Legal Services Bill [Lords]

I appreciate the comments made by the hon. Member for Huntingdon (Mr. Djanogly), although I am not sure that it was entirely as he describes. I also agree with what my hon. Friend the Member for Stafford (Mr. Kidney) said about the benefits that can accrue from ABS, which I hope will enhance the opportunities and choice for the consumers. On the notorious remarks about the can of beans, a journalist suggested that the Bill's effect on legal services would make it like choosing a can of beans in a supermarket. I thought, ““Well, what's wrong with that?”” Given the choice of cans of beans one can get now, I hope that consumers will benefit from the choice that will be available to them in legal services, so I do not regret having that comment attached to me. In addressing new clause 6, I also wish to address amendments Nos. 148 to 151 and how they would alter the definition of a low risk body in clause 108. First are bodies that have up to 25 per cent. non-lawyer managers, as long as the non-lawyer managers are the only non-lawyer owners. The second are bodies that have up to 50 per cent. non-lawyer managers, as long as those non-lawyers are members of a ““recognised professional body”” and are the only non-lawyer owners. That sets the actual threshold for non-lawyer managers at 50 per cent., or 40 per cent. higher than the current threshold we have set out in the Bill. That means that those bodies, which would be multi-disciplinary partnerships, could have up to 50 per cent. external ownership and still be automatically classified as low risk. As I have said before in relation to similar amendments, I am not convinced that the bodies proposed here would necessarily be low risk. The amended versions of the amendments have not changed my position. Allowing any multi-disciplinary partnership with non-lawyer management or ownership over 10 per cent. to be automatically classed as low risk might be highly inappropriate in any context. The view of Clementi, the Joint Committee, this House and the other place has always been that multi-disciplinary practices might present greater regulatory challenges than other forms of ABS—for example, the non-lawyer-managed LDPs I will be seeking the permission of this House to incorporate that into schedule 16. It is a view that is even more important in multi-disciplinary partnerships where lawyers account for less than 90 per cent. of the management. However, I recognise that once part 5 comes into force, it might transpire that the board is of the view that certain ABS provisions are not necessary to regulate certain kinds of multi-professional practices. It will be open to the board, should it so choose, to recommend to the Lord Chancellor that certain categories of practices could be regulated more flexibly. The Lord Chancellor could then make an order under section 106(1)(e) to create a new category of special body, which in principle could be a category of multi-professional body that is similar to one proposed here. Given the complex regulatory issues that such bodies could present, it is right that that should be left to the board's judgement. It will be in a position to make an evidence-based assessment of the risk profile of those bodies, and it should satisfy itself that granting low-risk status would be acceptable, having regard to public and consumer interest. For those reasons, I hope that the hon. Gentleman will withdraw the amendments. However, the low risk bodies referred to in schedule 16, and for which we allow 25 per cent. non-lawyer management, are completely different from the low risk bodies described by the hon. Member for Huntingdon. The schedule 16 bodies are approved by the Law Society and work under its rules, so up to 25 per cent. non-lawyer managers may be involved in providing solicitor services. There is no external investment. The part 5 low risk bodies can be externally owned and may include up to only 10 per cent. non-lawyer management providing legal and other services. I do not think it appropriate to equate the two; there is an important difference and I hope that the hon. Gentleman will understand why I feel unable to accept the amendments. On notaries, I have said on several occasions that the whole point of the part 5 regime is that it will operate on a voluntary basis; there will be no compulsion on an approved regulator to seek licensing authority status, and no compulsion on firms or individuals to seek an ABS licence or even to become part of an ABS firm. The process is entirely facilitative, so it is right for the notary profession itself—obviously, with its regulator, the Court of Faculty, and the legal services board—to decide, when the time is appropriate, which it clearly is not at present, whether it is desirable and appropriate for notarial services to be provided under that part of the Bill. Under the arrangements, one of the objectives of the licensing authorities is to maintain professional principles, which include acting with integrity and independence. The special requirements of notarial activity will be recognised. Anyone wanting to provide notarial services will have to demonstrate that their arrangements take the principles into account before they can obtain a licence, so amendments Nos. 65 and 156 are not absolutely necessary. Government amendment No. 85 adds a duty on licensing authorities to give special attention to access to justice in considering the issue of ABS licences. I appreciate what colleagues have said both in Committee and in the Chamber. Other amendments have been tabled on the subject, and I and my colleagues in both Houses have spoken about some of the problems raised by those proposals. I shall not go into detail, except to say that I felt the amendments were unnecessary because there were already sufficient safeguards in the Bill. However, I have included amendment No. 85 to signal the importance of access to justice to licensing authorities. Earlier, we talked about perception and it is clearly important in this case. It is important that people perceive that access to justice is a key part of what we are trying to achieve. The amendment is drafted in a way that allows access to justice without sidelining other objectives, and I am pleased that the Opposition support it. As I have already explained, amendment No. 156 is unnecessary and I hope that our proposed amendment on access to justice will help to clarify the position. I remind the House that I do not want regulatory objectives or professional principles ranked; we do not want any one of them to take priority over the rest—they must all be effective. After all, if everything is a priority, nothing is. Amendment No. 86 deals with the information powers of licensing authorities set out under clause 93 and provides that they apply to all categories of interest-holder. That brings the clause into line with Clause 85 and will allow licensing authorities to impose obligations on all interest-holders as part of the licence terms. Licensing authorities might want to use their information powers to determine not only whether a body is complying with the licence terms, but also whether its interest-holders are complying with licence terms. They could also be used where an interest-holder might be in possession of information that would help a licensed body ascertain whether the body was complying with its terms. Finally, I hope that Government amendments Nos. 87 to 92 will enhance consumer protection by amending clause 108, to ensure that the body cannot be entitled to low-risk status if 10 per cent. or more of its ownership is held by another licensed body, which might be 100 per cent. owned by non-lawyers. The existing reference to authorised persons in clause 108 does not distinguish between licensed bodies and other types of authorised person, and it is right that we should do so, since the intention of clause 108 is to confine low-risk status to those bodies in which non-lawyers form a very small proportion of the overall management and ownership. It is not appropriate, however, to apply automatic low-risk status to a body just because it is a subsidiary that is perhaps 90 per cent. or more owned by another licensed body. That is why I have tabled these amendments to correct that. On that basis, I ask the hon. Gentleman to withdraw the motion, but I am grateful to him for the support that he has shown to the amendments that I have tabled.