Legal Services Bill [HL]

I agree with my noble and learned friend Lord Lyell. Until the intervention of the noble Lord, Lord Whitty, we had been getting on exceedingly well. I do not know why he felt it right to throw abuse at the Law Society in the way that he did, but I completely disagree. He is just being a little over anxious. No doubt he has heavy responsibilities as chair of the National Consumer Council, but in this group of amendments we are just trying to get the balance right. I agree with my noble and learned friend that the triggers for the Legal Services Board exercising its formal powers in respect of the approved regulators just need to be balanced in some way. I recall that the Government said in response to the Joint Committee’s report that the Legal Services Board should act in partnership with the approved regulators, exercising its formal powers only when approved regulators are clearly failing. The question of whether a regulator is failing naturally needs to be looked at by reference to the regulatory objectives. The noble and learned Baroness, Lady Butler-Sloss, is right. We must make sure that the current formulation is narrowed to some extent. It is just too wide and could be misleading in many ways. The problem is that the regulatory objectives are to some degree in contention with one another. Almost any act or omission can be regarded as having an adverse impact on at least one of the regulatory objectives. I give as an example the requirement to undertake prescribed training prior to admission as a solicitor. It would plainly have an adverse effect on competition in legal services if everyone with a law degree could simply be admitted as a solicitor immediately. The potential supply of solicitors would be that much greater. On the other hand, failing to require appropriate pre-admission training would have a detrimental effect on the interests of consumers, and probably on one or two of the other regulatory objectives. Under the current formulation in the Bill, the Legal Services Board would be entitled to take action against an approved regulator whatever approach it took to pre-admission training. So I think that my noble friend’s amendment is well placed. I can assure the noble Lord, Lord Whitty, that the decision on whether to take action in any particular case must be for the Legal Services Board. It is not possible to prescribe detailed quasi-mathematical criteria for the exercise of the power. We are going to have to rely on the judgment of the Legal Services Board, subject to whatever arrangements for challenge exist in a particular case. But it is important for the statute to guide the board appropriately on the approach that it should take, and in this context the board needs to take a balancing approach. It needs to decide whether the act or omission has had an adverse impact on the regulatory objectives considered as a whole. That does not mean that the Legal Services Board can act only where a failing of the approved regulator affects more than one regulatory objective; it could still deal with it on one objective. An act or omission which adversely affected competition, for example, without being justifiable by reference to one or more of the other objectives would be sufficient to justify action taken by the Legal Services Board. It is important that a balancing exercise is carried out so that the board does not intervene where an act or omission constrains competition, but there are sound reasons in the other objectives for the approach which the approved regulator has taken. I support my noble friend’s amendment because he is establishing that principle.