The Committee consisted of the following Members:
Chair: Ian Paisley
† Aldous, Peter (Waveney) (Con)
† Beresford, Sir Paul (Mole Valley) (Con)
Champion, Sarah (Rotherham) (Lab)
† Cryer, John (Leyton and Wanstead) (Lab)
† Duguid, David (Banff and Buchan) (Con)
Evans, Chris (Islwyn) (Lab/Co-op)
† Frazer, Lucy (Parliamentary Under-Secretary of State for Justice)
† Glindon, Mary (North Tyneside) (Lab)
† Heaton-Jones, Peter (North Devon) (Con)
† Lefroy, Jeremy (Stafford) (Con)
Mahmood, Shabana (Birmingham, Ladywood) (Lab)
† Onasanya, Fiona (Peterborough) (Lab)
† Qureshi, Yasmin (Bolton South East) (Lab)
† Russell-Moyle, Lloyd (Brighton, Kemptown) (Lab/Co-op)
† Spelman, Dame Caroline (Meriden)
† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)
† Whittingdale, Mr John (Maldon) (Con)
Mike Everett, Committee Clerk
† attended the Committee
Third Delegated Legislation Committee
Tuesday 6 February 2018
[Ian Paisley in the Chair]
Draft Legal Services Act 2007 (General Council of the Bar) (Modification of Functions) Order 2018
I beg to move,
That the Committee has considered the draft Legal Services Act 2007 (General Council of the Bar) (Modification of Functions) Order 2018.
With this it will be convenient to consider the draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (General Council of the Bar) Order 2018.
It is a pleasure to serve under your chairmanship, Mr Paisley. The purpose of both orders is to ensure the more effective and efficient regulation of the Bar and alternative business structures by the Bar Standards Board. I shall begin by explaining a small technicality. The orders are in the name of the General Council of the Bar, but they relate to the functioning of the Bar Standards Board. The reason for that is that, in accordance with the Legal Services Act 2007, the Bar Council has delegated its regulatory responsibilities to the BSB.
I should mention that I was a practising barrister before entering the House of Commons, and while I was a barrister, for a short time I also served as a member of the Bar Council.
The second order, made under section 80 of the 2007 Act, is very straightforward. It simply allows an appeal route in relation to decisions by the BSB. I will briefly expand on that. The BSB was made a licensing authority in February 2017. That means that it has the power to license those that provide legal services. Initially that was barristers, but it now includes a wider range of bodies because of the expansion in those able to offer legal services as alternative business structures under the 2007 Act. Where decisions are made by the BSB, it is appropriate that there is a route by which to challenge its decisions; and when the BSB was first established as a licensing authority, a temporary appeal route was established to the High Court.
This provision enables the First-tier Tribunal, rather than the High Court, to hear and determine appeals in relation to decisions by the BSB. That is an appropriate route, as the First-tier Tribunal has a jurisdiction in the General Regulatory Chamber and has judges with experience of considering regulatory appeals. The First-tier Tribunal already deals with appeals against licensing decisions by the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys and the Institute of Chartered Accountants in England and Wales. Provision in that regard was made when they were each designated as a licensing authority. This draft order is supported by the Bar Council.
The first order, made under section 69 of the 2007 Act, modifies the functions of the BSB in six main ways. It gives the BSB the power to make regulations or rules allowing for appeals to the First-tier Tribunal, so it is in effect the counterpart to the section 80 order. It gives the BSB, in its role as an approved regulator, the same intervention powers as it has as a licensing authority, and it gives the BSB powers to make rules in relation to information gathering, disciplinary arrangements, practice rules on engaging disqualified individuals, and compensation arrangements.
I shall briefly explain why these powers are sought. Currently there is no statutory basis for much of the regulation of individual barristers or entities by the BSB. Barristers are regulated under a non-statutory regulatory regime, with barristers in effect consenting to be bound by the BSB’s rules and thus establishing a contract between them. That arrangement is underpinned by a series of agreements between the Bar Council, the Inns of Court, the Bar Tribunals and Adjudication Service and the BSB.
In an ever changing legal services market, a contractual mechanism of regulation is simply not sustainable in the long term. The legal services market is continuing to evolve, with innovative businesses, which have different and novel business models, entering the market at a rapid rate. Since February 2017, the BSB has been able to license ABSs in addition to regulating barrister entities and individual barristers. The BSB is currently regulating 80 barrister entities and seven ABSs.
The Legal Services Board and the BSB believe that the interests of consumers and the public would be better protected if many of the BSB’s arrangements for regulation were placed on a statutory basis, as that would enable the BSB to react more effectively and efficiently to the rapidly changing nature of the market. These provisions will place the BSB’s regulation of barristers on a statutory footing.
These changes are sought by the BSB, to which the regulatory functions have been delegated. They were recommended by the LSB, which has general oversight of regulation in this area, and the Lord Chancellor has accepted them. That is how the draft orders came to be before the Committee.
I should mention that when the LSB consulted on the draft section 69 order in 2016, concerns were expressed by the Bar Council, the Inns of Court and the Institute of Barristers’ Clerks. The BSB took time to carefully consider those concerns and has committed to working with interested parties to ensure that regulations are proportionate and in keeping with the eight statutory objectives in the Legal Services Act.
In conclusion, we believe that these statutory instruments are necessary to enable the BSB to carry out its role as a regulator more effectively and efficiently, and to better regulate in the interests of consumers and the public. I commend the draft orders to the Committee.
It is a pleasure to serve under your chairmanship, Mr Paisley. The draft order concerning appeals to the First-tier Tribunal makes perfect sense, so we do not seek to divide the Committee on it. We do not seek a Division on the other draft order either, but the Minister mentioned that some concerns were expressed by the Bar Council—including its chair, I think—the Inns of Court and the Institute of Barristers’ Clerks about some of the provisions that are being applied for.
I understand from my discussions with the Bar Council that the Bar Standards Board says that it does not intend at the moment to bring into force the provision for compensation arrangements for individual barristers and entities, or to provide for the administration of those arrangements. That raises a question: if the BSB does not intend to use that provision, why did it ask for it? The Bar Council has similar concerns about a couple of other things that have been alluded to. If the Bar Standards Boards says it will not implement some of these things, why has it asked for the powers?
That said, however, we do not seek to divide the Committee. I should declare that I, too, was a practising barrister.
Question put and agreed to.
DRAFT LEGAL SERVICES ACT 2007 (APPEALS FROM LICENSING AUTHORITY DECISIONS) (GENERAL COUNCIL OF THE BAR) ORDER 2018
That the Committee has considered the draft Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (General Council of the Bar) Order 2018.—(Lucy Frazer.)