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Legal Services Bill [HL]

That presupposes that the noble Lord is in charge of whether there is a cliff for me. I am not sure that reading that I have continued to move is necessarily the way to enhance my career, sunny uplands or not, from the noble Lord’s point of view. I should begin by saying that of course I have committed to look at all the issues again, but I wanted to place on the record—it is important that we reflect on the matter—why we think we have captured this but with the proviso that I already mentioned. When we discussed Amendment No. 33, as the noble Lords, Lord Kingsland and Lord Hunt, mentioned, we said that the board needs to work in partnership with those it regulates. The Government’s stated policy is that the responsibility for day-to-day regulation should rest with the approved regulators. It is one of the key benefits of what has been described as a B+ model—that the experience and knowledge of approved regulators will be preserved within the new framework—and one of the reasons we agreed was Sir David’s recommendation that that was the best way to reform the legal service. For that model to work, we need a strong and independent oversight regulator that does not second guess and micromanage those approved regulators that are performing their functions well. We believe that the Bill as drafted does establish the Legal Services Board as a proportionate regulator. We have talked a number of times today, and indeed yesterday, about the statutory duty in Clause 3 to ensure that the board has regard to better-regulation principles, including that the activities should be proportionate and targeted only at cases where action is needed, and be accountable to Parliament for how it exercises its functions. Through Clause 48 the board must issue policy statements about how it will use its powers; for example, the power to issue directions. Any policy statement made under the provision can be brought into force only after a draft has been published and the board has considered representations made to it about that draft. We think that that provision is important as a way of ensuring clarity and transparency about how the board will exercise its functions and to give approved regulators—I return to the point about working collaboratively—the opportunity to inform any policy. Paragraph (b) of the amendment limits the circumstances in which the board can take action where the approved regulator is acting or refusing to act unreasonably. It is a high hurdle, which would make it difficult for the board to function as effectively as we would like and to exercise its powers in circumstances where the regulator is failing. There may be circumstances where a regulator is acting in a way that cannot be said to be a way in which a reasonable regulator would act, but there is an adverse effect on the objectives that should be addressed. In this case, it is right for the board to take action, so I would argue that the existing thresholds are the right ones and we do not need to duplicate them in Clause 48. It is to be expected that the board will be in regular communication with the approved regulators in its role as oversight regulator; indeed, it is likely that policy statements under Clause 48 will be the appropriate medium where the board sets out its approach and that relationship more formally, similar to the way in which the Financial Services Authority operates. It uses those statements to clarify its role in relation to the firms that it regulates. I hope that that gives a greater sense and supports what the noble Lords, Lord Kingsland and Lord Hunt, said about not micromanaging and the relationship that needs to exist. I have already indicated that I will reflect whether we have that right in the Bill as it stands but it is our intention to have got it right in the way that the noble Lords would wish.