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Legal Services Bill [HL]

I think that we should press the Minister a little further on this important amendment. Nothing in the Bill indicates that the Legal Services Board is intended to act as a supervisory regulator, leaving day-to-day responsibility with the approved regulators and exercising its powers only where they are clearly failing. The Bill is cast in terms that would enable the Legal Services Board to set out detailed templates for the way in which it considered approved regulators should discharge their functions, to micromanage them and to substitute its view for theirs, even where their approach is plainly within the range of reasonable decisions. That is the Bill as is stands. We wrestled with this problem in the Joint Committee. We were mindful of the fact that Sir David Clementi had looked at two options. The first was a unitary system of regulation with a body along the same lines as the Financial Services Authority taking over responsibility from the professional bodies. Secondly, he looked at the continuation of regulation based on the professional bodies, but with a new board with supervisory powers to ensure that the approved regulators carried out their tasks effectively. Sir David’s final report favoured the second option, but that is not in the Bill. The Joint Committee spent some considerable time taking evidence on that point, and I want to press the Minister on this amendment because it would solve at least one major problem. Unanimously in the Joint Committee, we said at paragraph 176 of our report: "““We believe it is important that the LSB has an effective range of powers, but it is also important that the draft Bill ensures that they are only used where necessary, in order to avoid undue micro-managing of the approved regulators””." We continued in paragraph 178: "““The draft Bill should ensure that—consistent with the Government’s policy that lead responsibility should rest with the approved regulators—the Legal Services Board acts in partnership with the approved regulators””." The Government appeared to favour that approach, stating in their response to the Joint Committee’s report: "““The LSB should exercise its powers only where approved regulators are clearly failing””." There is nothing in the Bill to indicate that the LSB is that supervisory regulator. When the Legal Services Board is established, it will not look to the Government’s response to the Joint Committee’s report in order to determine what its powers are and how they should be exercised; it will look to the Bill, which will then be a statute. Surely the Minister must realise that there is a considerable problem here, which can be addressed only by amendments to the Bill. That is what the Joint Committee recommended and what the speakers in this debate have said. So far, the Minister has not been able to respond positively. I hope that she will reflect and return to the House with a clearer guideline to the LSB, set out in statute, that it is the supervisory regulator and does not have any day-to-day responsibility. To conclude my attempt to persuade the Minister, I point out that there are a number of advantages in continuing to base regulation on the professional bodies. First, it is much easier to ensure that regulation is independent of the Government. Secondly, the professional bodies are well established and building on them avoids the need to incur the costs of setting up a new regulatory approach. Thirdly, the professional bodies may be more successful than a regulator on FSA lines in getting the profession to agree. Lastly, the professional bodies are closer to day-to-day practice and thus able to decide what is necessary and to develop appropriate regulatory responses. The Government acceptedSir David Clementi’s recommendations, so why are they not yet able to put them into practice and into effect in the Bill?