PARLIAMENTARY DEBATES HOUSE OF COMMONS OFFICIAL REPORT

Third Delegated Legislation Committee

DRAFT LEGAL SERVICES ACT 2007 (APPROVED REGULATOR) (NO. 2) ORDER 2014

Monday 8 September 2014

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The Committee consisted of the following Members:

Chair: MR CHARLES WALKER

Ainsworth, Mr Bob (Coventry North East) (Lab) Paisley, Ian (North Antrim) (DUP) † Cunningham, Mr Jim (Coventry South) (Lab) Percy, Andrew (Brigg and Goole) (Con) Dowd, Jim (Lewisham West and Penge) (Lab) Russell, Sir Bob (Colchester) (LD) † Field, Mark (Cities of London and Westminster) † Slaughter, Mr Andy (Hammersmith) (Lab) (Con) Sutcliffe, Mr Gerry (Bradford South) (Lab) Graham, Richard (Gloucester) (Con) † Turner, Karl (Kingston upon Hull East) (Lab) † Vara, Mr Shailesh (Parliamentary Under-Secretary † Hammond, Stephen (Wimbledon) (Con) of State for ) Huppert, Dr Julian (Cambridge) (LD) † Wallace, Mr Ben (Wyre and Preston North) (Con) McDonnell, John (Hayes and Harlington) (Lab) † Metcalfe, Stephen (South Basildon and East Katie Stout, Committee Clerk Thurrock) (Con) † Newton, Sarah (Truro and Falmouth) (Con) † attended the Committee 3 Third DelegatedHOUSE OF COMMONS Legislation Committee 4

that appropriate internal governance procedures are in Third Delegated Legislation place so that regulatory decisions will be taken Committee independently of representative decisions; that CILEx will be competent and have sufficient resources to perform the role; that CILEx’s regulatory arrangements make Monday 8 September 2014 appropriate provision for the regulation of those it wishes to authorise; and that provision has been made to prevent regulatory conflict. Moreover, the LSB is [MR CHARLES WALKER in the Chair] satisfied that appropriate complaints procedures will be in place, including mandatory co-operation with the Draft Legal Services Act 2007 (Approved , and that CILEx will promote the Regulator) (No. 2) Order 2014 regulatory objectives set out in section 1 of the Act. The LSB is satisfied that there will be no lowering of 4.30 pm standards or lessening of consumer protection. It is satisfied that IPS will be a capable and effective regulator The Parliamentary Under-Secretary of State for Justice in the legal services market. CILEx’s expansion will (Mr Shailesh Vara): I beg to move, contribute to the growth of the legal services market That the Committee has considered the draft Legal Services and will bring further innovation, leading to benefits for Act 2007 (Approved Regulator) (No. 2) Order 2014. consumers of legal services. Following its consideration, It is a pleasure to serve under your chairmanship for the LSB made a recommendation to the Lord the first time, Mr Walker. I look forward to doing so, on 9 December 2013, and earlier this year I agreed to but I hope it is not for very long. table the draft order to designate CILEx as an approved The purpose of the draft order is to designate the regulator of the reserved legal activities of reserved Chartered Institute of Legal Executives as an approved instrument activities and probate activities under the regulator under the Legal Services Act 2007 for the 2007 Act. This order has been moved at the earliest reserved legal activities of reserved instrument activities opportunity following its tabling on 23 June 2014. The and probate activities. That will allow CILEx’s members order will provide a greater choice of regulator for to conduct those activities without the supervision of properly qualified and trained practitioners to carry on and, once appropriate regulatory arrangements the reserved legal activities of reserved instrument activities are in place, to establish their own practices to conduct and probate activities, and will pave the way for the such services. continued widening of the legal services market. The , which is the oversight regulator for approved regulators, recently completed a 4.35 pm consultation on a further order that will be made under Mr Andy Slaughter (Hammersmith) (Lab): It is a section 69 of the 2007 Act, and the LSB will make a pleasure to serve under your chairmanship, Mr Walker. recommendation to the in due course. I do not intend to detain the Committee. We endorse If granted, that order will allow CILEx, through ILEX and support the proposal and I am grateful to the Professional Standards, which is CILEx’s independent Minister for setting out the reasons why it is necessary regulatory arm, to regulate entities as well as individuals. and welcome. If both orders come into force, they will enable increased I am also grateful to the Chartered Institute of Legal competition and innovation in the legal services market. Executives, which provided a briefing for the Committee The 2007 Act established a new regulatory framework that makes clear its benefit as an organisation. The for legal services. Among the Act’s objectives are to put Minister mentioned diversity. The fact that 74% of the consumer at the heart of legal services and to deliver CILEx are women and 32% of its students are a more effective and competitive market. from black and minority ethnic backgrounds is a formidable CILEx offers one of the most flexible routes into the achievement that other parts of the profession could be and allows people from a variety of urged to encourage. backgrounds to enter the profession. That path is reflected The principal part of the briefing aims to explain—if in CILEx’s diverse membership. CILEx is already an such an explanation is necessary—whether it is suitable approved regulator under the 2007 Act and has been for CILEx to become a regulatory body in the affected able to authorise chartered legal executives to administer areas of conveyancing and probate. The comments on oaths and exercise since the cutting bureaucracy and red tape and making things commencement of the Act. CILEx was also designated simpler are relevant because, in alternative business as an approved regulator for the conduct of litigation in structure firms in particular, the person with the most May 2011, and it is a designated qualifying regulator for experience of doing such work is likely to be a chartered immigration advice and services. and it is clearly nonsensical that they CILEx applied to the LSB in March 2013 to be have been hampered and restrained. We therefore welcome designated as an approved regulator for reserved instrument the measure. activities and probate activities. The LSB tested CILEx’s The only thing that gave me pause was the comments proposals against the criteria set out in the 2007 Act, in the explanatory memorandum of the former Lord and it found that CILEx has both the capacity and the Chief Justice, Lord Judge, so I went away and looked at capability to undertake an extended regulatory role in them. Paragraph 8.4 states: the legal services sector. The LSB took advice from the “The Lord Chief Justice expressed concerns that regulatory mandatory consultees, as required by the Act: the Lord competition will have a detrimental effect on standards, that a Chief Justice, the Legal Services Consumer Panel and variation in standards between regulators is inappropriate in the Office of Fair Trading. The LSB is satisfied that principle, and that a variation in standards may bring about a CILEx has met the requirements of the 2007 Act, in drive to the bottom.” 5 Third Delegated8 SEPTEMBER 2014 Legislation Committee 6

Those words are quite dramatic, in a way. However, been a proliferation of legal regulators, and sooner or almost all of the letter from which they were taken is later somebody will have to address that. Again, that is concerned with measures on advocacy and rights of something about which the chair of the LSB would audience that have already been incorporated. Such agree. I do not think the Government will have anything matters might have been slightly more contentious, but new to say about that issue because they made it clear I think everyone—the Legal Services Board included—was that they have lost interest in the idea of regulation this satisfied about them. There are only two small points at side of the election, but I flag it up because it is a the end of the letter that deal with probate and so on. legitimate point. We are drawing the wrong conclusion The former Lord Chief Justice had one matter of and blaming the individual professional bodies when concern across the board—parity of standards when defining the regulators is a matter for the Government. one has a proliferation of regulators—and a further I welcome the order, but I seek greater clarity. Will concern as to whether this instrument deals with contentious the Minister put on the record his response to the or non-contentious probate. My understanding is that former Lord Chief Justice’s points—in particular, those it deals with non-contentious probate, although clearly, about probate? contentious probate matters relating to litigation and advocacy could be included. However, I am entirely 4.41 pm persuaded that any fears he may have had are set to rest Mr Vara: I take on board what the hon. Gentleman in CILEX’s detailed response. I am sure that the Minister said about the former Lord Chief Justice’s comments. is also persuaded: otherwise, he would not be proposing The Legal Services Board was fully aware of his concerns. this measure. Parliament clearly set out the objectives of the Legal When previously considering changes to the regulation Services Act 2007, which include: under the 2007 Act, I have said that, because they come “encouraging an independent, strong, diverse and effective legal forward in a piecemeal way, information can be misleading. profession”, For the former Lord Chief Justice’s words to have been and put in the terms they were in the explanatory memorandum was misleading. The paragraph in question appeared to “promoting competition in the provision of services” raise serious and genuine concerns that in fact were not provided by authorised persons under the Act. The relevant to this instrument; but one would not have 2007 Act therefore aims, among other things, to create a known that without going to the original source. He more effective and competitive market, and extending was right to raise those concerns—although I do not the regulatory powers of CILEx will help to do that. share them—which gave CILEx an opportunity to put The order is pursuant to the 2007 Act, which was its arguments forcefully to the satisfaction of the passed under the previous Administration. Government, the LSB and others. The hon. Gentleman discussed the fact that legal Two ancillary points arise from that. First, chartered executives are not officers of the . He will appreciate legal executives are not officers of the court. Although that this is not the place or time for that discussion, but it is accepted that that is no longer relevant because of I am happy to take that point on board. We may have the way regulation works post the 2007 Act, because the further representations from CILEx and others on that jurisdiction of the judiciary and the over the issue. The hon. Gentleman will be aware that the professional bodies has been weakened, and because Government undertook a consultation exercise on the solicitors and are now in a different place in regulatory regime, but unfortunately there was no consensus that regard, it is still appropriate that the anomaly be view about the way forward, so the issue has been put in corrected at some point. The Government do not need the file for review at a later date. to set out a timetable, but do they intend to do that? I commend the order to the Committee, and I trust Secondly, we probably all agree that the former Lord that it will not meet with a Division. Chief Justice had a point about the proliferation of Question put and agreed to. regulators. It is not a problem for CILEx and IPS but a problem across the board, which the Government funked 4.43 pm by abruptly ending their review of regulation. There has Committee rose.