Legal Services Bill [HL]

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 15. This group of amendments covers the area we have just discussed—the essential balance between the role of the overarching regulator and the individual bodies. Previous debates on this issue centred on the need to establish the appropriate relationship between the board and the approved regulators, and that gave rise to amendments that covered three main issues. First, the board should consider the ““B plus”” model of regulation by recognising that the primary responsibility for regulation rested with the approved regulators. Secondly, the board should apply a test that the approved regulator had taken unreasonable action or inaction before it could exercise its powers. Thirdly, the board must seek to resolve matters informally before resorting to the exercise of a power. While there were technical drafting reasons, as there often are, why the Government could not accept those particular amendments, we agreed with two of the three underlying principles so that the board would be making it clear in the policy statement how it would avoid micromanagement or second-guessing of approved regulators. All agreed, as do I, that that would be highly undesirable. We were not able to accept the requirement for the board to fetter its discretion to act so that it must be satisfied before it can use any of its powers that the action or inaction of the approved regulator to which the power would be directed is unreasonable. Of course it is sensible that the board should consider the reasonableness of an approved regulator’s actions before exercising its powers. Unreasonable action or stubbornness in refusing to take action when it is clearly called for will raise for the board the question of whether it should act. There may be occasions, however, when an approved regulator might act or refuse to act in a way that the regulator argues is not outside the bounds of what a reasonable regulator might choose to do but the overall effect has, or seriously risks having, a harmful effect on the regulatory objectives. Our concern is that we would not want to prevent the board taking such action in such circumstances. Moved, That the House do agree with the Commons in their Amendment No. 15.—(Lord Hunt of Kings Heath.) 15A: Line 10, at end insert ““, and (c) ensure that the Board exercises its powers only where it considers that the action or inaction of an approved regulator is not an approach which the approved regulator could reasonably have taken.””””