government should make a commitment that the Rehabilitation of Offenders Act 1974 should not be allowed to stand in the way of the approval of those who wish to involve themselves in alternative business structures. I have had the experience in Hong Kong of appearing, instructed by firms which were essentially Triad-funded, with a front of a solicitor who did very little except ultimately go to jail. The warning was there: one cannot be too blasé in these alternative business structures. The noble Lord, Lord Bach, will know how I feel about alternative business structures, but those arguments seem to be a long way away from where we are today. Can the Minister address the question of whether an exception can be made so that the licensing authorities can stop individuals with criminal convictions from becoming involved in ABS firms, specifically after the 10-year period has passed when their convictions might be concealed for other purposes? That is my only point on this order.

On the order about appeals from licensing authority decisions, it seems appropriate that the First-tier Tribunal should act as the appellate body for appeals in relation to licensing authority decisions. We certainly supported the setting up of the new tribunal system, with the First-tier Tribunal and Upper Tribunal. They contain people of considerable and wide experience, not necessarily totally involved in this area but nevertheless well capable of dealing with the issues that would arise in appeals from licensing authority decisions. I am surprised that the Law Society has decided to opt out and follow its own method of appeal. From the Explanatory Memorandum, it seems that the issue that very properly concerned the Law Society was that of costs. The tribunal has only a limited power to award costs, and the Law Society seemed to take the view that there should be a wide discretion, as for tribunals in other areas, to award all the costs when an appeal is dismissed having been improperly brought. Is that the issue? To set up a separate body to take these appeals seems quite unnecessary. Can the Minister help us with where he is on that basis?

[Baroness Hayter of Kentish Town]

My Lords, I declare an interest as chair of the Legal Services Consumer Panel. I welcome these two orders, which appear a little technical—as, indeed, they are. But they are also important milestones on the road to seeing a new form of company opening for business which will help clients get access to good legal advice and enable “one-stop shops” to serve the needs of consumers. The Legal Services Act 2007 is a key piece of legislation introduced by the previous Government. It set up the Legal Services Board and the consumer panel which I have the honour to chair. That Act established independent oversight of the regulation lawyers. The Act clearly requires that such regulations should be in the interests of access to justice and the rule of law, and also be consumer focused.

The Act, as we know, set up the new legal ombudsman, which came intro operation in October last year. What is pertinent to today’s discussion is that it allows a new form of business, as the Minister has set out, combining law with other services in ways that we hope will better serve the needs of some clients in accessing particular types of service. As has been stated, the orders are part of the preparation for the introduction of the new business structures and are intended to ensure that the licensing authorities, which are the specialist parts of the approved regulators, will be ready to accept applications from October this year.

I, too, will start with the second order: like the noble Lord, Lord Thomas, I had them originally in the other order. The second order deals with appeals that are turned down by the new licensing authorities. It gives the First-tier Tribunal the remit to hear appeals from the Council for Licensed Conveyancers. This is a sensible, proportionate and appropriate regime. The noble Lord, Lord Thomas, said that he was surprised that the solicitors were not similarly covered. I very much regret that absence, and the fact that the Solicitors Regulation Authority did not accept exactly the same system for appeals against its decisions as a licensing authority on the same issue: namely, rejections of applications to be allowed to operate the new business framework. As other noble Lords have been said, the SRA prefers its own Solicitors Disciplinary Tribunal, for which, as we have heard, a separate order will come here in due course. I regret this because it will risk causing a delay to the desired 6 October start date. It will also mean, perhaps more seriously in the longer term, that there will be two tribunals dealing with essentially identical cases. It is in the interest of consumers, and more widely in everyone’s interests, that a single, consistent body of case law should develop about legal services regulatory matters. Despite the absence of the SRA, I nevertheless welcome the order, which allows for an efficient and cost-effective solution to regulation completely independent of the CLC.

On the first order, I simply note and welcome the proposed change in membership of the Council for Licensed Conveyancers, which, as the noble Lord, Lord McNally, explained, will provide for a lay majority. This is in line with the Act’s requirement for the Legal Services Board and also with the LSB’s internal governance rules for all front-line, approved regulators.

[Lord Hunt of Wirral]

My Lords, I support my noble friend Lord Thomas of Gresford in his comments about the Rehabilitation of Offenders Act. I recollect that, with the noble Lord, Lord Bach, we spent considerable time not only in debating the Legal Services Bill, as it then was, but in the previous Select Committee. One basis on which we took forward the notion of alternative business structures was that there should be a level playing field. I explain that by reiterating the fact that the Solicitors Regulation Authority, which was established by the Law Society to discharge the society’s regulatory functions, should have exactly the same powers to regulate ABS firms as it has already to regulate existing firms. We made several commitments at the time to reassure people about the new structures and affirm that there would be a level playing field between ABS firms and existing law firms. That is why we see a problem with the implementation of alternative business structures that is not dealt with through these provisions. Those are the arrangements to ensure that the prospective owners of ABS firms are fit and proper persons. Indeed, I could quote myself, Jonathan Djanogly MP or the noble Lord, Lord Bach, in stressing the importance of this key issue.