My Lords, I shall speak also to the draft Legal Services Act 2007 (Warrant) (Licensing Authority) Regulations 2015.
By way of background, as noble Lords will know, the Legal Services Act 2007—the 2007 Act—governs the regulation of legal services in England and Wales and established a new regulatory framework for legal services. The 2007 Act enabled the widening of the legal services market to allow for different regulators to regulate legal services and for different types of legal businesses to provide those services.
The intention of the 2007 Act was to put the consumer at the heart of legal services and deliver a more effective and competitive market. It established a number of regulatory objectives which the Legal Services Board and the approved regulators must promote, including protecting and promoting the public interest and the interests of consumers, encouraging an independent, strong, diverse and effective legal profession and promoting competition in the provision of legal services by authorised persons.
The Legal Services Board was established under the 2007 Act to be the independent oversight regulator with responsibility for overseeing the approved regulators. Under the 2007 Act, approved regulators are under a duty to act in a way that is compatible with the regulatory objectives set out in the Act. Where acts or omissions of an approved regulator are likely to have an adverse impact on these regulatory objectives, the LSB has a range of enforcement powers that it can exercise, including issuing performance targets and directions, public censure and imposing financial penalties.
Where an approved regulator’s acts or omissions cannot be adequately addressed by these other enforcement powers the LSB can, in appropriate cases, issue an intervention direction providing for certain functions of the approved regulator to be exercised by the LSB or a person nominated by it; or it can recommend to the Lord Chancellor that he cancel the approved regulator’s designation. Similarly, the LSB may recommend that the Lord Chancellor cancel an approved regulator’s designation as a licensing authority in relation to one or more reserved legal activities, but only if it is satisfied that it cannot address the issue through its other enforcement powers. This is intended to ensure that the power to issue an intervention direction or to cancel a designation remains reserved for the most serious or persistent infractions.
Where an intervention direction is made under section 41 of the 2007 Act or an approved regulator’s designation is cancelled under Section 45, the LSB or a new regulator will assume some or all of the approved regulator’s functions. In order to provide continuity of regulation in these circumstances, the LSB, or a person nominated by it, can apply for a search warrant for the approved regulator’s premises under Sections 42 or 48, as appropriate.
Section 79 makes similar provision for licensing authorities to that made by Section 48 for approved regulators, in that it makes provision for search warrants which may be issued following the cancellation of a designation. It applies where a body has had its designation as a licensing authority cancelled, either automatically under Section 75 of the Act because its designation as an approved regulator has been cancelled under Section 45, or by an order made by the Lord Chancellor under Section 76 of the Act.
The 2007 Act permits the LSB to apply for a warrant in certain circumstances authorising it to enter and search the premises of an approved regulator or licensing authority and take possession of any written or electronic records found on the premises. There are two separate powers under the 2007 Act which are set out in Sections 42 and 48. These allow search warrants to be issued for an approved regulator’s premises, and one power in Section 79 which allows search warrants to be issued for a licensing authority’s premises. Regulations must be made by the Lord Chancellor under each of those three sections specifying further matters which a judge or justice of the peace must be satisfied of or have regard to before issuing a warrant, and also regulating the exercise of a power conferred by the warrant. That is the purpose of these two sets of regulations before the Committee, one of which relates to approved regulator warrants and one to licensing authority warrants.
The intention in exercising a warrant under Sections 42, 48 or 79 will be to provide continuity of regulation in specific circumstances of regulatory failure by an approved regulator or licensing authority. If both sets of these regulations come into force, they will enable the LSB or a person appointed by it to apply for warrants as part of its enforcement strategy. As required under the 2007 Act, the Lord Chancellor has also formally consulted the LSB about the making of these regulations.
Finally, I regret to say that there is a small error in the version of the approved regulator regulations before the House—the result of a computer glitch. In Regulation 1(2) the paragraph lettering is incorrect in that it runs through from (a) to (g) rather than restarting for each definition. I take it that no confusion has been caused. This error will be corrected in the final “made” version of the regulations.
In conclusion, these regulations enable the LSB or a person appointed by it to apply for a warrant as part of its enforcement strategy, enabling the LSB to assume effectively the functions of the relevant regulator. Overall, this has the potential to act as a deterrent against poor regulation, to improve the standard of regulatory practice and to strengthen the LSB’s regulatory powers, leading to greater consistency and better protections for consumers. I commend both sets of regulations to the Committee and beg to move.