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Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (No. 2) Order 2011

I will address that in my closing remarks. I was about to say that the matter of the extension of this order was raised in particular by the noble Lord, Lord Hunt of Wirral, who is not in his place today. Noble Lords will be aware that the Rehabilitation of Offenders Act allows individuals to lawfully conceal certain spent cautions and convictions after a specified period of time has elapsed. The Rehabilitation of Offenders Act allows individuals to do this by declaring certain cautions and convictions as spent. Once a caution or conviction is spent, the individuals need not declare it when applying for most types of employment, seeking licences or applying for insurance. The Government believe that individuals who have put their criminal past behind them should be given a chance to reintegrate into society. Research has consistently shown that employment reduces the risk of reoffending. By removing unnecessary barriers to employment, the Government are therefore demonstrating their commitment to clearing the way for ex-offenders to lead law-abiding lives. The Government also recognise the importance of protecting the public; therefore, there must be a balance. In certain specified circumstances, for example, it is right that employers or regulators are aware of an individual’s full criminal record history when they are determining the individual’s suitability to fulfil a certain role or carry out a specific activity. The exceptions order amending this Act seeks to achieve this balance towards public protection. The exceptions order lists specific activities for which the employer, regulator or other relevant body is entitled to information about the spent cautions and convictions of persons applying to carry out that activity. These activities are those that present individuals with a particular opportunity to cause harm to the public or involve regular contact with a particularly vulnerable group. This includes work with children, as well as work in certain sensitive financial or legal positions. Today, I am seeking to extend the exceptions order to those seeking to hold a restricted interest in an alternative business structure. During passage in this House of a previous amendment in an exceptions order in June this year, a number of noble Lords raised concerns about the risk of criminal ownership to alternative business structures. Following that debate, the Ministry of Justice expedited consideration of a business case, seeking further amendments to the exceptions order in relation to the provision of legal services. After careful assessment of the business case, we concluded that the exceptions order should be extended to persons who hold a restricted interest in an alternative business structure. This, the Government believe, addresses the immediate concern of safeguarding the new structures from the risk of criminal ownership—a point that was made at the last debate by the noble Lords, Lord Hunt of Wirral and Lord Thomas of Gresford. It effectively captures those who might pose a risk of improper management of firms providing legal services, including the risk of the exploitation of access to client money. Schedule 13 to the Legal Services Act requires all those who hold a restricted interest in an alternative business structure to be subject to a fitness-to-own test. Information about an individual’s spent convictions will form part of that test. Therefore a licensing authority, when determining whether or not an individual is fit and proper, will be entitled to ask questions about the individual’s previous criminal history, which will include any spent cautions or convictions. While the Law Society and other consultees welcomed the decision to make this further exceptions order, they also expressed a desire for further exceptions to be made, in particular for non-lawyer managers of alternative business structures who do not hold a restricted interest. It is important to state that the framework of the Legal Services Act makes provision for a statutory approval process only for those persons who fall within Schedule 13. There is not a separate statutory provision which allows for the approval of non-lawyer managers who do not hold a restricted interest. Our analysis found that all non-lawyer managers will be captured by this order, unless the percentage of their interest or voting rights falls below the statutory threshold that constitutes a restricted interest under Schedule 13. Our analysis is that such persons would not pose a significant enough risk to the management of an alternative business structure to justify making an exception. However, if a licensing authority deemed it necessary—and if the Legal Services Board agreed to the change to its regulatory arrangements—it has the power under Schedule 13 to make licensing rules so that the threshold at which a person is considered to have a material interest in an alternative business structure is less than the 10 per cent threshold set out in Schedule 13. I am satisfied that this order effectively addresses the immediate risk to alternative business structures of criminal ownership. As we go forward and begin to see alternative business structures in operation, the Ministry of Justice will consider any future business case to extend the exceptions order further, in the usual way. Should compelling evidence be presented that additional roles in relation to alternative business structures or the legal services sector should be added to the exceptions order, then the appropriate amendment could be made. I am sure that noble Lords will appreciate that, when deciding whether or not the exceptions order should be extended to a particular role or activity, the Government must be mindful of the careful balance between access to information about spent convictions and the important goal of improving access to employment for offenders who have proven that they have put their criminal lives behind them. I believe that the decision to extend the exceptions order only as far as necessary, to persons who hold a restricted interest in alternative business structures, will enhance the regulatory safeguards in relation to those seeking to hold a material interest in an alternative business structure, but also ensure that this balance is maintained. I beg to move.