Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011

Lord Dholakia Excerpts

Tuesday 5th July 2011 Grand Committee

[Lord Hunt of Wirral]

My Lords, I declare an interest in the global firm of solicitors, Beachcroft LLP, where I have been a partner since 1969, and as vice-chairman of Justice. I say that with trepidation in the presence of the emeritus chairman of Justice—my noble friend Lord Goodhart—because Justice must deserve a great deal of credit for the original rehabilitation of offenders legislation.

However, I need help from my noble friend the Minister on giving a commitment—a commitment that was given by the party opposite when it had responsibility. I also gave personal commitments when I was leading for the Opposition from the Front Bench and made it clear, right at the outset, that a single set of regulatory standards would be required for alternative business structures.

The Minister has received a fascinating brief from his officials to explain the mistake in singling out “head of legal practice” or “head of finance and administration”. I warmly commend the officials for having thought up this reason, but it was two years ago that we made it clear that it is the owners and managers of the alternative business structures who must be the people in the spotlight. It may well be that they will need under them a head of legal practice or finance and administration, but at the end of the day the key role played by the owner/investor/manager of the alternative business structures must mean that they should be subject to the same authorisation rules as solicitors in regard to disclosing criminal offences. Why? Because we must ensure, as both Front Benches agreed we had to, that convicted criminals are not able to become owners and managers of legal practices.

It is not just that a request has only just been received from the Legal Services Board, because it was in June 2009 that the Solicitors Regulation Authority made it clear that a single set of regulatory standards would be required. Why on earth this is not included now I just do not know, because what it means is that someone who has served a sentence for a serious crime such as money laundering does not have to disclose this when applying to be an owner or investor in an alternative business structure firm.

I suppose that my noble friend can immediately move to give me assistance by promising that there will be a further order to rectify this omission, which will then make it clear that the exemption of course also applies to owners and managers of ABS firms, as well as to the heads of legal practice and finance and administration within those firms.

[Lord Dholakia]

My Lords, I thank my noble friend the Minister for the explanation that he offered on the order. My noble friend Lord Thomas of Gresford has commented on some aspects of the order, particularly in relation to the Legal Services Act 2007 (Appeals from Licensing Authority Decisions) Order 2011. I intend to build on that. However, let me make a confession first. My noble friend Lord Hunt just wanted a minute from me, but in that minute he has stolen half my thunder. But I can build on what he said—and certainly the Minister might look sympathetically at why we are making this request.

As one who is promoting the Rehabilitation of Offenders (Amendment) Bill, I am aware that this order is adding additional exceptions to the Rehabilitation of Offenders Act, which does not include external owners. The matter was brought to the attention of the Ministry of Justice by the Solicitors Regulation Authority, which said that a single set of regulatory standards will be required, based on the existing ones for solicitors and traditional law firms and on the assumption that all potential owners of alternative business structures will have to disclose all previous criminal convictions. It would be very helpful to know from my noble friend the Minister why the Government have not included external owners in the list of exceptions. The Solicitors Regulation Authority is clear that it will not be able to subject external owners and managers to the same standard of fitness and propriety checks as apply to solicitors. I am told that the SRA conducted a public consultation and no objections were raised about alternative business structure owners and managers.

Will the Minister now intervene to ensure that the liberalisation of the market can occur with appropriate public protection? My Private Member’s Bill includes exceptions in serious cases, and that is right; it is how it should be, if we are to build the confidence of the public in the structures that we promote. The crux of the matter is to establish a strict regulatory regime so that serious criminals cannot take control of legal practices. This is where changes are necessary.

There is a clear divide between what the Ministry of Justice is proposing and what is required by the SRA of the Law Society. It would be helpful to have the Minister’s reasons for this order. It poses difficulties for the SRA, whose task it is to establish standards, and it is the SRA’s view that it cannot license ABS until these exceptions are in place.