---

Legal Services Bill [HL]

The noble Lord was succinct in speaking to Amendment No. 106. I understand that setting out a financial separation could, among other things, help with the perception of a separation of regulatory and representative functions. However, I hope that he will agree that the precise nature of how that separation happens and the accompanying financial arrangements that might apply are likely to vary between different approved regulators. It should be for the board to determine how the arrangements apply in each case, and, in accordance with its duties under the Bill, to act in accordance with best regulatory practice, including proportionality. I believe that that is best worked out between the supervisory regulator and the regulators themselves. The board is already under a duty to make detailed rules on a number of matters, including the purposes for which practising fees may be raised. It must also set out internal governance rules under Clause 29 to ensure that the representative and regulatory functions are properly separated. However, it may not always be appropriate to set out a separate requirement that practising fees are separated from other assets in every case. It is important to recognise that although practising fees are raised mainly for purely regulatory purposes, some functions are more of a public interest nature than a purely regulatory nature where it might be appropriate for both the regulatory and the representative arms to be involved. Functions could include the promotion of relations between the approved regulator and other national—or even international—bodies, Governments or the legal professions of other jurisdictions; or participation in law reform. It would not be appropriate to set out a requirement that could restrict or prevent an appropriate and efficient distribution of resources. I am sure that that is not what the noble Lord had in mind. There may be smaller approved regulators that carry out only a regulatory function for which a financial separation on the lines of this amendment would not be appropriate. We consider that maximum financial flexibility is needed to ensure that the different types and sizes of regulators can operate effectively and efficiently and to recognise the different roles they play—an example of which I hope I have given the noble Lord, on which he can reflect. On Amendment No. 148, although I would expect money owed on the levy to be paid from practising fee income, and Clause 50(4)(b) already provides that the levy is one of the purposes for which practising fees may be charged, I do not want to set that out in the Bill. We do not want to set out a statutory requirement that restricts the flexibility of the approved regulators to meet a debt in the way best suited to their financial arrangements—and it would be a debt. The requirement might also mean that an approved regulator could be forced to divert funds raised from practising fees away from essential regulatory functions when other assets or sources of income would be the least damaging way to meet the costs of regulation. It is unusual for legislation to restrict the way in which moneys owed may be recovered, and we do not think that we should make an exception in this case. I start again from the principle that we hope that these powers are not used; but if they are, we would perhaps be failing the regulators if we restricted the ways in which they could use their assets to those in the amendments. I ask the noble Lord to reflect on that reason and withdraw the amendment.