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Legal Services Bill [HL]

moved Amendment No. 135: 135: Clause 36, page 18, line 6, after ““objectives,? insert— ““( ) that the approved regulator has failed to comply with a direction made under section 31,? The noble Lord said: My Lords, we are extremely grateful to the Government for the amendments that they have just brought forward. However, they have not yet accepted the general principle that fines should be imposed only where no lesser sanction is appropriate. They have, of course, included that principle in Clauses 40 and 44, which deal with intervention and the cancelling of approved regulators’ designations; and in other contexts, they have accepted that the power to fine is significantly different from the powers to give directions, to set targets and to censure. For example, the Bill provides for appeals against fines. In dealing with an amendment moved by my noble friend Lord Campbell of Alloway concerning judicial review, in respect of Legal Services Board directions, the Minister said that, "““the fining power within the Bill is, we believe, a stronger power. Noble Lords and those who are being regulated may also feel that it is stronger, more definitive and has potentially greater and far-reaching consequences. We therefore wanted to add the ability to go to appeal specifically around that power. So we did so, by saying that there would be leave to go to the High Court to appeal on that power?.—[Official Report, 23/01/07; col. 1013.]" Given that fines are a significantly stronger power, we think it essential that they should be used only where no lesser sanction would suffice. Providing for appeals against fines is not enough. It is important to ensure that the basis on which fines may be imposed is properly defined in the first place. Indeed, the Minister appeared to accept that proposition in the discussion on my amendment concerning appeals against public censure. The Minister said: "““For me, designing a board by saying, ‘This is how you must behave’ is a better way of achieving what I think the noble Lord is seeking—that is, it ensures that the board does not exercise its power inappropriately or heavy-handedly and so on. There is unanimity in the Committee about light-touch supervisory regulation. No one has argued against that and the Government do not either. Therefore, how the board uses its powers is about saying, ‘You must behave in this way’, rather than trying to develop criteria for when it would use them?.—[Official Report, 23/01/07; col. 1019.]" The Minister sought to justify the power to fine by references to the position of other regulators, including the Financial Services Authority and Ofgem; but both of those directly regulate service providers. They do not supervise other regulators and they do not supervise supervisors, as in this case. The only example that supports the Minister’s case is the existing power of the Legal Services Complaints Commissioner. Power for a supervisory regulator to fine another regulator is very unusual and needs to be confined to circumstances where no other sanction is appropriate. Nevertheless, we have sought, in the circumstances, to limit the power to fine in the ways set out in the amendment. I beg to move.