Professional Qualifications Bill [HL]

Lord Bilimoria Excerpts

2nd reading
Tuesday 25th May 2021 Lords Chamber

[Lord Bilimoria (CB) [V]]

My Lords, the UK services industry accounts for 80% of our economy, and the UK is the second largest services exporter in the world. It is quite remarkable how well respected our services industry is, and our UK professional qualifications are, frankly, the most well regarded in the world in many cases, whether for our lawyers, our accountants or our doctors.

The Bill was announced in the Queen’s Speech on 11 May, making provisions relating to the recognition of professional qualifications in the UK. It obviously follows a lot of consultation by the Government which ran through the autumn of last year and which created a number of regulation-making powers designed to implement a new framework for the recognition of overseas professional qualifications in the UK. That would replace the EU law in the area, including the interim provisions that have been in place since the end of the transition period, making provision for international agreements on the recognition of professional qualifications, for any powers to authorise regulators to enter into regulatory recognition agreements with regulators overseas, and the sharing of information between regulators. The Minister also mentioned amending the Architects Act 1997.

Over 160 professions are regulated by legislation in the UK, and there are more than 50 regulators. The Government have explained that they seek reciprocal agreements on the recognition of professional qualifications as part of their trade agenda. I congratulate the Government, and Liz Truss and the Department for International Trade, on the fantastic job that they have done in rolling over more than 60 bilateral EU trade agreements, and on the work that they are doing on the new trade agreements. The Australian one is imminent. The enhanced trade partnership with India will lead to an FTA, I hope. The American trade agreement is in the offing, I hope, and joining the CTPPP will be a fantastic £110 billion of trade.

On top of that, we are now making the 60-plus agreements that have been rolled over from the EU into super-duper bespoke deals between the UK and the other countries, starting with Mexico and Canada. This is great news. Professional qualifications will be a key part of all these trade agreements. The Bill is equipping regulators to pursue agreements with their counterparts in other countries where they want to do so, and the Government say that they

“want to facilitate the continued strong reputation of UK professional qualifications, which will support export opportunities, including education exports and the recruitment of international students.”

The Government have stated that the feedback from the consultation and other stakeholders indicated that the regulatory landscape that had developed for professions was complex. That is something we have to accept. The UK’s current framework for recognising professional qualifications gained overseas is derived largely from EU law. The interim system has provided certainty for UK businesses and helped to maintain workforce supply for professions, including nursing and teaching. The Government have said that many of the professions within the scope of the regulation-making powers in Clause 1 have pre-existing legislative frameworks governing the way they are regulated. While the ability to allow for an overseas qualification to be treated as though it was a specified UK qualification is set out in the Bill, along with the conditions, it is necessary for this to be implemented in a manner that is tailored to each profession by the appropriate national authority.

We then have the regulator recognition agreements—RRAs—between the UK regulators and international counterparts on the recognition of professional qualifications. The recognition of professional qualifications and the regulation of professions is of huge significance to the UK’s world-leading services providers, which rely on this provision to sell their services abroad. Following the EU-UK Trade and Cooperation Agreement, the loss of automatic recognition adds levels of complexity and administrative challenges for companies. Businesses are looking for clarity on the recognition of qualifications and what it means in practice for UK-based firms’ continued provision of services in the EU.

As president of the CBI, I can say that businesses welcome the pathway provided in the TCA to establish recognition agreements and are ready to engage with government and regulators. Across the UK, companies are clear that the recognition of professional qualifications and the regulation of professions is an essential aspect of how they operate their businesses.

I look back to the 10 business priorities for UK-EU trade after Brexit that the CBI laid out when it identified

“10 immediate practical actions both sides can take to stabilise relations and strengthen cooperation”.

One of them was to secure the recognition of professional qualifications. The automatic mutual recognition of professional qualifications has now ended between the EU and the UK but, according to the CBI,

“the TCA creates a pathway for future agreements being struck between the UK and individual EU member states via the Partnership Council—although the exact process is still to be confirmed.”

Perhaps the Minister could shine some light on this. The CBI continues:

“The loss of automatic recognition adds significant levels of complexity and administrative challenges, particularly in the professional services sector. Newly qualified individuals in regulated sectors will not be … allowed to work or to deliver services in the EU without this recognition, leaving UK professionals and businesses losing business to EU competitors”


and other competitors. It continues:

“The CBI welcomes the steps that have already taken place by the UK government in supporting regulator to regulator recognition across the UK and Ireland, with 10 agreements already made in various sectors. But the pathway for more agreements, as set out in the TCA, should be established as quickly as possible to support the trade in services on both sides.”


Does the Minister agree with this, and that

“The EU should work constructively with the UK to facilitate this dialogue through the relevant governance mechanisms”?


I am proud to be a fellow of the Institute of Chartered Accountants in England and Wales. I would go so far as to say that it is the most highly recognised and finest accountancy qualification in the world. I say that with pride, and I am sorry that I am boasting. The ICAEW welcomes the passage of the Bill and a new UK framework for recognition of professional qualifications from around the world. It says that the Bill confirms that the UK does not give preference to any one nationality or country. It is a global recognition system, no matter where you work and qualify. This is positive, as it will make processes of recognition simpler for regulators to administer and demonstrates the UK’s global outlook—totally in tune with global Britain.

This is a rare opportunity to propose much-needed amendments to sections of the Companies Act 2006, such as Section 1221, which deals with the Secretary of State’s powers to recognise foreign qualifications for eligibility to become a UK statutory auditor. Select changes to the Act would enable the UK to enter more freely into audit recognition agreements with other countries. The Bill establishes transparency by setting rules and criteria for all professionals and for all potential applicants wishing to practise a profession in the UK.

Clause 16 of the Bill says that a regulated profession

“means a profession that is regulated by law in the United Kingdom or a part of it”.

Does the definition of a regulator in the Bill includes chartered bodies, or is it the profession’s statutory regulator? In the case of the accountancy profession that is the FRC/ARGA. I assume that it is the FRC/ARGA for audit, but for accountancy the ICAEW is considered the regulator. The Bill does not define clearly which regulator will be responsible. Perhaps the Minister would like to explain.

Clause 4 dictates the contents of a regulator recognition agreement. The ICAEW has agreements with accountancy bodies around the world. Will it, as a professional body, continue to retain autonomy over the formation and content of recognition agreements with other countries, or will this become the responsibility of the FRC/ARGA, or of the department for business? Will it gain new powers to intervene in ICAEW decisions? Will the Minister respond to that?

Finally, Clause 3 requires regulators of professions in all parts of the UK to publish information on the entry and practice requirements of their profession. We welcome these transparency measures, but any additional measures and obligations should be proportionate. The Bill could lead to a major work and cost burden for professional bodies if, in the interests of transparency, they were obliged to implement customer service standards for applicants that go beyond what is currently required, such as website redesign, process times for applications, fee caps, and so on. Do the Government agree?

The Solicitors Regulation Authority supports the overall aims of this Bill, including encouraging a diversity of talent and skills into the UK, and maximising opportunities for trade in professional services by providing an easily navigable regulatory framework. It is pleased that the Government’s approach is underpinned by the need for public confidence that professionals are appropriately qualified. Regulators must be able to set the standards and to make autonomous and independent decisions. Do the Government agree?

There is already an established system for recognising overseas legal professional qualifications that is targeted and proportionate, with mechanisms in place for candidates to qualify with appropriate exemptions based on an assessment of equivalence. The Solicitors Regulation Authority was very clear in responding to last year’s call for evidence. It said that recognition of professional qualifications in the legal profession should be based on the equivalence of the standard and content of an overseas qualification, assessed on a case-by-case basis, rather than solely on reciprocity. This approach would ensure that all providers of legal services in England and Wales have the knowledge and skills to practise safely and competently, and that any restrictions are targeted and proportionate. It is pleased that the Bill supports this approach and that it is underpinned by the need for public confidence that professionals are appropriately qualified. The SRA says it is essential that regulators can set the standards and make autonomous and independent decisions. This is key for it as an organisation exercising statutory regulatory functions in the public interest. Do the Government agree?

The UK is hugely fortunate to have the finest professional services in the world. They are a jewel in our crown, and I hope that the Bill does everything to strengthen their reputation, of which we are very proud.