House again in Committee.
Clause 138 [Enforcement by complainant of directions under section 134]:
136AA: Clause 138 , page 72, line 14, at end insert—
“( ) The scheme rules should provide that an ombudsman may take proceedings on behalf of a complainant in such circumstances as the rules may specify.”
The noble Lord said: Where the proceedings have led to the failure of the respondent to pay or make redress to the complainant, or in similar circumstances, the amendment would allow an ombudsman to take the legal lead in enforcing the redress penalty. It raises a more general question as to whether an ombudsman, if they found a serious breach by the respondent, could take action themselves rather than relying always on the original client and complainant to pursue the ramifications of legal action all the way through.
I not only turned up late for the resumed proceedings, but also left my glasses in my office. Therefore, that is the sum total of my contribution on the amendment. I beg to move.
My Amendment No. 136B is in the same group of amendments as that of the noble Lord, Lord Whitty. It would enable the Office for Legal Complaints to apply to the court on behalf of the complainant to enforce an award of compensation.
One of the good things about the Bill is that OLC awards will be directly enforceable, thus removing many of the problems with the old system where awards made by the Law Society were not enforceable unless and until the Solicitors Disciplinary Tribunal made an order. However, the Bill still requires the complainants to enforce the awards through court action. Complainants who have had to go to the OLC due to a problem with the service that they have received from an authorised person may understandably lack the necessary confidence in the legal process and the legal profession to so act. Therefore, they may have reservations about instructing another lawyer to enforce the award and may feel also at a significant disadvantage in taking enforcement action on their own behalf against a qualified lawyer.
There is also a genuine risk that recalcitrant authorised persons would refuse to pay an award in the hope that the complainant would not enforce it, in the secure knowledge that if he did not, no other person or body would have the power to do so. Equally, it is manifestly unfair to impose further delays on a complainant whose grievance has been upheld before they can receive their rightful award. The current system encourages such delays.
All these problems could be removed at a stroke if the OLC had the power to take action to enforce awards on behalf of the complainant in cases where the complainant wished it to do so. This is a power that will hardly ever be exercised, as a solicitor will know that he will not be able to escape an award simply by not paying and hoping that the complainant does not enforce compensation. My amendment would help to maximise the effectiveness of the new arrangements for dealing with consumer complaints and should surely find favour with the Government’s promotion of the consumer interest in this Bill.
I support the noble Lords, Lord Whitty and Lord Kingsland. It does not matter much which of their amendments would apply, but quite a lot of people are not accustomed to dealing with courts; they find the whole process of litigation disturbing and upsetting. If they start by having to go through the whole procedure set out in the Bill—it will be an excellent procedure—and are given an award to which they are clearly entitled, and then the recalcitrant solicitor or barrister does not pay, the idea that the complainant would have to go to court, become a litigant and have to brief a separate solicitor in order to do so would be a step too far for many people. It would be enormously helpful if some sort of procedure would enable such people not to have to go through this; they sometimes may not be of good education and have been let down by the legal profession—and such people undoubtedly exist.
Our general experience of ombudsman schemes across the board is that compliance tends to be high. That is partly because the vast majority of cases are resolved by agreement without formal determination, but where a decision does reach the stage where an ombudsman needs to make a binding determination, compliance is also very high.
The British and Irish Ombudsman Association’s guidance states:
“Compliance with an Ombudsman’s recommendations is secured by a variety of means—by law, by contract, by a regulator or by the moral force and the standing of the Ombudsman. Non compliance is rare”.
That is the context in which we are considering the amendments. We fully expect that to be the case for the ombudsman scheme established by Part 6; but the Bill also provides for situations in which a respondent still does not comply, by providing, through Clause 138, for any compensation payable or fees owed to be recoverable on application to a court.
In rare cases where a respondent refuses to pay, Clause 139 provides for the OLC to be notified and for onward notification of the relevant approved regulator. That will, as with other schemes, be treated seriously and as a disciplinary matter by the relevant approved regulator. So a respondent who refuses to comply will have to have very good reasons for doing so, and that will act as a strong incentive. Where a complainant does have to make an application to court, we hope that that may be done before the county court as well as the High Court, with a straightforward procedure and the ability to recover the costs of having to do so. We have a good procedure.
However, I have listened carefully to what has been said and my view is that we should look at this again. I do not wish to require the OLC to take action on behalf of the complainant, but I am happy to think about whether we could provide the flexibility for it to be able to do so, bearing in mind the comments that have been made about the particular circumstances that could arise. Perhaps I may take this matter away and consider it further.
To assist the Minister, can I suggest that some word such as “exceptionally” be put in? I would not have thought that it would be a general power, but there would be rare cases. The knowledge that there was the rare case might be an incentive to those who did not want to obey. They would know that it was not just a poor little old lady who had to try to go to court. The whole panoply of the OLC could be engaged. “Exceptionally”, “in unusual circumstances” or some phrase like that might meet the case and show that it is unlikely to be used very often. It would not be an encouragement to someone who, for instance, was too lazy to go to court. It would only be used by somebody who could not manage going on their own.
I can see noble Lords nodding at what the noble and learned Baroness said. I am happy to consider whether those measures would be appropriate. That is the sort of thing I am thinking of; not making it a requirement but enabling flexibility. It would be precisely in the circumstances that she indicated, where you have somebody who could not take this through. We need to help people enforce what is rightfully theirs—I am a great believer in that. I would like to take this away, discuss it and come back.
I am always suspicious when the noble Baroness falls back on the concept of flexibility. It seems to me to be another way of saying that she does not want to agree with the amendment.
However, I do understand that the noble Baroness wants flexibility here. I suggest to her that if she accepts my amendment it will, in practice, be a power that will hardly ever be used. If a solicitor knows that he cannot escape an award simply by not paying and hoping the complainant will not enforce compensation, then he will comply because he knows that if the complainant is reluctant to bring proceedings, the OLC will. I see no incompatibility between accepting my amendment on the one hand and the OLC only rarely being involved in proceedings of the sort that the amendment gives it a right to undertake on the other. I hope the noble Baroness will feel, on mature reflection between now and Report, that she is able to accept the measure I propose in full.
I am sorry the noble Lord is suspicious of me. The point about flexibility is that we do not want to be in the position where the complainant does not feel they should do anything because the OLC will deal with it. I was taken by what was said about cases where people would find it very difficult to do something and where justice needs to be seen to be done. We hope, in the main, that this will never happen, and that those who need to provide redress will do so. It is important in those occasional circumstances. To say that the OLC always has to act creates another potential problem; what onus is on those who are perfectly capable of sorting something out to do so? I hear what the noble Lord says, but I ask him please not to be suspicious of me. I will look at the matter, but in the context of trying to say that the OLC does not have to act in all circumstances but that there may be circumstances where it thinks that doing so is important. I will reflect maturely, of course.
I am grateful to the noble Baroness for her further reflections. The amendment raises a similar issue to the one raised not by the previous amendment but, I think, by the one before that. If the OLC is to gain the reputation for effectiveness that we hope it will, it will not be enough for it simply to make its decision about whether a respondent has been negligent or has committed some other dereliction. The remedy that the complainant deserves must be delivered. If it is not, that will rebound on the reputation of the OLC, even though it might not be its fault. It is in the interests of the OLC that there should be an effective weapon at its disposal in the Bill to make sure that the remedy it recommends actually takes effect. That is where this amendment adds value to the Bill. I heard what the Minister said and I know that she will go away and reflect on this. In those circumstances, I shall not press the amendment.
I by and large agree with the noble Lord, Lord Kingsland. On the grounds that we are not supposed to be suspicious of the Minister and that she will come forward with something that meets both our objectives, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 136B not moved.]
Clause 138 agreed to.
Clause 139 agreed to.
[Amendment No. 137 not moved.]
Clause 140 [Reporting possible misconduct to approved regulators]:
137XA: Clause 140, page 73, line 13, leave out “may” and insert “must”
The noble Lord said: In relation to an earlier amendment, I said that various amendments tabled in a previous sitting postulated an independent reviewer system, the Minister indicated that she thought that the OLC’s proceedings would build in the possibility of an independent reviewer at some point and I indicated that I did not want an automatic assumption of a full-blown appeal system. However, in the circumstances of this clause, it would be useful to provide for an independent reviewer. There may be other such circumstances but in this situation I hope that we can agree to the possibility of an independent review of a decision by the ombudsman not to proceed with a full investigation into the complaint. This challenges a very early decision not to pursue a complainant’s case. Complainants require that protection. In those circumstances, I see a role for the independent reviewer. I beg to move.
There are two amendments in this group: Amendments Nos. 137ZZZA and 137XA. Amendment No. 137ZZZA deals with the independent reviewer point and Amendment No. 137XA deals with allowing an ombudsman with a report of potential misconduct issued to an approved regulator to require a report back. I say that only for clarification of the groupings. I shall respond to both amendments because they raise distinct issues—although they are clearly suitably grouped together.
I shall start with the independent reviewer question, which my noble friend rightly raised. We do not think that it is necessary that an “independent reviewer” be established to decide whether an ombudsman has made the right decision in not making a report to an approved regulator. The ombudsman does not have the discretion to decide, even though it appears that there may have been professional misconduct, not to report it to the relevant approved regulator: there is a duty on the ombudsman to make such a report whenever the ombudsman is of the opinion that there is, has been or may have been such misconduct.
The reviewer would not be able to review a decision not to make such a report but would be reviewing whether the ombudsman could reasonably be of the opinion, on the information available, that there was nothing to suggest misconduct. The purpose would be to secure reconsideration of that opinion, and potentially the making of a report.
But there is, by design, nothing in the Bill to prevent an individual complainant who feels that there has been misconduct of which the relevant regulator should be aware from raising the issue with the approved regulator directly or drawing this specifically to the attention of an ombudsman. The problem of an independent reviewer is that we would be adding an expensive and potentially cumbersome way of achieving much the same result.
I hope that noble Lords are reassured that, because of the importance of reporting misconduct to approved regulators, there are various safeguards in place to ensure that ombudsmen honour their statutory duty. First, there is provision for a co-operative relationship with approved regulators in Clause 141. Secondly, it is envisaged that the OLC will follow the best practice recommended by the British and Irish Ombudsman Association of having mechanisms for internal quality assurance in place to deal with complaints about the service provided by the OLC. Thirdly, the operation of the ombudsmen scheme will be monitored by the OLC, through information and statistics collected through those internal quality assurance mechanisms. Ultimately, the OLC is accountable to the LSB, which will monitor the performance of the OLC.
We think that we have captured what my noble friend seeks to achieve with an independent reviewer within a duty and responsibility that will fall to the ombudsman. On that basis, he may feel able to withdraw his amendment.
On Amendment No. 137XA, Clause 140 allows an ombudsman, where he has reported a potential misconduct issue to an approved regulator, to require a report back on the action that has been taken. In certain circumstances, it will be very important that approved regulators report back to the OLC on that action. My noble friend’s amendment would require approved regulators to report back, with reasons for any action taken, in every case. I do not accept that that is necessary. The OLC is not intended to undertake a general oversight role in relation to approved regulators, although it will be able to report to the LSB any serious or persistent failures on the part of approved regulators. Oversight of the approved regulators and any necessary action will be provided by the LSB.
As the clause stands, whether a report is necessary is a matter that is left to the ombudsman’s discretion. I think that this is right. To require a report in every case would be onerous and expensive and would increase the cost of the OLC and the administration of approved regulators, and those additional costs would ultimately increase the cost of legal services to consumers. So, while we accept that it is important that ombudsmen have the power to require a report, and the additional power to report to the LSB any serious or persistent failures, for the reasons that I have given I do not think that the amendment is necessary and I hope that it will be withdrawn.
I hope that the noble Lord, Lord Whitty, will have seen Amendment No. 139E after Clause 155, where we propose that the current Legal Services Ombudsman should be renamed,
“the Independent Reviewer of Legal Services Complaints”,
which is exactly what he asks for in Amendment No. 137ZZZA. Just as I support him in his amendments, I hope that he will support me in mine. We believe that an internal review, which is thrown around all the time, is a very unsatisfactory way of resolving disputes. It will mean going back to the same people asking them to say that they have made an error, which is always very difficult to do. At the same time, the independent reviewer whom we seek will save the expensive judicial review, fulfil the role currently carried out by the Legal Services Ombudsman and be entirely in accord with the amendments tabled by the noble Lord, Lord Whitty. I notice that our amendment is supported by Which?, an organisation with which I believe the noble Lord has a connection.
I certainly agree with the noble Lord, Lord Thomas, that simple internal quality control does not resolve the issue and that, therefore, some independence in a reviewer is required. His amendment is one possible way of doing that and it is one to which we should return. I take some comfort, from what the Minister says, that the issue is recognised. I apologise for focusing largely on the second amendment in the group, rather than the first. On the second amendment, I believe that there are various ways of doing it. We have the possibility of using the present system of independent review which arises from the existing structure. At this stage, I shall withdraw the amendment, but this reassurance to consumers is important in the total picture and I hope that the Minister will come back with more detail at the next stage.
Amendment, by leave, withdrawn.
[Amendment No. 137ZZZA not moved.]
Clause 140 agreed to.
Clause 141 [Duties to share information]:
137ZZA: Clause 141, page 74, line 5, leave out paragraph (b) and insert—
“(b) the need for the OLC to assist approved regulators in carrying out their regulatory functions, and for approved regulators to assist the persons within subsection (3) in carrying out their functions of investigating, considering and determining complaints under the ombudsman scheme.”
The noble Baroness said: This amendment would substitute the word “need” for “desirability” in Clause 141(5)(b), thereby strengthening the stipulation that the OLC should assist the front-line regulators in carrying out their jobs through the sharing of information.
This two-way exchange of information between the OLC and approved regulators is absolutely essential if the two-tier regulatory regime set out in the Bill is to work effectively, and that is why the Solicitors Regulation Authority is strongly of the view that this change of wording is important. If front-line regulators are to protect consumers effectively and tackle particular risks within the regulatory system, a clear understanding of the nature of consumer complaints that the OLC is handling will be critical.
The current drafting of Clause 141 already reflects movement in that the Government have clearly accepted the principle that this type of information-sharing is desirable. I therefore hope that the Minister will react positively to the amendment to ensure that the provision is given the weight that it merits. I beg to move.
I have an amendment grouped with that of the noble Baroness, Lady Henig. Although its wording is somewhat different, I believe that the intention behind it is very similar.
We are aware of the importance of a clear separation between, on the one hand, the representative role of the Law Society and the Bar and, on the other hand, their disciplinary role. But it is crucial that the separation of functions between the handling of consumer complaints and professional conduct matters does not deprive approved regulators of the information that they need to act promptly whenever issues of professional conduct arise. Information derived from consumer complaints is, as the noble Baroness well knows, a key source of regulatory information.
The Office for Legal Complaints should pass to approved regulators the information that the approved regulators need at the time they require it. It would, I submit with respect, not be sufficient for the OLC to wait until the determination of a complaint before passing information to approved regulators in a serious case, such as one where dishonesty might be involved and urgent action was plainly necessary.
Clause 141 requires scheme rules to make provisions concerning the disclosure of information, and the clause specifically recognises the desirability of the OLC assisting approved regulators in carrying out their regulatory functions. Nevertheless, the provision still leaves the initiative very much with the Office for Legal Complaints, as the provisions concerned are to be in scheme rules made by the OLC. The purpose of the amendment is to seek to rebalance the provision by ensuring that the OLC consults the approved regulators before settling its proposed rules.
When I was talking to the officials this morning about the amendment of my noble friend Lady Henig—it is very nice to see her joining us at this late hour—I said that I start dancing on the head of a pin when I try to explain to noble Lords the difficulties of changing the word “desirability” to “need”.
I am not sure that my noble friend’s amendment would have a substantive effect. I can see by looking at the clause that she is keen to change the wording because it would fit better, but it is important not to skew what then happens because the “need” to do something overrides any other consideration. Of course, I will consider my noble friend’s amendment and will think about whether the wording is right. There is very little between us on this; it is simply a case of whether I can persuade her that the language would have an effect that she herself would not wish to see.
Although it does not say so in my speaking note, I am also perfectly happy to take away and consider the amendment in the name of the noble Lord, Lord Kingsland, because I think that he makes an important point.
I hear what the Minister says and I take the point. It is the outcome—how the thing works—that matters in the end and not the words. I absolutely accept that. Obviously, the assurance that I seek is that the outcome is of the sort that I have described. I am sure that she will reflect, as will I, on what combination of words will bring about the particular outcome that I think we all seek, as does the Solicitors Regulation Authority. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 137ZA not moved.]
Clause 141 agreed to.
Clauses 142 to 145 agreed to.
Clause 146 [Enforcement of requirements to provide information or produce documents]:
moved Amendment No. 137ZB:
137ZB: Clause 146 , page 76, line 32, leave out “a person (“the defaulter”)” and insert “an authorised person”
The noble Lord said: The amendment would ensure that the Office for Legal Complaints can enforce requirements to provide information or produce documents only against an authorised person. Clause 144 enables the ombudsman to require parties to complaints to produce documents and provide information which the ombudsman considers necessary for the determination of a complaint. Where a person fails to comply with the requirement under Clause 144(1), Clause 146 enables the ombudsman to certify the defaulter’s failure to comply with the requirement to the court. The court can deal with the defaulter as though the person concerned were in contempt.
That provision seems to us to be rather heavy-handed. It would surely be sufficient to entitle the ombudsman to deal with the complaint on the basis of the complainant’s account, and to report the failure of the authorised person to comply with the direction to their authorised regulator for disciplinary action to be taken.
Even if a power of this sort is thought appropriate in respect of authorised persons, it surely cannot be justified in respect of the individual complainant. Where a complainant fails to provide information which is necessary for the determination of a complaint, the ombudsman should no doubt be able to reject the complaint. It may also be appropriate for an award of costs to be made under Clause 133(1). But to initiate proceedings which may lead to the person being dealt with as though in contempt of court surely is disproportionate. I beg to move.
The purpose of this part of the Bill is to ensure equality between the parties. It is important that an ombudsman’s power to require information can be backed up by enforcement. Without such, the complainant or respondent could simply ignore the ombudsman’s requests. The noble Lord has indicated that he is concerned about disproportionality in this context.
The ombudsman is duty bound to determine cases in the public interest—Clause 113—and by reference to what is fair and reasonable—Clause 134. It is possible that the ombudsman receives a genuine complaint—not a frivolous or vexatious complaint—but the complainant withholds information needed to assist the ombudsman to make a determination. For example, the complainant may have a valid complaint and be seeking £10,000 redress. That complainant might be withholding documents that show he is really only entitled to £5,000. The ombudsman cannot make a determination without that information. In the example I have just given, if an ombudsman made an award of £10,000 without having the necessary documentation, he would probably fall foul of Clauses 113 and 134 in any event.
When we looked at the matter, we mirrored the powers available under Sections 231 and 232 of the Financial Services and Markets Act. As the Committee would expect, they are used extremely rarely, but they provide a useful deterrent in situations such as I have described, so we consider that they are powers worth keeping. Of course, the power could not be used aggressively by an ombudsman by virtue of Clause 134(3). That states that the ombudsman can only require information if it is,
“necessary for the determination of the complaint”.
Of course, the complainant can at any time and in any circumstances withdraw the complaint. The information or documents would then be no longer necessary for determination and the ombudsman would no longer have the power to require the information or pursue legal proceedings.
I argue that on the grounds of fairness and in the interests of justice, it is appropriate that the ombudsman can require information from both parties and have the necessary powers to ensure that that happens in order to make determinations, bearing in mind what I have said about the complainant always having the right to withdraw if he so wishes. I hope that the noble Lord will feel reassured and able to withdraw his amendment.
I am most grateful to the noble Baroness for her reply. There is no difference between us as a matter of principle. We agree that the OLC ought to have enforcement powers in this context. The only issue raised by the amendment is whether the powers granted to the OLC in this context are too severe. To go to court and initiate contempt proceedings is a very severe remedy—I submit, a disproportionate remedy. I entirely accept that there needs to be an effective remedy in such circumstances. The only difference between us is whether the remedies that I have suggested are sufficiently effective to deliver the policy that the noble Baroness seeks to advance.
I will reflect on what the noble Baroness said and consider whether it is appropriate to bring the amendment back on Report but, meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 146 agreed to.
Clause 147 [Reports of investigations]:
137ZC: Clause 147 , page 77, line 20, at end insert—
“(3) A report under subsection (1) may identify the respondent.”
The noble Lord said: The amendment is intended to put what I think is now the latest government thinking about better regulation into the Bill: that representational sanctions are as important and, often, have a greater effect in terms of both retribution and deterrence than financial and administrative sanctions. The Government recently accepted the recommendations of the Macrory report: not only that there should be an alternative approach to sanctions in total but that regulators should disclose to key stakeholders and the wider public when and against whom enforcement action has been taken.
My noble friend may well argue that the Bill does not preclude that. That is certainly true, but it is also important that that is seen as part of the armoury of the new regulatory structure. I do not apologise for repeating the statistic that more than 33 per cent of all complaints to the Law Society under the old system emanated from 7 per cent of solicitors’ firms, yet neither the profession nor potential clients know the names of those firms which undermine the credibility and good standing of the rest of the profession.
It is therefore important that the regulator, the OLC, should be able proactively and explicitly to name those who are subject to such sanction. I would not make that an absolute requirement. The OLC would have to decide whether it used that power in particular circumstances. The power would be primarily to deal with persistent offenders: the 7 per cent of firms which are creating such a bad image for the rest of the profession among the public. It would use it in that context, not necessarily when a single offence had been committed.
It is important, however, that this principle of “reputational sanction”, if you like, is in the Bill—there is a very good National Consumer Council pamphlet on reputation and regulation, which I commend to your Lordships. In this profession, probably more than most, it is a very important aspect of how the public view particular solicitors’ firms. It is, therefore, important that it is registered in the Bill. I beg to move.
I totally oppose this amendment. On Second Reading, I made the point that an awful lot of complaints are made by dissatisfied litigants who have lost their case; those who win do not complain. Another speaker in our later deliberations, whose name escapes me for the moment, referred to many complaints as “rubbish”. I do not see why it should be possible to publish the name of the solicitor’s firm, or even the barrister conducting the case, for a complaint that has failed. There is absolutely nothing in the amendment of the noble Lord, Lord Whitty, which would prevent the identification of a respondent when the claim had been thrown out.
We are almost in that very unsatisfactory situation in criminal law, in rape trials, where the complainant is never mentioned but the defendant is. Now it is to be translated over to this field. I do not see why a successful respondent should be at risk of having his identity revealed, when the complainant, who may have brought a complete rubbish complaint, is entitled to anonymity.
I share entirely the views that have been expressed by the noble Lord, Lord Thomas of Gresford.
I am not entirely sure that I agree with the noble Lords who have last spoken. It seems to me that what the noble Lord, Lord Whitty, is saying could be rephrased to meet their objections. There is much to be said for identifying, in certain circumstances, habitual offenders. As we were told by the noble Lord, Lord Whitty, only 7 per cent of solicitors out of the whole profession tend to come before the disciplinary bodies and I can see that, “A report under subsection (1)”, might in certain circumstances identify the respondent. But you would have to identify those circumstances, and I have in mind “where a complaint is justified”.
That might meet the public interest, because there are members of the public who go to solicitors—or, indeed, to barristers—without knowing whether they can trust them. I think that, in certain circumstances, and at the discretion of the organisers of the OLC, that information should be given, but given only if the complaint has been clearly upheld.
I hope to steer a course between the different views here, and to support what the noble and learned Baroness has said. It is not appropriate for the OLC to assume a naming and shaming role. There are issues, of course, about human rights and data protection, but it is not the overall purpose of the complaints scheme, and would ultimately undermine the objectives of the scheme. My noble friend Lord Whitty was looking, specifically I think, for what the noble and learned Baroness suggested, which is that where it might be considered appropriate, that would be available. This is not, actually, about the acceptance of the amendment, because the powers in the Bill enable what my noble friend is looking for; the OLC has that power.
It is explicitly precluded in the legislation, under Clause 147(1), from publishing the identity of a complainant, but not the identity of a respondent. The effect of legislative drafting, with which my noble friend is very familiar, is that the OLC has the power to identify respondents in its reports. We do not need to add anything to the Bill therefore because Clause 147(2) states that except for the complainant, anyone can be mentioned. That is a much better way of dealing with this than trying to set out the alternative, which is to provide that in certain circumstances they could be named.
As I have indicated, in specific circumstances that will be appropriate. As the noble and learned Baroness and my noble friend have said, that is right and proper, but it is not about naming and shaming or putting forward anyone in circumstances where it would be inappropriate to do so. That point was made clearly by the noble Lords, Lord Thomas of Gresford and Lord Kingsland. That is not what this is about. However, I agree that there will be circumstances in the public interest where in that context the ability to be able to name someone is important and the Bill allows for that, which is precisely what my noble friend seeks. On that basis, I hope that he will withdraw his amendment.
I am happy to withdraw the amendment in its present form. However, the formulation proposed by the noble and learned Baroness, Lady Butler-Sloss, would be an appropriate power for the OLC in these circumstances and one which I think the Government will seek following the Macrory report in many other areas of regulation. It is a discretionary power and it is to be left to the OLC itself to decide whether it would be appropriate. If it is to be restricted to where the balance of opinion suggests, to those complaints which have been upheld—the area I am mainly concerned about—I could envisage a situation where it was in the interests of lawyers to have on the public record the fact that they had been cleared of a mischievous complaint, but let us exclude that if we want to. I am concerned with the situation where the OLC is able to publish the names of those against whom a complaint has been upheld. If my noble friend says that it is already possible, that is fine in one sense except that in this new era of reputational sanctions being available to regulators, it might be helpful to include it in the Bill. However, I accept what she has said and we will take it from there. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 147 agreed to.
Clause 148 agreed to.
Clause 149 [Disclosure of restricted information]:
137A: Clause 149 , page 78, line 27, after “persons” insert “(other than approved regulators) who exercise regulatory functions”
The noble Baroness said: I shall speak also to Amendments Nos. 139G, 151A, 151B, 151D, 151E, 152, 153 and 155A. Amendments Nos. 152 and 153 have been tabled by the noble Lord, Lord Thomas of Gresford. We concur completely with those amendments. The noble Lord simply got there faster than I was able to, so with his permission I shall speak to his amendments with the government amendments.
The principle behind this group of amendments is to implement recommendations made by the Delegated Powers and Regulatory Reform Committee in its report on the Bill. The committee specifically recommended that some provisions should be subject to greater parliamentary scrutiny either by making them by statutory instrument or by laying orders under the affirmative procedure where currently they are dealt with under the negative procedure. In addition, the amendments limit the scope of two of the order-making powers, as suggested by the committee. Amendments Nos. 137A, 139G, 151A, 151B, 151D, 151E and 155A give effect to recommendations made in the report, and, as I have indicated, I agree with Amendments Nos. 152 and 153 in the name of the noble Lord, Lord Thomas of Gresford.
Amendments Nos. 137A and 139G give effect to the committee’s recommendation that the powers in Clauses 149(3)(g) and 161(3)(g), which are analogous to the powers in Section 86 of the Pensions Act 2004, should either be amended so as to be subject to the same restrictions as those powers or be made subject to the affirmative resolution procedure. The committee’s preference was for the former action and that is the approach taken by the amendments. Clause 149(3)(g) confers a power by order to prescribe additional persons to whom restricted information may be disclosed by the OLC, an ombudsman or a member of staff exercising duly delegated functions and the purpose for which it may be disclosed. Clause 161(3)(g) makes mirroring provision for disclosure by the LSB or a person exercising delegated functions. The amendments in each case restrict the power so that only persons having regulatory functions may be prescribed.
Amendments Nos. 151A and 151B give effect to the committee’s recommendation that the statutory instruments under Section 83(3) of the Trade Marks Act 1994, which is inserted by Clause 176, and under Section 275(3) of the Copyright, Designs and Patents Act 1988, inserted by Clause 177, should be made by the affirmative rather than the negative procedure. The order-making powers under these sections give the Lord Chancellor powers to require registers of trade mark attorneys and patent attorneys to be kept by persons specified in the order and are currently subject to negative procedure. We accept the committee’s recommendation, as amending the person who keeps the registers of trade mark attorneys and patent attorneys is a significant power to exercise and one where a high level of parliamentary scrutiny is appropriate. As such, Amendments Nos. 151A and 151B seek to change the negative procedure presently set out to the affirmative procedure. We agree with the Delegated Powers Committee that this is the appropriate procedure for the exercise of such powers.
Amendments Nos. 151D, 151E and 155A give effect to the committee’s recommendation that rules made by the board under Clauses 36(3), 93(3) and 166 should be made by statutory instrument subject to the negative procedure. The clauses that I have identified contain important rule-making powers, relating to the maximum levels of financial penalties—in respect of approved regulators and the regulation of licensed bodies—and the levy rules. Of course, these rules have a potential financial impact on approved regulators, so I accept the committee’s view that it is important that they are subject to an appropriate level of parliamentary scrutiny.
It is important that it should be the board, as the oversight regulator, that takes responsibility for preparing these rules. We have therefore provided that the board itself will make the order, in accordance with the Statutory Instruments Act 1946. However, it is still appropriate that the approval of the Secretary of State of the sponsoring department should be given to the rules before they are scrutinised by Parliament and made by order. We believe that, together, these amendments achieve the additional safeguards that the Delegated Powers Committee thought necessary in respect of financial rules.
As I said earlier, I am happy to agree that the Bill should be amended as suggested by the noble Lord, Lord Thomas of Gresford, in his Amendments Nos. 152 and 153. We agree that greater parliamentary scrutiny of the use of this power is needed than the Bill originally provided for. I trust that the Committee will agree to these amendments being made, and I beg to move.
I am grateful that the Government have accepted Amendments Nos. 152 and 153, which we tabled. The Government’s attitude indicates the considerable good work done by the Delegated Powers Committee. I congratulate that committee and its clerks on their constant observance of legislation as it comes through and on drawing to our attention matters as important as this.
On Question, amendment agreed to.
Clause 149, as amended, agreed to.
Clauses 150 and 151 agreed to.
Clause 152 [Consent requirement for rules]:
[Amendment No. 137B not moved.]
Clause 152 agreed to.
Clause 153 agreed to.
Clause 154 [Approved regulators not to make provision for redress]:
[Amendments Nos. 138 and 139 not moved.]
139ZA: Clause 154, page 80, line 18, at end insert—
“( ) provision in its conduct rules which identify particular circumstances and require the persons subject to those rules in those circumstances to undertake a process which may result in clients receiving restitution or compensation, whether following complaints from them or not, or”
The noble Baroness said: I wish to move Amendment No. 139ZA and speak to Amendment No. 149ZF, which is associated with it. The purpose of the first amendment is to enable front-line regulators to set standards requiring legal practitioners to take proactive steps to provide redress in circumstances where consumers may have suffered from malpractice but have not made a complaint, because they were either unaware of the issue or simply ignorant of their entitlement to redress.
This issue is perhaps best illustrated by reference to practical examples. The process of achieving redress for sick miners who were victims of malpractice by solicitors making claims on their behalf from the government compensation scheme has been slowed by the lack of any power for the regulatory authority to require solicitors to investigate case histories proactively. This contrasts with the situation in the realm of financial services regulation, where firms have been required by the regulator to proactively investigate possible instances of endowment mortgage mis-selling and provide redress.
The amendments are designed to provide front-line regulators with the necessary tools to be able to require proactive redress. These would include powers to require the review of files and, where appropriate, to invite clients to make use of internal complaints processes. The amendments would not affect the right of any client to complain through the Office for Legal Complaints and so would not detract from the OLC’s role in considering individual complaints.
In summary, these powers would significantly bolster consumer protection and should prevent large numbers of complaints from arising in the first place. As such, I hope that the Minister will be able to give a positive response to the amendment. I beg to move.
My intervention on this amendment provides an opportunity for me to give notice that I will not object to Clause 154 standing part of the Bill. I tabled my intention to oppose the clause—the general provisions of which I approve—in order to probe whether it also covers the potential for redress in relation to malpractice issues.
For the consumer—the client—it can be obscure on occasion whether they are complaining about an issue of professional malpractice or a failure of service, which is appropriate for the OLC. They may take one course or the other, or both. It is therefore important that issues of professional malpractice, which are dealt with by the front-line regulators, are also subject to the same possibilities of redress. As to the tragic miners’ case to which my noble friend Lady Henig referred, and which was eloquently spoken to by my noble friend Lord Lofthouse at Second Reading, if we look at it through the punters’ eyes, it is not absolutely clear whether that is an issue of malpractice or one of failure of service and incompetence.
I support the objectives of my noble friend’s amendment. I hope that the Minister will clarify whether the Government consider that the Bill as it stands adequately provides for redress in cases of professional malpractice.
I know that my noble friend is not planning to introduce a stand part debate on Clause 154, but the clause is critical to the entire scheme in Part 6. It underlines the distinction in the new system between the role of the approved regulators and the role of the Office for Legal Complaints and its ombudsman scheme. Under the new system, the imposition of disciplinary sanctions remains with the approved regulators; the awarding of redress is for the OLC. Without the clause, that distinction could not be maintained. We cannot create exceptions to Clause 154 lightly. We do not want to undermine the role of the Office for Legal Complaints and we have to consider very carefully whether any exception that might be made would do so.
I know that Amendment No. 149ZA was tabled on behalf of the Law Society, which feels that it needs a broad rule-making power to provide in its conduct rules that in certain circumstances solicitors will have to review their files and, where appropriate, provide proactive restitution or even compensation to consumers. The intention is that in situations of widespread wrongdoing the clients affected, as my noble friend said, can be identified as early as possible and restitution made by the solicitor in question.
The Government appreciate the intention behind the proposals to give the Law Society, in particular, the tools to respond quickly and effectively to situations where wrongdoing has been discovered that may have impacted on a large number of clients. We want to do what we can to enable the Law Society and other approved regulators to take a more proactive approach where appropriate when consumers are being adversely affected.
In our view, however, Amendment No. 149ZF is drafted very widely, and we would not be able to accept such a wide rule-making power. The amendment as drafted would allow an approved regulator—the Law Society, in this case—to award redress, despite the provisions in the Bill preventing approved regulators from doing so. That would not be acceptable; it would undermine the role of the new OLC. That said, we are willing to consider what powers less than awarding redress might be acceptable—for example, the power to order authorised persons to go through solicitors’ files, identify the names of clients who have been treated wrongly and pay back any money improperly being held if appropriate.
Before the detail of any exception to Clause 154 could be agreed, it is necessary to agree exactly what sort of exception is being sought and considered. We are looking at this issue and I am hopeful that we can bring something back on it. We will obviously need to talk to the Law Society, to my noble friend and to others who are interested, but I believe that, short of redress, and therefore short of interfering with the role of the OLC, we will be able to achieve something that will deal with the issue. I agree with my noble friend that that is very important, and I agree with what my noble friend Lord Lofthouse said at Second Reading. I hope that we can do that to everyone’s satisfaction, and that on that basis my noble friend feels able to withdraw her amendment.
I hear what my noble friend has said. I am grateful for her reassurance that the Government will look at this carefully and do what they can to meet the objectives here, which we are clearly all agreed on. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 154 agreed to.
Clause 155 [Legal Services Complaints Commissioner and Legal Services Ombudsman]:
139A: Clause 155 , page 80, line 26, leave out “offices” and insert “office”
The noble Lord said: I must apologise to the House for not being here earlier in the Committee’s deliberations to deal with Amendment No. 118D. I know that my noble friend Lord Maclennan of Rogart dealt with it, and I shall read the Minister’s response with considerable interest.
The amendment arises out of the fact that the Government have failed to replace the position of the Legal Services Complaints Commissioner and of the Legal Services Ombudsman. That is what Clause 155 is all about; it abolishes those two positions, which are currently held by one person. The Legal Services Complaints Commissioner dealt with service complaints, but in her other capacity as the Legal Services Ombudsman she dealt with disciplinary complaints. Those were the two hats that she wore as a person completely independent of the regulatory bodies, the Law Society and the Bar Council in their various functions. It is our view that it is entirely misconceived to remove independent review of the Office for Legal Complaints altogether.
It was for that reason that we proposed Amendment No. 118D to give the Legal Services Board the power to make intervention directions in relation to the Office for Legal Complaints. In that instance we were concerned that, with service complaints, the Legal Services Board itself would act as the independent reviewer. It would be able to deal with the Office for Legal Complaints if it was failing in that regard.
When it comes to disciplinary matters, we feel that it is necessary for the position of the Legal Services Ombudsman to remain. The purpose of the amendments in this group is to retain the position and functions of the Legal Services Ombudsman, but, because the new Bill already has an ombudsman working as the chief functionary of the Office for Legal Complaints, it is necessary to rename that individual. Consequently, we suggest that the Legal Services Ombudsman—the independent reviewer—should be called the independent reviewer of legal services complaints.
Currently, the power of the Legal Services Ombudsman to review the handling of all cases dealt with by the professional bodies, including those that concern allegations of serious misconduct, should remain. We think there is considerable danger in the Government’s proposal to remove that external and independent appeal body without the Office for Legal Complaints first proving itself to be an efficient and effective complaints body. We hope that in due course the OLC will be efficient and effective. However, I have in previous Committee sittings made quite clear my view of the proposed Office for Legal Complaints being set up on the corpse of the failed Law Society complaints body.
I do not propose to go further at this stage. I look forward to hearing why the Government think it necessary to remove independent review of the Office for Legal Complaints, even in its earliest stages. I suggest that the amendment should be accepted. I beg to move.
There is no doubt that in the present circumstances the office of Legal Services Ombudsman plays a useful and necessary function. Consumers can be confident that should a complaint against a lawyer not be handled well by the lawyer’s professional body, there is an appeal mechanism open to them. But we are not talking about the current situation. The point about Part 6 is that we are establishing a completely different system for the handling of complaints against lawyers than the one currently in use.
The noble Lord was not able to be with us when we talked about what he refers to as building on the corpse of the previous system. We see it more as building a new system. We take the expertise that may be available from the current system; I hope that he will have the chance to read my comments about the way in which we propose to do that and the importance of making sure that the system continues for the next three years while we develop the new system. The current system must not be unable to deal with complaints because for various reasons staff have not been able to participate and do not want to continue because they do not consider they have a future. We are creating a new organisation, but taking expertise where that is available. Although the organisation does not, as the noble Lord said, have the greatest of reputations, that does not mean that everyone in it is unable to perform some of the functions we expect to see in the new organisation. When looking at how to achieve a new organisation, it is important to use the experience and expertise available while recognising that the cultural change and the way the organisation operates is critical.
No longer will complaints against lawyers be sent to their professional body to be considered or determined. All complaints will be dealt with by an independent complaints handling body, which will be administered by an independent board. So immediately the system looks very different from that which we have today. In drawing up the new system, we have had regard to the Financial Ombudsman Scheme, which is regarded as good practice, and to the guidance of the British and Irish Ombudsman Association.
A key feature of our ombudsman scheme, and that of the Financial Ombudsman Scheme, is that the decisions of the ombudsmen are final; if accepted by the complainant, they bind both parties. Ombudsman schemes, such as the one that we are creating, are meant to provide a free, quick and simple service to complainants so that they can resolve a dispute without the need to go to court. My noble friend Lord Whitty has talked about the importance of that. A complainant will have a choice as to whether he or she accepts the decision. If the choice is to reject the decision, the complainant can pursue the complaint through the courts. But if a complainant chooses to accept the ombudsman’s decision, it is binding on both the respondent and the complainant. The choice rests with the complainant, which is why we do not consider it appropriate or desirable to see a formal review of this sort against an ombudsman’s decision. Our view is supported by the British and Irish Ombudsman Association.
It would be inappropriate for the OLC to be considered akin to approved regulators in handling complaints. It will have a very different relationship with the LSB from the approved regulators. The LSB will appoint members of the OLC and will approve all its rules. In certain circumstances, as we have already discussed, it could remove members.
It would be wrong to say that the OLC should be treated like an approved regulator, but it would be equally wrong to say that the OLC will operate like the Law Society’s Legal Complaints Service. As I have already indicated, this is not a rebadging exercise. The OLC will not work like the LCS or indeed any other approved complaints-handling procedure. It will be a new and independent system working in the interests of consumers set up under the ombudsman guidance.
That does not mean that mistakes do not happen from time to time. How these mistakes are dealt with is a matter for the OLC, and I expect that, like any other responsible organisation, the OLC will have internal management arrangements to deal with this. If it is looking for a model to develop an internal complaints-handling service, it might look to the Financial Ombudsman Service, which has an independent assessor who considers complaints about the service provided by FOS staff. But he does not consider the merits of a decision made by the ombudsman.
The terms of reference for the assessor do not allow him to consider the merits of an investigation. The FOS system, like the one that we are creating in Part 6, makes it clear that the decision of the ombudsman is final and, if accepted by the complainant, binding. I am not persuaded that management decisions of the OLC should be set out in the Bill.
We believe that with the best practice—for example, with the Financial Ombudsman Service—the OLC should establish internal arrangements for handling complaints, but these are management decisions not to be set out in the Bill. An internal arrangement to deal with complaints about the service should not extend in any way to a review of determinations made by an ombudsman. This is already clearly a view supported by the British and Irish Ombudsman Association and consumer organisations. On that basis, I hope that the noble Lord withdraws his amendment.
I am not surprised that the British and Irish Ombudsman Association supports what the Minister is putting forward because, in essence, that is the end of it. The decision of the ombudsman, which may be against the consumer, is the final say. There may be some internal review process and I do not think that the Minister entirely shut out judicial review. But the strength of the present system is the position of the independence of the Legal Services Commissioner and the Legal Services Ombudsman. As the Minister knows, many complaints have gone to the ombudsman which have been successfully resolved. If the Office for Legal Complaints fails or is not a success there is no redress.
I have not seen the whole of the noble Baroness's reply to the earlier amendment. I should not make any further comment until I have read what she said then and considered what she has said now. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 139B and 139C not moved.]
[Amendment No. 139D had been withdrawn from the Marshalled List.]
Clause 155 agreed to.
[Amendment No. 139E not moved.]
Clauses 156 and 157 agreed to.
[Amendment No. 139F not moved.]