Legal Services Bill [HL]

I am hopeful that I can clarify where we are on this question. I agree completely that proportionality is very important and that the board must have regard to it when exercising its functions under Clauses 28 and 29. We believe that that is covered under the duty in Clause 3, which states: "““The Board must have regard to … the principles under which regulatory activities””," including its functions under Clauses 28 and 29 should be proportionate. I do not, therefore, want to set out an additional requirement for the board to pay particular regard to what is proportionate under Clauses 28 and 29, as it rather gives the appearance that it does not have to do so when discharging all its functions or that the tests for other functions should be of less significance. That would not be desirable. As regards the proposed new subsection, I agree with the noble Lord, Lord Kingsland, that there might be instances when it may be more efficient and cost effective for approved regulators to operate from the same premises, where the overheads can be shared between the regulatory and representative arms, or for some individuals to carry out functions that could have both regulatory and representative aspects—for example, if those individuals are carrying out support rather than policy or decision-making roles. However, there may be circumstances where it is appropriate to make such a requirement, and it is right that the board should be able to describe this without being constrained by considerations set out in legislation. I recognise that the amendment states that the requirement is without prejudice to proportionality. However, given that the board is already under this duty, and it must ensure that the regulatory and representative functions are appropriately separated, I do not think that we need to put the additional detail in the Bill. I hope to allay concerns, in a sense, in both directions, that the detail is better set out in the internal governance rules under Clause 29, which allow the board to take a proportionate approach. So, yes, separation, but that does not necessarily always mean separate buildings; indeed, there may be specific circumstances where individuals can carry out particular functions. I do not think that there is any difference between us. That is how we see it working.