Legal Services Bill [HL]

moved Amendment No. 119: 119: Clause 30, page 15, line 13, leave out ““one or more of? The noble Lord said: My Lords, I shall also speak to all the other amendments in the group. At the risk of being accused of constant repetition, we believe it essential that the Bill reflects the Government’s declared policy that the Legal Services Board should take action against the approved regulators only where they are, to use the Government's words, ““clearly failing?. At present, it does not. The thresholds for intervention are far too low; at their present level, the Legal Services Board becomes simply a front-line regulator, like the Financial Services Authority. The potential for constant interference by the board would go completely against Sir David Clementi’s vision of the Legal Services Board as a small oversight body. Sir David Clementi said in his review of the legal services framework for England and Wales, published in 2004, at page 44: "““The LSB should be a small oversight body, so delegation should be expected, subject to the Legal Services Board’s satisfaction about competence and governance arrangements?." Direct regulation by the Legal Services Board would also make the operation of the legislation inordinately costly. The amendments would incorporate that policy in the Bill by raising the threshold for intervention in two respects. The first is that the power of the board to intervene is triggered by an assessment of adverse impact on the eight regulatory objectives considered as a whole rather than individually. For example, it would not be reasonable for the Legal Services Board to take action that had an adverse impact on competition if the approved regulator’s approach was necessary to improve access to justice and maintain adherence to the professional principles. However, it should be possible for the Legal Services Board to exercise power to act where the only adverse impact on the regulatory objectives was that it restricted competition, if that action could not be justified by reference to a benefit to the other regulatory objectives. Amendments Nos. 119 and 120 would bring Clause 30 into line with Clause 3(2) and Clause 27(2), which require the board and approved regulators respectively, in discharging their duty, to promote the regulatory objectives so far as it is reasonably practical; to act in a way, "““which is compatible with the regulatory objectives?." That form of words recognises that the regulatory objectives may pull in different directions. The approved regulator may have to balance the objectives, and, in the words of the noble and learned Baroness, Lady Butler-Sloss, on Second Reading, "““to decide that one objective takes precedence over another, in which case there is likely to be an adverse effect on one of the objectives. Consumer protection or the rule of law may, for example, need to take precedence over competition?.—[Official Report, 6/12/06; cols. 1194-95.]" Yet the Bill entitles the board to intervene to penalise a regulator who had exercised legitimate discretion in a balancing exercise. In making its analysis, the Legal Services Board should trust the judgment of the approved regulator, unless it has good reason not to do so. This is especially so now that the regulatory and representative functions of the Law Society and the Bar Council have been clearly separated. The new approved regulators will have substantial lay representation, and all members will have to be selected on the basis of Nolan principles. In other words, the composition of these bodies will look very like the composition of the Legal Services Board. It must follow that the board should not exercise its powers simply because it would have reached a different decision on the same matter. The board should intervene only if it is clear that the conduct of an approved regulator in some way fell short of reasonableness. I can deal much more telegraphically with the second line of issues to which the amendments give rise. There should be some qualifying adjective about the degree of adverse impact before the Legal Services Board invokes its powers. We have chosen the word ““significant?, but ““serious? or ““substantial? would be equally acceptable. Almost any exercise of its function by an approved regulator will have at least some adverse effect on at least one of the regulatory objectives. I beg to move.