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Legal Services Bill [HL]

moved Amendment No. 33A: 33A: Clause 3 , page 2, line 35, at end insert— ““(4) The role of the Board is to ensure that the approved regulators act in a way which is compatible with the regulatory objectives.”” The noble Lord said: As the Committee is well aware, when Sir David Clementi initially issued his consultation paper that formed the background to his subsequent report, he portrayed two possible solutions to the regulation of legal services. One was based on the model of the Financial Services Authority, whereby a regulatory body was established that performed the function of direct regulation. The other model was one where the regulator would not directly regulate but would act as the supervisor of other regulators. As a result of the consultation, he concluded that the second model was the right one; the professional bodies would continue to be the approved regulators; and the Legal Services Board would act in a supervisory role intervening only if one or other of the approved regulators was delinquent. This model was described much more fully in Sir David’s final report and, when the Government came to respond, they said that they accepted it in its entirety. The difficulty for us is that the Bill does not reflect either the picture painted in Sir David’s final report or the Government’s response. Amendment No. 33A seeks to enshrine the Clementi philosophy in the Bill. The purpose of the amendment is to make absolutely clear that the board’s role is that of a supervisory regulator. It supervises the approved regulators and ensures that they follow the regulatory objective. It is not a front-line regulator. The Government have on a number of occasions—at Second Reading and on the first day in Committee a fortnight ago—agreed with this philosophy, and I see the noble Baroness nodding. But it is our view that more needs to be done to the text of the Bill in order to ensure that the Legal Services Board understands that that is its task. A distinct though related issue bears on the balance of power between the Legal Services Board and the approved regulators—the very important consideration of cost. The cost of the new Legal Services Board is a major issue for all the approved regulators, for reasons which I do not need to go into because they were very well canvassed at Second Reading. The Government have provided us with certain estimates for start-up and running costs, which are based on the understanding that the Legal Services Board will be a supervisory body. If it turns out that the board sees its role as being more micromanaging than that, the Government’s cost estimates will prove to be wholly inaccurate. So the two issues are linked. My noble friend Lord Hunt drew to your Lordships’ attention a related issue, which is not directly dealt with in this amendment. We will come later to amendments which are an important counterpart to Amendment No. 33A; that is, amendments which deal with the level of intervention thresholds. It is a necessary complement to the principle of the balance of power between the supervisory and the direct regulatory role that what are termed, I think, by the professions as the trigger thresholds for intervention by the LSB are not too low. Rightly, those amendments have not been grouped with Amendment No. 33A because they raise distinct and rather technical issues; but they should be borne in mind when we consider this issue. I think that I have made the point sufficiently well for it to be understood. It is an important point of principle, which we believe should inform all subsequent drafting of the Bill. I beg to move.