Legal Services Bill [HL]

moved Amendment No. 108DAA: 108DAA: Schedule 11, page 173, line 8, at end insert— ““( ) Licensing rules may provide for fees to cover the whole cost of the licensing authority dealing with the application, whether the application is granted or not.”” The noble Lord said: This amendment is intended to ensure that the licensing rules can put the whole cost of dealing with an application on to the applicant, rather than leaving a part to be borne by others regulated by the licensing authority concerned. It is an important principle that the costs of regulation should be borne by those whose activities give rise to the cost rather than by the regulated sector as a whole. This is vital in the case of alternative business structures, where some applications could give rise to extremely complex issues. It follows that it would be quite unsatisfactory for a single flat fee to be applied to all applications, whether from an applicant filling a modest and localised gap in legal services or from a supermarket seeking to set up a substantial new service. If a single fee were set so as to meet all the costs of dealing with ABS applications, the result would be grossly unfair to the small applicant. On the other hand, a single fee at the level appropriate for the small applicant would involve an unacceptable cross-subsidy from the rest of the regulated sector. In any event, if licensing authorities were unable to match the fee to the cost of dealing with the application, they might be inhibited from investigating applications as thoroughly as they should, particularly where access-to-justice considerations arise. Amendment No. 108DAB, which is also in this group, is designed to ensure that the onus of demonstrating fitness to own rests on the applicant, rather than the licensing authority having to approve them unless it can demonstrate that they are not fit or proper persons. The effectiveness of the fitness-to-own provisions is a critical element of the public protections that need to be in place before alternative business structures involving external ownership can be safely permitted. The Bill provides for licensing authorities to consider whether those who hold more than a small interest in a prospective alternative business structure firm are fit and proper persons. In paragraph 14 of Schedule 13, under which a licensing authority may require non-authorised persons to provide it with such documents and information as it may require, it appears to be the intention of the Bill that the applicant should demonstrate fitness to own, rather than that the applicant should be entitled to be approved unless the licensing authority can demonstrate that it is not fit to own. However, merely demonstrating an absence of criminal convictions should not be sufficient to entitle an applicant to become an approved person. For example, the possession of unexplained wealth could give rise to reasonable suspicions about the integrity of an applicant. It is important that the licensing authority should be able to refuse approval in those circumstances, unless it received a convincing explanation of the source of the wealth. The amendment is intended to put beyond doubt the fact that the onus of proof on these issues should rest with the applicant. I beg to move.