Official Report 641KB pdf
Good morning, and welcome to the second meeting in 2025 of the Equalities, Human Rights and Civil Justice Committee. We have received no apologies. Our first and only agenda item is consideration of the Regulation of Legal Services (Scotland) Bill at stage 2.
I will briefly explain the procedure that we will follow for the benefit of anyone who is watching. Members should have with them a copy of the bill, the marshalled list and the groupings of amendments. The documents are available on the bill page on the Scottish Parliament’s website. I will call each amendment individually in the order on the marshalled list. The member who lodged the amendment should either move it or say “not moved” when the amendment is called. If that member does not move the amendment, any other member present may do so.
The groupings of amendments set out the amendments in the order in which they will be debated. There will be one debate on each group of amendments. In each debate, I will call the member who lodged the first amendment in the group to speak to and move that amendment and to speak to all the other amendments in the group. It would be helpful if members could be clear about which amendment they are speaking to, given that there are so many amendments.
I will then call other members who have amendments in the group to speak to, but not to move, their amendments and to speak to other amendments in the group, if they wish. I will then call any other member who wishes to speak in the debate. Members wishing to speak should indicate that by catching my or the clerk’s attention. I will then call the minister, if she has not already spoken in the debate.
Finally, I will call the member who moved the first amendment in the group to wind up and to indicate whether he or she wishes to press the amendment or to withdraw it. If the amendment is pressed, I will put the question on the amendment. If a member wishes to withdraw an amendment after it has been moved and debated, I will ask whether any member present objects. If there is an objection, I will immediately put the question on the amendment.
The other amendments in a group are not debated again when they are reached. If they are moved, I will put the question on them straight away. If there is a division, only committee members are entitled to vote. Voting is done by a show of hands and it is important that members keep their hands raised clearly until the clerk has recorded their names. If there is a tie, I must exercise a casting vote.
The committee is also required to consider and decide on each section and schedule of the bill and the long title. I will put the question on each of those provisions at the appropriate point. We will not go beyond the end of section 50 today.
Before we begin proceedings, I welcome the Minister for Victims and Community Safety, Siobhian Brown.
Section 1—Overview of the regulatory framework
Amendment 1, in the name of the minister, is grouped with amendments 2 to 4 and 38 to 46. I call the minister to move amendment 1 and to speak to all the amendments in the group.
Good morning. I will make a few remarks before we turn to amendment 1. We have an extraordinarily large number of amendments before us, so I intend to keep my remarks as short as possible to provide the committee with the information that members need while ensuring that we can proceed in a timely manner to deal with them all. I am happy to answer any questions that members have.
I also want to thank all those who have engaged with the bill and supported the development of the amendments that I have lodged. I want to take the opportunity to note the constructive engagement that I have had, in considering all the amendments, with the Lord President and the senior judiciary, the Law Society of Scotland, the Faculty of Advocates, the Scottish Legal Complaints Commission, the consumer panel of the Scottish Legal Complaints Commission and the bodies that are represented on it.
Draft amendments were shared with the senior judiciary, and I have reflected carefully on their comments. I note the comments of the Lord President in his letter to the committee on 23 December, in which he notes:
“Our significant ... concerns have been addressed”
and that
“the senior judiciary are broadly content with the amendments lodged”.
I also welcome the comments of the Law Society in its letter to the committee on 10 January, in which it shares that view. I hope that the committee and stakeholders are reassured by those comments and that they can support the amendments.
I acknowledge that the bill has attracted differing views from stakeholders; we have had to balance those differing views as we aim to modernise the regulatory system. If the amendments that are proposed at stage 2 are agreed, the bill will achieve the right balance, by delivering the priorities of the stakeholders and a modern, more flexible regulatory system.
I turn to amendments 2 and 43. The Law Society of Scotland, the Faculty of Advocates and the senior judiciary raised concerns at stage 1 about the provision in the bill that conferred powers on the Scottish ministers. The Scottish Government absolutely recognises the importance of an independent legal profession and is committed to upholding that independence. The intention has been that the bill would protect the independence of the legal profession while introducing greater transparency and accountability with regard to the profession’s duty to work in the public interest.
I wrote to the committee in September 2023 to say that I would lodge amendments to remove the references to the Scottish ministers that caused concern, and I confirmed that again in my response to the stage 1 report. Amendments 2 and 43 are the first of a number of amendments that remove that provision, and the committee has been provided with a list that highlights those amendments. As this is the same change throughout the whole bill, I will not repeat the reasoning in each group.
Amendment 43 will remove section 5 of the bill, which would have conferred a delegated power on the Scottish ministers to amend the objectives of legal services regulation and the professional principles to which persons providing legal services should adhere. Amendment 2 is consequential to that change.
Amendment 3 makes a change to section 1, removing the reference to the ministerial powers in sections 19 and 20. It is consequential on amendments to those sections that have the effect of transferring the powers under those sections from the Scottish ministers to the Lord President.
Amendments 1, 4, 38 to 41 and 46 are technical amendments to clarify the language in places in part 1 of the bill. Amendment 42 adds the Scottish Solicitors Discipline Tribunal to the list in section 3(5) of named regulatory authorities to which the regulatory objectives apply. Following discussion with Scottish Mediation, amendments 44 and 45 clarify the meaning of the term “legal services” to ensure that the definition does not include alternative dispute resolution activities.
I ask members to support the amendments in this group.
I move amendment 1.
Good morning, minister. With regard to amendments 40, 41 and 42, the named regulatory authorities need carry out their regulatory duty only so far as practicable. Can you say more about the general understanding of the term, “so far as practicable”, so that we have clarity on that point?
Yes, certainly. Amendment 41 makes it clear that the requirement to exercise regulatory functions in a way that contributes to sustainable economic growth applies only to the extent that to do so would not be inconsistent with the regulatory objectives, rather than, as the bill requires at present, only to the extent that it would not be inconsistent with the exercise of regulatory functions. The amendment addresses the Law Society’s concern that it is circular and confusing to require the exercise of regulatory functions only to the extent that that is not inconsistent with the exercise of regulatory functions.
Amendment 41 makes section 3(4)(b) clear that the duty to exercise regulatory functions in a way that would help to achieve economic growth applies only to the extent that that is not inconsistent with the regulatory objectives as set out in section 2(1).
Amendment 42 adds the Scottish Solicitors Discipline Tribunal as a named regulatory authority in section 3(5), which means that, as a regulatory authority, the SSDT is subject to the duties that are set out in section 3. Those duties relate to how the regulatory objectives are applied and to other regulatory authorities, including the Lord President and category 1 and category 2 regulators.
Thank you. I thought that it would be helpful to have that on the record.
Before we move into lengthy consideration of the amendments that are before us, I thought that it would be helpful to put on the record some general comments about this section and the ministerial powers that apply to the amendments in this group, so that I will not have to repeat my comments in any of the subsequent groupings.
For those of us on the committee who heard the stage 1 evidence, it was clear that the bill did not start out in a place of consensus. There was much concern about the warnings that came from respected organisations, including the Law Society, the Faculty of Advocates and the senior judiciary, that were in many ways unprecedented. Such was the level of concern about the threat to the independence of the judiciary from the imposition of ministerial powers that it seemed that the bill was, at points, quite significantly flawed and that it would require subsequent amendments, such as those that are before us. In saying that, credit should be given to the minister and the team of officials for the work that they have done on the amendments over many months, and for their work with stakeholders to sufficiently address risk.
I also thank the minister for her constructive engagement with me in listening to many of the concerns about those aspects of the bill and, more widely, for offering a collegiate way of working to address some of the issues. I hope that we will continue with that collegiate approach throughout stage 2 consideration and into stage 3.
I still have some areas of concern in the bill more widely but it would not be appropriate for me expand on those now. To avoid dragging on for too long, I just confirm my support for amendments in the group and say that I am keen to continue the debate as we move through the remaining amendments. I am grateful to you, convener.
Minister, I would be grateful if, when you wind up, you could address the SLCC’s concerns about amendment 40. The amendment looks like a minor drafting adjustment, but, when looked at it more closely, it seems to make a substantive change by qualifying the application of regulatory objectives. It is no longer a duty. The amendment does change that. I would like the minister to respond to the SLCC’s comments.
I invite the minister to wind up, please.
I thank Paul O’Kane for his comments. I know that the bill has been on a bit of a journey since it was introduced in April 2023. When we went into stage 1, committee members wanted to see all the amendments being made at that stage, so I hope that members will now appreciate the amount of work that has had to be done and the discussions that we have had with the judiciary and the Lord President to get us to where we are today. Thanks to my officials, a lot of work has been done in the background, and I think that we are in a better place today than we maybe were at this time last year. I thank Paul O’Kane for his comments on that.
Tess White asked about the SLCC’s comments on amendment 40. There has been a lot of engagement with stakeholders during the bill process. The purpose of amendment 40 is to clarify that, under section 3, the duty of the regulatory authority to exercise its regulatory functions in a manner which is compatible with the regulatory objectives and is considered the most appropriate to meet those objectives is not an absolute duty. The regulatory authority need only carry out that duty as far as practicable. The effect of amendment 40 will be to insert the words “so far as practicable” into section 3(1) of the bill, so that a regulatory authority need only apply the regulatory objectives so far as practicable. Amendment 40 reflects many discussions with the Law Society to get agreement and that is the conclusion that we have come to.
09:45
And the SLCC? You mentioned discussions with the Law Society in relation to the amendment.
Yes, after engagement, we decided that amendment 40 is the right way forward.
Amendment 1 agreed to.
Amendments 2 to 4 moved—[Siobhian Brown]—and agreed to.
Section 1, as amended, agreed to.
Section 2—Regulatory objectives
Amendments 38 and 39 moved—[Siobhian Brown]—and agreed to.
Section 2, as amended, agreed to.
Section 3—Application of the regulatory objectives
Amendments 40 to 42 moved—[Siobhian Brown]—and agreed to.
Section 3, as amended, agreed to.
Section 4 agreed to.
Section 5—Power to amend the regulatory objectives and professional principles
Amendment 43 moved—[Siobhian Brown]—and agreed to.
Section 6—Meaning of “legal services” and “legal services provider”
Amendments 44 and 45 moved—[Siobhian Brown]—and agreed to.
Section 6, as amended, agreed to.
Section 7—Meaning of regulatory functions
Amendment 46 moved—[Siobhian Brown]—and agreed to.
Section 7, as amended, agreed to.
Section 8—Regulatory categories
Amendment 47, in the name of the minister, is grouped with amendments 5 to 26, 28 to 38, 412, 413, 461 to 466, 507 and 522.
Amendments 47, 522 and 466 will make the necessary changes to legislation to reflect the change of name of the Association of Commercial Attorneys to the Association of Construction Attorneys. The association sought that change following the introduction of the bill, and that was approved under section 42 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990.
Schedule 1 of the bill would make a variety of changes to the Solicitors (Scotland) Act 1980 with respect to the Law Society becoming a category 1 regulator and the move to entity regulation.
Amendments 5 to 37, with the exception of amendments 15, 24 and 27, are minor or consequential modifications to part 1 of schedule 1 and relate to the Law Society’s functions.
Amendment 24 removes paragraph 22 from part 2 of schedule 1 of the bill, because it is no longer required.
Amendments 412, 413 and 507 make consequential amendments, following a change of name in the bill from the “guarantee fund” to the “client protection fund”. Amendment 11 allows the client protection fund to provide grants, as well as loans, to judicial factors appointed, in order to mitigate the risk of any further pecuniary losses being suffered by the clients of such a person by reason of dishonesty. The amendment reflects engagement with the Law Society, which sought that addition.
Paragraph 6(6) of schedule 1 inserts a new section into the 1980 act to enable the Scottish ministers to, by regulations, adjust section 43 and schedule 3 of the 1980 act in respect of the circumstances when claims can be made and the maximum amount of any grant payable, and in connection with administrative matters.
Amendment 15 restricts the exercise of that regulation-making power only to those cases in which the Scottish ministers have received a request from either a regulator, the Lord President or the consumer panel to do so. Before making such a request, the requester must have consulted the regulatory committee, the Lord President and the consumer panel and must also have secured the Lord President’s agreement to making the request. The provision sets out what information must be provided to the Lord President when seeking their agreement and requires the requester to publish certain documents.
Amendments 461 to 465 make minor and consequential modifications to enactments in connection with regulatory objectives, professional principles and new regulators in part 1 of schedule 3 of the bill.
I move amendment 47 in my name and ask members to support the other amendments in the group.
Amendment 47 agreed to.
Amendment 48, in the name of the minister, is grouped with amendments 49 and 50.
Amendments 48 to 50 have been lodged in response to concerns raised by the Delegated Powers and Law Reform Committee and legal stakeholders that section 8 might be used to alter the categorisation of the Law Society of Scotland or the Faculty of Advocates.
The amendments reduce the breadth of the delegated power to be conferred by section 8(5). As amended, that power will allow Scottish ministers to alter only the category of a regulator that is assigned by the bill, for example by making a significant change to a regulator’s composition or the way that it operates. The power will not capture the Law Society or the Faculty of Advocates. As an additional safeguard, the regulation-making power may only be exercised at the request of the Lord President. Amendment 49 is a technical amendment to add a more specific cross-reference to the power.
I move amendment 48 and ask members to support the other amendments in the group.
Amendment 48 agreed to.
Amendments 49 and 50 moved—[Siobhian Brown]—and agreed to.
Section 8, as amended, agreed to.
Section 9—Exercise of regulatory functions
Amendment 51, in the name of the minister, is grouped with amendments 53 and 52, 54 to 67, and 69 to 92. I draw members’ attention to the pre-emptions set out in the groupings of amendments.
Amendments 51 to 72 bring the provisions relating to a category 1 regulator’s exercise of its regulatory functions by an independent regulatory committee established and maintained by the regulator, in line with the equivalent provisions in the Solicitors (Scotland) Act 1980, which apply to the Law Society’s committees. The amendments reflect engagement with the Law Society.
Taken together, the effect of amendments 51, 52 and 53 is to require rather than allow the regulatory committee to determine its composition, governance arrangements and priorities in accordance with the bill. Amendment 54 ensures that a regulatory committee can continue to delegate its functions.
Amendment 64 allows sub-committees to delegate any of their functions to an individual, such as a member of staff. Delegation to a sub-committee, or onwards to an individual, is subject to some exceptions relating to the regulatory committee’s function of making regulatory rules and decisions around complaints.
Amendment 56 introduces a requirement on a regulatory committee to maintain and publish a document setting out its composition, governance arrangements, regulatory functions and procedures and any arrangements for the delegation of functions.
Amendments 57 and 58 limit the consultation requirement on the regulatory committee to consult the governing body of the regulator to only those cases where the committee is making a “material” change to its governance arrangements, rather than a less significant change to either its structure or governance arrangements.
Amendments 60 to 63 make changes to the rules and requirements relating to the composition, membership and procedure of regulatory committees, with amendment 59 making a minor technical change to clarify the meaning of section 53(3).
Amendment 65 removes the requirement to include in the annual report a summary of decisions to pay out professional indemnity insurance, to reflect concerns raised by the Law Society that it is the insurance provider and not necessarily the regulator that has access to that information.
Amendments 66, 67 and 69 increase the range of material that must be included in a category 1 regulator’s annual report to include information about the number of complaints and regulatory waivers. Amendment 68 is consequential on the transfer of the powers from the Scottish ministers to the Lord President under section 20, to take specified measures in relation to a category 1 regulator.
Following engagement with legal stakeholders, amendment 70 removes the requirement on a category 1 regulator or its regulatory committee to consult the Lord President when preparing an annual report. Instead, amendment 71 will require the regulator to send a copy of the report to the Lord President as well as publishing it.
Amendment 73 is clarificatory and makes minor changes to the interpretation provision in section 13(7), setting out how conduct and regulatory complaints are to be construed, and clarifying that a regulator’s “reporting year” means a 12-month period that coincides with the regulator’s financial year.
Section 14 of the bill requires a category 1 regulator to establish and maintain a compensation fund. It also gives the Scottish ministers the power, by regulations, to make further provision in connection with the fund or the fund rules. Reflecting engagement with legal stakeholders, amendment 74 will restrict the exercise of that ministerial power to cases where the Lord President, a category 1 regulator or the consumer panel has requested them to use it. The amendment specifies the information that must be included with such a request and sets out who must be consulted before such a request is made and when the Lord President’s agreement must be secured, as well as what information must be given to the Lord President when seeking their agreement.
Amendment 75 makes regulations that are made under the ministerial power subject to the affirmative procedure. It aligns with schedule 1, paragraph 6, which inserts section 43A, in respect of the Law Society of Scotland’s guarantee fund, into the Solicitors (Scotland) Act 1980. That is a delegated power that is subject to the affirmative procedure.
10:00Section 16 requires a category 2 regulator to prepare and publish online an annual report on the exercise of its regulatory functions. The section also specifies the information that the report must include. Amendments 76 and 77 require additional information to be included in the report.
Amendment 78 makes a consequential change to section 16(2)(g) to reflect that amendment 112 changes section 20 of the bill to allow the Lord President rather than Scottish ministers to take specified measures in relation to the performance of a category 1 or category 2 regulator. Under section 16, the annual report must include details of the steps that are taken by the regulator to comply with any such specified measures.
Amendment 79 exempts the Faculty of Advocates as a regulator from the requirement to include a statement in the report that indicates whether it considers it has been assigned to the correct category in line with the adjustments to section 8.
Amendment 80 requires a category 2 regulator to consult the consumer panel when it is preparing an annual report in order to ensure that consumer interests are considered.
Amendment 81, which was included following engagement with stakeholders, makes it a requirement for a category 2 regulator to send a copy of its annual report to the Lord President in addition to publishing it.
Amendment 82 clarifies that a “conduct complaint” is to be construed in accordance with part 1 of the Legal Profession and Legal Aid (Scotland) Act 2007 in respect of a category 2 regulator annual report.
Amendment 83 changes the definition of a “reporting year” to mean, in relation to a category 2 regulator, a 12-month period that coincides with the regulator’s financial year.
The other amendments in the group expand on the information that a regulator must hold about members in its register, as required under section 17 of the bill. They also widen the definition of “professional liability” in the bill to bring it more in line with the definition in the Solicitors (Scotland) Act 1980.
Amendments 84 to 88 and amendment 90 expand the information that is required to be held by regulators on the mandatory register about its members. In order to provide further transparency about the outcome of disciplinary action, that includes information about the business address, any sanction resulting from disciplinary action, suspension and what is required after a period of suspension has been lifted. Those amendments were included following engagement with stakeholders.
Amendment 89 allows the regulator to decide what additional information the register may contain, as it considers appropriate.
Amendments 91 and 92 widen the definition of “professional liability” as set out in section 18(7) on professional indemnity insurance to include former legal services providers and cover other services, in addition to legal services, which form part of the professional practice of the solicitors or qualifying individuals within the legal business that provides the legal services. The definition draws on some elements of the definition in the 1980 act.
I move amendment 51 and ask members to support the other amendments in the group.
Amendment 51 agreed to.
Amendments 53, 52 and 54 to 58 moved—[Siobhian Brown]—and agreed to.
Section 9, as amended, agreed to.
Section 10—Regulatory committee: composition and membership
Amendments 59 to 62 moved—[Siobhian Brown]—and agreed to.
Section 10, as amended, agreed to.
Section 11—Regulatory committee: lay and legal members
Amendment 63 moved—[Siobhian Brown]—and agreed to.
Section 11, as amended, agreed to.
Section 12—Regulatory committee: convener, sub-committees and minutes
Amendment 64 moved—[Siobhian Brown]—and agreed to.
Section 12, as amended, agreed to.
Section 13—Annual reports of category 1 regulators
Amendments 65 and 66 moved—[Siobhian Brown]—and agreed to.
Amendment 541, in the name of Tess White, is grouped with amendments 542, 546 to 548, 561, 566 to 570, 574 to 577, 579 to 581, 583 to 589, 591 to 604 and 607 to 636. I draw members’ attention to the pre-emptions set out in the groupings of amendments.
The amendments in this group are probing amendments. I lodged them because my colleagues and I believe that the bill does not go far enough in creating a simplified and streamlined complaints process for consumers. However, the issue is not just about an administrative process; it cuts to the core of the balance of power between lawyer and consumer. It is about who does what in the regulatory and complaints handling landscape.
Lawyers play an important role in challenging Governments on behalf of their clients, but who guards the guards? Is it right that a membership body for the legal profession should also regulate the misconduct of its members? That is a very important point. It should not be a David and Goliath situation, but that is what we have at the moment when things go wrong. For consumers of legal services, it is not always clear where self-regulation ends and self-interest takes over.
The Scottish Conservatives’ view is that those issues have not been satisfactorily addressed in the bill. Against that background, my amendments in this group form a package that seeks to change the system of complaints handling so that only the Scottish Legal Complaints Commission, and not the professional bodies, would consider complaints. It is clear from the 2018 Roberton review that the existing complaints and redress process is not fit for purpose. Esther Roberton’s diagram of the current system is eye-opening and quite alarming. As my colleague Russell Findlay said at stage 1, the Tokyo metro map is easier to understand.
Although I was not a member of the committee when the stage 1 report was published, I note the finding at paragraph 144, which states:
“The Committee is concerned that the Scottish Government may have missed an opportunity to take a simpler, more user-friendly approach in creating a single streamlined complaints process which would have benefited consumers and regulators alike.”
I have worked with the legislation team on how best to address the recommendation against the backdrop of a complex and legalistic framework. Members will appreciate that the single complaints process that was proposed in the Roberton review depended on the creation of an independent regulator, but I acknowledge that the ship has sailed—that quote has been used—at least for now.
At the moment, we have a single gateway for complaints, but we do not have a single investigation process. As such, my amendments in this group would use the SLCC’s existing infrastructure to investigate all conduct and service complaints. I have engaged with the Law Society of Scotland on that proposal and I note its position on my amendments as set out in correspondence to the committee on 17 January. I also note the submission that we received last night from the Faculty of Advocates, which argues against a single complaints process.
The regulators’ position is not unexpected or surprising. I recognise that they believe that more regulatory powers are essential in order to improve the complaints process and that they strongly oppose any structural change. Of course, it is their right to do so. However, in its latest response, the Faculty of Advocates says that the proposal is
“a hare that was considered to have been caught and shot long ago.”
I respectfully disagree. Just because the regulators oppose a single complaints process, that does not mean that we should not continue to discuss or debate the proposal. The consumer must also have a voice.
The SLCC has engaged constructively on my amendments, arguing that a single complaints process would be in the
“best interests of the public, consumers, the legal profession and the representative bodies”
and that it would be
“more efficient and allow greater flexibility ... reducing inefficiency, duplication and delay.”
The approach would, in many ways, satisfy paragraph 144 of the committee’s stage 1 report, on complaints, but it is not a cure-all. I recognise the stakeholder concerns about cost implications and the complexity of the Legal Profession and Legal Aid (Scotland) Act 2007, which was foundational for the SLCC.
My amendments in the group are probing and I will value the opportunity to work collaboratively with the minister and stakeholders ahead of stage 3 if it means that we can further improve the complaints process for consumers.
I move amendment 541.
I put on the record my thanks to the many stakeholders who provided briefings in advance, some of which were referenced by Tess White, including the Law Society of Scotland, the SLCC, the Faculty of Advocates and others. I also thank them for producing their briefings quickly since last week’s lodging deadline.
I do not support Tess White’s amendments in this group, although I appreciate that they are probing in nature. They allow us a useful opportunity to discuss and debate why the Government alighted on maintaining the current divisions for regulatory duties, rather than establishing a new regulator. However, I do not support the proposals in the amendments to shift all complaints proceedings to the SLCC, for many of the same reasons why the committee arrived at its view in considering the evidence that was presented to us at stage 1.
We recognise that there are significant challenges in the complaints system. I think that everyone acknowledges that it is complex and that it can be inefficient and slow, which can create a bad experience for consumers of legal services who wish to raise complaints. Through its genesis, the bill tries to go some way in addressing some of those issues. I and many other stakeholders that I have spoken to want change to be effected sooner rather than later. However, to go through a lengthy process that would last for many years and be at public expense in order to transition the functions that are currently conducted by the Law Society of Scotland and the Faculty of Advocates to a single body could result in significant delays for consumers, who need improvements right now.
10:15Even if we had chosen to consider what is proposed in the amendments at an earlier stage of the bill’s conception, we would not have got some of the noticeable benefits that are now coming through. As I said, putting new structures in place and placing new duties on the SLCC would require a breadth and depth of reform and change to the SLCC, not least to its resource and staffing.
I am interested in the fundamental principle that membership organisations should have an obligation to monitor, investigate and, if necessary, take action on their members’ conduct. That is, in essence, what we are debating today. We should ensure that organisations such as the Law Society feel that they can exercise their duty to look after and ensure the highest conduct standards of their members, in much the same way as we would expect regulation of members of other bodies in public life. I posit that political parties are an example of where the regulation of members is ceded to the party.
I do not want to go on at length, because many of these issues have been debated already and covered in the stage 1 report. However, there are many reasons why the broad solutions to the challenges that are faced in legal services regulation right now, which are alighted on in the bill, are preferable to the ones that are outlined in Tess White’s amendments.
I do not want to go over old ground, so I will leave my comments there. However, if we return to the issue at stage 3, it will be important to continue to recognise the things that I have outlined.
I thank Tess White and Paul O’Kane for the discussion, because it is useful for us to air our views.
I ask the minister to talk specifically about the concerns that the committee raised in our stage 1 report because of the evidence that we received, which Paul O’Kane referred to, on the complexity of the matter and how the minister’s proposals in the bill will achieve what she says they will, given the complex nature of streamlining the arrangements. I do not think that we have the overall picture when we look at the amendments in the group, so it would be helpful if the minister would respond to Tess White’s questions and clarify why that complexity cannot be dealt with in the way that the amendments suggest.
The Scottish Government recognised the differing views on the primary recommendation in Esther Roberton’s report, so it committed to seeking a wide range of views through consultation to inform the shape and extent of the reform. The bill takes a proportionate approach that seeks to balance and deliver the key priorities of all stakeholders, and it has been shaped by the responses to the consultation. As I said in my opening statement, we have had to balance those differing views as we aim to modernise the regulatory system.
The consultation highlighted that views were evenly split between support for and opposition to the primary recommendation. However, it is important to state that there are many areas where there is broad agreement between stakeholders, such as the introduction of entity regulation, protections around the title lawyer, and improvements to the complaints system. It is agreed on both sides of the polarised debate that reform is long overdue and is needed through the bill.
The bill will require that regulators of legal services exercise regulatory functions independently of other functions and activities. By removing complaints handling from regulators, the bill reflects the position that 60 per cent of the respondents supported, retaining and improving the current position in respect of responsibility for complaints handling. It was considered important that the body that is responsible for setting the rules deals with conduct complaints in relation to failure to adhere to those rules.
The SLCC will remain the single gateway for all legal complaints against legal practitioners for consumers of legal services, with a limited exception. When a complaint is identified by a regulator, it will be able to investigate it immediately.
The bill will introduce a more efficient and flexible system to allow complaints to be dealt with more swiftly. The Scottish Government has given very careful consideration to which bodies should have responsibility for investigating conduct, services and regulatory complaints. Although there is general agreement that improvement is needed, there is again significant divergence in views on what that improvement should look like. I think that everybody appreciates the need to find a balance as the bill progresses.
The bill retains a multi-agency approach, but it introduces changes that will vastly simplify and strengthen the process to the benefit of consumers, practitioners and the bodies that are responsible for handling complaints. The bill establishes a new legislative framework that will allow the SLCC to design its own flexible and responsive complaints system. It is intended that a proportionate system will be created for processing complaints. The bill will also remove steps in the current system that slow down the investigation of complaints by allowing the Law Society and the Faculty of Advocates to raise a complaint and directly investigate it without first going through the SLCC in certain circumstances. The introduction of those new systems, as well as the new ability for the SLCC or the regulator to initiate its own complaints, will be hugely beneficial for consumers and practitioners alike.
The Scottish Legal Complaints Commission currently has a role in monitoring trends in legal complaints and making regulations with which the regulator does not have to comply. The bill will build on that in providing greater independent oversight of complaints handling by allowing the SLCC to set minimum standards in consultation with the regulators and the Lord President. That will ensure consistency and best practice in the way that complaints are handled and it will mean that consumers should receive redress as quickly as possible and that fewer complaints should reach the SLCC.
Setting minimum standards for regulators will also improve the experience for those who have a complaint to lodge and for practitioners. The committee heard evidence from Rosemary Agnew, the Scottish Public Services Ombudsman, that that approach is best practice.
I appreciate that, in this part of stage 2, we are focusing a lot on removing ministerial powers and on all the legal aspects of the bill. In future sessions, we will consider how consumer interests are strengthened and improvements to the complaints system. The voice of the consumer will be placed at the heart of legal regulation by the expansion of the consumer panel’s remit. The panel will be able to make recommendations on, for example, client relation rules and price transparency. The introduction of the consumer principles will reinforce that, as the bill will require that the views of consumers are understood and taken into account.
I note the concerns that the Law Society raised in its letter of 17 January, in which it advised that the problems in the complaints system today are not because of who regulates but stem from complex, cumbersome and confusing processes that are required by statute. I have lodged a significant number of amendments that have been developed following engagement with the bodies that are involved in the complaints system, and they will streamline and deliver a more proportionate and flexible system to better serve legal practitioners and consumers. I will speak to those amendments when they are debated in subsequent groups.
I will address one of my concerns with Tess White’s amendments. At the moment, the Court of Session is responsible for the regulation of advocates, so we would undermine that court if we agreed to her amendments. That is just one of my concerns. However, I am very happy to discuss with Tess White before stage 3 how we can strengthen the consumer’s voice, which I am trying to do with my stage 2 amendments that we will discuss further down the track.
I invite Tess White to wind up and press or seek to withdraw amendment 541.
I thank the minister for her remarks. I am not going to push my amendments in this group at stage 2, but I welcome the opportunity to get it on the record that I will engage with the minister and stakeholders ahead of stage 3. I thank the minister for agreeing to meet me. It is important that we work together to further improve the complaints processes for the consumer, as the minister says.
My concern is that we have waited for so long for regulatory reform of the legal profession and that the bill will be a missed opportunity not only to strengthen the complaints process for consumers but to give them greater protections. The committee took a view on that at stage 1, and it is important that we do not get lost in this behemoth of a bill. As we have all agreed, and as my colleagues have said today, consumers stress that it is important for all of them to have a voice in the legislative process.
Amendment 541, by agreement, withdrawn.
Amendment 67 moved—[Siobhian Brown]—and agreed to.
Amendment 68, in the name of the minister, is grouped with amendments 93 to 101, 105, 104, 102, 103, 106 to 121, 310, 311, 122 to 178 and 459.
Section 20 currently allows Scottish ministers to intervene in the event of concerns being raised that a regulator is failing to exercise their regulatory functions in a way that is compatible with the regulatory objectives, and to take certain specified measures. Amendments 112 to 116 and 118 to 120 have the effect of transferring that power from the Scottish ministers to the Lord President. Although the regulation-making power allowing the Scottish ministers to specify intervention measures that may be taken other than those already provided for is retained in section 20(6), amendment 122 ensures that both the Lord President and other stakeholders have a greater role in the process. That amendment provides that the Scottish ministers can exercise the regulation-making power only at the request of the Lord President, who must, before making such a request, consult regulators, the consumer panel and other persons considered appropriate, as well as adhering to certain publication requirements. Those provisions will ensure an appropriate level of stakeholder involvement in the exercise of the delegated power.
The amendments to section 20 have been welcomed by both the Law Society and the senior judiciary in their recent correspondence to the committee. The amendments alter the sanctions available, with amendment 117 removing the ability to impose a financial penalty from the measures available to the Lord President.
Amendments 68, 121, 146, 310 and 311 make consequential changes to provisions in the bill. Amendment 123 makes a small technical change.
Section 19, together with section 20, provides an important mechanism so that there is a process for review of regulatory performance if concerns are raised about a regulator not upholding the regulatory objectives, with a process allowing specified intervention measures to be taken following such a review.
Amendments 93 and 94 reflect the change of powers to the Lord President that have already been discussed.
Amendments 95 to 99, 101 and 106 to 111 make further changes to alter the bodies that may seek a review of the performance of a legal services regulator, the criteria for a review, the process for conducting a review and the types of things that a performance review can include.
Amendment 99 makes a technical change to clarify that a regulator must provide information about performance when requested to do so by the Lord President in connection with a performance review or a decision as to whether to conduct such a review. Amendment 100 requires that information to be provided within 28, rather than 21, days.
10:30Amendments 102 and 104 insert new provisions into the bill to impose duties on persons other than the relevant regulator in relation to information that they hold relating to the performance of that regulator. That will ensure that the Lord President has all the necessary information available when conducting a review.
Amendment 105 allows the Lord President, when a regulator has failed to provide the information within 28 days, to add such a failure to the existing review. However, the regulator must be given an opportunity to respond to the Lord President’s proposal.
Amendment 103 requires the Lord President to consult such bodies as are considered appropriate in conducting a review of performance.
Amendment 109 requires the Lord President to also send a copy of the report to the relevant regulator and to any requesting body, and amendment 110 requires the Lord President to inform a body that has requested a review of any decision not to conduct such a review.
Amendments 98, 101, 106, 107, 108 and 111 make consequential changes.
Amendment 459 inserts new section 86A into the bill. The new section allows the Lord President to make rules in connection with the exercise of their functions under part 1 or 2 of the bill. Before making rules, the Lord President must consult the consumer panel and each category 1 and category 2 regulator.?
The Lord President is required to publish the rules, once finalised. That transparency provides a check on the exercise of the Lord President’s power.?
I will move on to discuss technical amendments that reflect the substantive changes that have been made to sections 19 and 20 in relation to powers being with the Lord President.
Amendment 147 enables the Lord President to direct a new regulator, or any regulator that acquired rights for its members to provide legal services—other than rights to conduct litigation and rights of audience—under the 1990 act, to change its regulatory scheme in the manner directed by the Lord President. In other cases, the amendment provides that the Lord President can ask Scottish ministers to make regulations to make provision to change the regulatory functions or the way in which those functions are exercised.
Amendments 148 to 152 are consequential or technical amendments, as are amendments 156 to 178, with the exception of amendment 169.
Amendment 169 requires the Lord President, when proposing to remove all the regulatory functions of either an accredited regulator or of a body that has acquired rights for its members to conduct litigation and has acquired rights of audience, to give notice of that intention to authorised providers and to consult them.
I move amendment 68 and ask members to support the other amendments in the group.
Amendment 68 agreed to.
Amendments 69 to 73 moved—[Siobhian Brown]—and agreed to.
Section 13, as amended, agreed to.
Section 14—Compensation funds
Amendments 74 and 75 moved—[Siobhian Brown]—and agreed to.
Section 14, as amended, agreed to.
Section 15 agreed to.
Section 16—Annual reports of category 2 regulators
Amendment 76 moved—[Siobhian Brown]—and agreed to.
If amendment 542 is agreed to, I cannot call amendment 77, which was debated with amendment 51 in group 4, because of pre-emption.
Amendment 542 not moved.
Amendments 77 to 83 moved—[Siobhian Brown]—and agreed to.
Section 16, as amended, agreed to.
Section 17—Register of regulated legal services providers
Amendments 84 to 90 moved—[Siobhian Brown]—and agreed to.
Section 17, as amended, agreed to.
Section 18—Professional indemnity insurance
Amendments 91 and 92 moved—[Siobhian Brown]—and agreed to.
Section 18, as amended, agreed to.
Section 19—Review of regulatory performance by the Scottish Ministers
Amendments 93 to 101, 105, 104, 102, 103 and 106 to 111 moved—[Siobhian Brown]—and agreed to.
Section 19, as amended, agreed to.
Section 20—Measures open to the Scottish Ministers
Amendments 112 to 121, 310, 311, 122 and 123 moved—[Siobhian Brown]—and agreed to.
Section 20, as amended, agreed to.
Schedule 2—Further provision about measures open to the Scottish Ministers
Amendments 124 to 178 moved—[Siobhian Brown]—and agreed to.
Schedule 2, as amended, agreed to.
I propose that we suspend the meeting for five minutes for a comfort break.
10:42 Meeting suspended.Section 21—Power to direct special rule changes
Welcome back. Amendment 179, in the name of the minister, is grouped with amendments 180 to 188, 543, 189, 190, 544, 191 to 199 and 545.
The sections on special rule changes relate to the practice rules and provide regulators with the powers to waive practice rules in defined circumstances for the purpose of promoting innovation or avoiding a regulatory conflict by removing an unnecessary rule or making a rule less onerous, where a regulator considers that to be necessary or appropriate. The waivers are not intended to be permanent, so the bill incorporates transparency and accountability to the Lord President in the process.
The intention of my amendments in the group is to retain the system of special rule changes that are set out in the bill as introduced, but to remove some elements, including the requirement to produce a dedicated report every year, and to introduce more flexibility in other areas in response to concerns that have been raised by the Law Society. The proposals for changes were reached following engagement with the Law Society, which feels that some provisions in sections 21 to 24 do not allow for enough flexibility in relation to the granting of waivers.
Amendment 179 will add to the conditions that are already set out in section 21 a condition that a regulator can give a direction to its member or members “only if” the regulator
“is satisfied the direction is compatible with the regulatory objectives.”
Amendments 180 and 181 will add additional circumstances in which a direction may be given—that is, where the regulator considers that a direction is
“necessary or appropriate in the circumstances.”
Amendment 182 provides that a direction may not disapply or modify a requirement under the bill “or any other enactment”. That will ensure that regulators will continue to meet their obligations in respect of the provisions in the bill or any other enactment.
Amendments 185 and 186 will add to the list of things that a direction must specify, including the period of time for which the direction is to have effect. Amendment 188 will remove the requirement that a direction ceases to have effect after five years.
Amendment 183 will limit the duty of a regulator to consult the Competition and Markets Authority before giving a direction that could restrict, distort or prevent competition to a significant extent to circumstances where the direction that is being given is for the purpose of enabling a new or alternative way of providing or regulating legal services to be piloted.
Amendment 184 will make changes to the bodies to which a copy of a direction is to be given and in what circumstances.
Amendment 187 will place a new requirement on a legal services provider to whom a direction relates to inform the regulator of any changes in circumstances.
Amendment 189 will limit the circumstances in which the Lord President may revoke a direction to the directions that have been given by a regulator, on the basis that it was desirable for the purpose of enabling new or different ways of providing or regulating legal services to be piloted. Amendment 190 will remove the duty to give notice of doing so to the Scottish ministers.
Amendment 191 will remove section 23 of the bill, with the effect that the regulator’s duty to prepare a report on each direction will be removed. Amendment 194 will make a consequential change to section 24. Section 24 of the bill requires a regulator to establish and
“maintain a register of ... Directions”
given under section 21 and sets out what documents the register must contain.
Amendments 192 and 193 will remove the need to include a copy of the application for, or application to amend, the direction.
Amendment 196 will add a requirement to specify
“whether the direction is to have effect for an indefinite period.”
Amendment 195 will make a technical change to denote the placement of the new subparagraphs of section 24(2)(b).
Amendments 197, 198 and 199 will make minor technical changes.
Paul O’Kane’s amendments 543, 544 and 545 would remove most of the special rule changes provisions—sections 21, 22 and 24—from the bill. Unfortunately, I cannot support them. Mr O’Kane’s amendment 556, which is to be debated with group 12, would not be a full replacement for the special measures approach that will be taken through sections 21 to 24, because it would apply only in relation to legal businesses, and not to all legal services providers. That would leave a gap in respect of the Faculty of Advocates and the Association of Construction Attorneys.
The provisions apply not only to the Law Society but to all current and future regulators of legal services in Scotland. The provisions would allow rules to be disregarded where that could bring innovation that could benefit consumers or make a rule less onerous for a legal services provider. The Lord President and the Law Society have been consulted on the Scottish Government amendments. I have listened to the Law Society’s comments and I have sought to address its concerns.
I also consider it important to retain transparency and oversight by the Lord President, following engagement with the senior judiciary. The senior judiciary consider that it is appropriate for the Lord President to have oversight of special rules changes and to have powers to revoke certain types of directions.
I will move amendment 179 and I ask members to support my other amendments in this group. I ask Mr O’Kane not to move his amendments 543 to 545. If he does, I urge members not to support them in favour of retaining the special rule changes arrangements in the bill.
I move amendment 179.
My amendments 543, 544 and 545 all seek to deal with the issue of waivers by leaving out the relevant sections of the bill. The powers contained within sections 21, 22 and 24 seek to provide for powers that already exist and are conferred under the 1980 act, with the ability to waive most of the existing practice rules. That is currently in force and is deemed to work well.
I have listened to what the minister has said and I am looking at the motivation behind the Government’s desire to make changes to the powers for special rules, but there is a lack of clarity in relation to concerns or issues that have been raised about waivers and how the system works at the moment.
Regulators that currently operate a waiver system go through numerous checks before a waiver is granted. Practice has been built up over many years of experience and is overseen by dedicated committees conducting due diligence on applications for waivers.
In understanding the concerns about the system that the Government is creating in the relevant sections, it is important to understand that waivers are requested and granted most often when that is of benefit to clients and there is a need to move quickly, which is the theme that has emerged from our desire that the bill help to speed things up for people who seek support and redress.
11:00The bill might create a lengthy process that has to run through other bodies, including the Lord President and Scottish ministers, before a waiver can be granted. That might add to the system inefficiency and complexity that do not exist at present. I have not heard compelling arguments for introducing that system. Processes can add time and cost, and can be to the detriment of the consumer, who will bear the consequences.
There are further issues with the system that the Government envisages. In most cases, the system might not work if waivers are time limited, because a rule must either apply to situation and transaction, or it must not.
Additionally, waiver decisions often refer to an applicant’s personal information, which can be commercially confidential, such as information about operations or practice and what is going on in a business. It would therefore be difficult, at best, to publish waiver decisions, as is envisaged by the Government. At worst, having to redact them before they are published might consume significant time and resource. I come back to the argument about the length of time that it might take, when we are seeking a quicker process.
I am not convinced that there has been much evidence that the current system is broken or that it is being misused. Perhaps we should not seek to fix problems that do not exist. I hear what the minister has said and I hear her challenge to me, but I wonder whether, in summing up, she might say more about her position on special rules and consider what more we might do in that area.
There has been a lot of engagement with the Lord President regarding waivers, so we would have to engage further with him if we were going to change anything, going forward. I suggest to Mr O’Kane that, as we move to stage 3, I would be happy to look at how we can strengthen the provision to make him feel more comfortable.
Amendment 179 agreed to.
Amendments 180 to 188 moved—[Siobhian Brown]—and agreed to.
Amendment 543 not moved.
Section 21, as amended, agreed to.
Section 22—Powers to amend or revoke directions
Amendments 189 and 190 moved—[Siobhian Brown]—and agreed to.
Amendment 544 not moved.
Section 22, as amended, agreed to.
Section 23—Reports on directions
Amendment 191 moved—[Siobhian Brown]—and agreed to.
Section 24—Register of directions
Amendments 192 to 199 moved—[Siobhian Brown]—and agreed to.
Amendment 545 not moved.
Section 24, as amended, agreed to.
Section 25—Right to provide legal services
Amendment 200, in the name of the minister, is grouped with amendments 201 to 235. I point out that amendments 206, 207 and 208 are pre-empted by amendment 548, previously debated in the group entitled “Complaints: Commission to investigate and determine all complaints (services, conduct and regulatory).”
Sections 25 to 27 of the bill would allow a body to apply to the Lord President and the Scottish ministers together to become a new regulator of legal services, being accredited to authorise persons to acquire the right to conduct litigation, the rights of audience in courts and the right to provide other types of legal services. The provisions will replace and modernise similar provisions that are contained in the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990.
Following engagement with the Lord President about the concerns that have been raised by the senior judiciary at stage 1 on the role of the Scottish ministers in the regulation of legal services, I gave an undertaking to the committee that I would lodge an amendment to the effect that it would be the responsibility of the Lord President acting alone to consider any application by a body wishing to enter the legal services sector as a new regulator. Amendment 200 will do just that and amendments 211, 212 and 213 will make consequential amendments.
Amendment 209 will insert proposed new section 26A into the bill to give Scottish ministers the power to specify in regulations the additional regulatory matters that must be dealt with in a draft regulatory scheme. However, Scottish ministers will be able to exercise that power only if they have received a request to do so from the Lord President, an accredited regulator or the consumer panel, following a period of consultation with the specified bodies. Except where the Lord President is the requester, the Lord President’s agreement to the request must be obtained.
To address concerns that were raised by the senior judiciary, amendments 201, 203, 206, 207 and 210 will make changes to the application requirements in respect of the draft regulatory scheme that must accompany an application for accreditation. Amendments 202, 204, 205 and 208 are consequential amendments.
The purpose of amendments 214 to 224 and 227 is to remove the involvement of Scottish ministers from consideration of an application and the accompanying draft regulatory scheme, which will leave it to the Lord President alone. The amendments will also introduce additional requirements for consultation and transparency.
Amendments 225 and 226 will place an additional duty on the Lord President, when considering a draft regulatory scheme, to consult the Scottish ministers as well as the Competition and Markets Authority, the consumer panel and other persons who are considered to be appropriate. Amendments 228 to 231 are consequential amendments.
Amendment 232 will impose a new requirement, in proposed new subsections 29(2A) and (2B), on the Lord President to publish the decision on an application under section 25 by a prospective regulator seeking accreditation.
Amendment 233 will remove the requirement for Scottish ministers to make regulations to give effect to the draft regulatory scheme.
Amendment 234 will require an applicant to give effect to and publish an approved regulatory scheme. Amendment 235 will make a consequential amendment. The committee will be aware from correspondence with the Lord President and the Law Society that the amendments are welcomed by the senior judiciary and the legal profession.
I ask members to support my other amendments in the group, and I move amendment 200.
Amendment 200 agreed to.
Amendment 201 moved—[Siobhian Brown]—and agreed to.
Section 25, as amended, agreed to.
Section 26—Regulatory scheme
Amendments 202 to 205 moved—[Siobhian Brown]—and agreed to.
Amendments 546 and 547 not moved.
Amendment 548, in the name of Tess White, has already been debated with amendment 541. If amendment 548 is agreed to, I cannot call amendments 206 to 208 because of pre-emption.
Amendment 548 not moved.
Amendment 206 to 208 moved—[Siobhian Brown]—and agreed to.
Section 26, as amended, agreed to.
After section 26
Amendment 209 moved—[Siobhian Brown]—and agreed to.
Section 27—Publication of draft regulatory scheme and representations
Amendments 210 to 213 moved—[Siobhian Brown]—and agreed to.
Section 27, as amended, agreed to.
Section 28—Consideration of applications
Amendments 214 to 216, 218, 217 and 219 to 227 moved—[Siobhian Brown]—and agreed to.
Section 28, as amended, agreed to.
11:15Section 29—Approval of application and giving effect to the regulatory scheme
Amendments 228 to 234 moved—[Siobhian Brown]—and agreed to.
Section 29, as amended, agreed to.
Section 30—Exercise of rights to provide legal services
Amendment 235 moved—[Siobhian Brown]—and agreed to.
Section 30, as amended, agreed to.
Section 31—Surrender of rights
Amendment 236, in the name of the minister, is grouped with amendments 237 to 249, 264, 266, 265 and 267 to 270.
Amendment 236 is linked to amendments in group 8 that remove the role of Scottish ministers from the process of acquiring and exercising the right to provide legal services. The amendment removes the involvement of the Scottish ministers in respect of any application enabled under section 31 by an accredited regulator to surrender its acquired rights. Amendments 238, 239, 242, 243 and 244 are consequential. Applications are to be made to the Lord President alone.
Amendment 240 inserts new subsection (2A) into section 30, making particular provision where an application is to surrender all of the regulator’s acquired rights. The consultation undertaken by the regulatory body under subsection (1A) must seek the views of the body’s authorised providers about whether a majority of those providers would like another regulator to authorise them to exercise and regulate their rights or to form a body and to submit an application under section 25 to seek accreditation to authorise them to exercise and regulate their acquired rights.
Amendment 245 provides that the direction-making power under section 30 is exercisable by the Lord President acting alone, rather than together with the Scottish ministers. Amendments 246 and 247 provide that those directions can be varied or revoked by the Lord President.
Amendment 248 makes changes to the conditions and process of granting an application to surrender some or all of the acquired rights, placing publication and notification requirements on the Lord President
Amendment 249 provides that, where all a regulator’s rights are to be surrendered, the Lord President’s notice may provide that the notice takes effect either when the regulator’s legal services providers are authorised by a new regulator or when the providers form a new body and that body becomes an authorised regulator.
Section 34, on revocation of acquired rights, allows Scottish ministers to revoke the approval of an application under section 29 when it appears to them that the body that made the application had failed to comply with a direction under section 33.
Amendments 264, 265, 266 and 269 reflect the shifting of the role to the Lord President alone.
Amendments 267 and 268 set out the notification, publication and consultation steps that the Lord President must take when they wish to revoke the approval.
The bill grants ministers the power to intervene by establishing a new regulator, transferring rights to another regulator, or, if necessary, assuming direct regulatory responsibilities themselves.
Amendment 270 transfers the responsibility and authority to the Lord President. In the new section that it introduces, powers are given to the Lord President to seek appropriate arrangements where an accredited regulator is a discontinuing regulator. That will involve consulting each authorised provider to determine, in particular, whether a majority of the authorised providers would like another regulator to authorise and regulate them. If the majority is in favour of another regulator authorising and regulating the providers, the Lord President, where the new receiving regulator is an accredited regulator or a body that has had an application granted under section 25 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990, can amend the regulatory functions of the receiving regulator to enable it to regulate the authorised providers of the discontinuing regulator.
In any other case, the Lord President can ask the Scottish ministers to make regulations subject to the affirmative procedure to amend the functions of the receiving regulator. As noted with the previous group, the Lord President and the Law Society have welcomed these amendments.
I move amendment 236 and ask that members support the amendments in the group.
Amendment 236 agreed to.
Amendments 237 to 249 moved—[Siobhian Brown]—and agreed to.
Section 31, as amended, agreed to.
Section 32—Offence of pretending to have acquired rights
Amendment 250, in the name of the minister, is grouped with amendments 455 to 458.
Amendments 455 and 456 amend respectively the new offences of taking or using the title of lawyer, or of pretending to be a regulated legal services provider. The amendments will increase public protection with regard to the term “lawyer”, as false use of the term will now be an offence without also having to commit intent to deceive. Likewise, a person can no longer falsely advertise that they are regulated.
Public polling by the Government and the Law Society has shown support for the title of lawyer being given the same protection as solicitor. That was considered important in order to protect the consumer, who might not understand the distinction between the two when seeking legal services from a regulated professional.
The committee has also heard anecdotal evidence of solicitors being struck off and subsequently providing unregulated legal services to the public under the title of lawyer. We view that there is a public protection concern in such cases.
Amendment 457 makes changes to section 84 to make it an offence for a person who is not a member of the Faculty of Advocates to, without reasonable excuse, take or use a name, title, addition or description implying that the person is a member of the faculty. Currently, a person commits an offence only if the person pretending to be an advocate does so with intent to deceive, and the amendment means that there is no longer any need to prove intent to deceive for the offence to be committed.
Amendment 250 widens the offence of pretending to exercise acquired rights to include any false claim of authorisation without a reasonable excuse, not just those made with the intent to deceive.
Amendment 458 alters the power for the Scottish ministers to make regulations to amend section 32 of the 1980 act to make provision for, or in connection with, its being an offence for an unqualified person to draw or prepare certain documents or provide certain other legal services.
Instead of being able themselves to initiate the regulation-making power, Scottish ministers will be able to exercise such a power only following a request to do so from the Lord President, a regulator or the consumer panel. Prior to making a request, the requesting body must consult the bodies in the list other than itself and secure agreement with the Lord President. The amendment seeks to add an approval mechanism for the Lord President before the Scottish ministers can seek to make regulations in that area.
I move amendment 250 in my name and I ask that members support all amendments in the group.
I make just a brief comment to thank the minister for her amendments in this group. She will be aware that this is one area that exercised many witnesses at stage 1, and I raised concerns about the need to strengthen and alter the provisions contained in these sections throughout the stage 1 process, as other colleagues did; I also did so in my meeting with the minister.
It is important that consumer protection is at the forefront of our minds in ensuring that unscrupulous individuals who seek to misrepresent themselves as lawyers or solicitors, or as holding the public office of advocate, are held to account, and that we ensure that there is a safeguard against their doing so. I believe that the Government’s amendments in the group will provide a solution to that and, indeed, to the concerns that we heard in evidence. I will support the amendments in the group.
I echo Paul O’Kane’s comments. In the evidence that we gathered for stage 1, we heard people’s very real concerns about the intention or otherwise to mislead people by using certain titles. As Paul O’Kane indicated, the amendments in the group satisfy those concerns and give the protections that we wanted for consumers. I therefore thank the minister for lodging them and I, too, will support them.
Would the minister like to wind up?
No thank you, convener.
Amendment 250 agreed to.
Section 32, as amended, agreed to.
Before section 33
Amendment 251, in the name of the minister, is grouped with amendments 252 to 263.
The effect of amendment 252 is to require an accredited regulator to review its regulatory scheme if directed to do so by the Lord President. It removes from the bill ministerial involvement in triggering the review process.
A regulator also has the power to initiate such a review itself. Where it does so and proposes a revision, amendment 251 requires it to provide a report of the revision to the Lord President, who can approve the revision, not approve it, or direct another revision to be made.
Amendments 253 to 259 and amendment 261 are consequential on the removal of the role of the Scottish ministers from the process.
Amendment 260 gives a new power to allow the Lord President to comment on an accredited regulator’s proposed revisions to its regulatory scheme and direct the regulator to take account of such comments before giving the Lord President a revised report containing any revision to the scheme.
Amendment 262 places a requirement on the regulator to publish its revised scheme.
Amendment 263 gives the Lord President the power to revoke or vary any direction that they have given.
I move amendment 251 in my name and ask members to support my other amendments in the group.
Amendment 251 agreed to.
Section 33—Review of regulatory schemes
Amendments 252 to 263 moved—[Siobhian Brown]—and agreed to.
Section 33, as amended, agreed to.
11:30Section 34—Revocation of acquired rights
Amendments 264, 266, 265 and 267 to 269 moved—[Siobhian Brown]—and agreed to.
Section 34, as amended, agreed to.
Section 35—Replacement regulatory arrangements for authorised providers
Amendment 270 moved—[Siobhian Brown]—and agreed to.
Section 35, as amended, agreed to.
Sections 36 and 37 agreed to.
Section 38—Overview of Part
Amendment 271, in the name of the minister, is grouped with amendments 272, 549 to 552, 273, 553, 554, 642, 274, 555, 275 to 278, 556, 279 to 309 and 641. I call the minister to move amendment 271 and to speak to all the amendments in the group.
These amendments relate to part 2 of the bill, which makes provision for category 1 regulators to authorise legal businesses to provide legal services. Amendments 273 and 642 extend the definition of an authorised legal business to include business entities that are owned by a solicitor or solicitors jointly with a person or persons who are regulated by a category 1 regulator and clarify that a business may be wholly owned either directly or through one or more other bodies, or partly directly and partly through one or more other bodies. These amendments address a concern that was raised by the Law Society that various types of business entities are not covered by the provisions.
It is an offence under section 39, liable to a £20,000 fine, for a person to own or operate a legal business that provides legal services to the public for a fee, gain or reward without that business being authorised under part 2 of the bill. The Scottish ministers have the power to change the amount of the fine by regulations, and amendment 274 requires them to consult each category 1 regulator and other persons considered appropriate before making such regulations and to publish any responses to the consultation.
Amendment 275 has the effect of treating a sole solicitor, a firm of solicitors, an incorporated practice and a multinational practice, all as defined in the Solicitors (Scotland) Act 1980, as authorised by the Law Society of Scotland to provide legal services to the public for a fee, gain or reward on the coming into force of the section. This amendment meets a request by the Law Society of Scotland for existing authorised legal businesses to be passported into authorisation when the relevant provisions of the bill commence, so that existing legal businesses are deemed to be authorised rather than all of them having to go through the authorisation process at the same time.
Section 40 introduces the offence of taking or using
“any name, title, addition or description implying that the person is an authorised legal business”
or otherwise pretending
“to be an authorised legal business”
with the “intent to deceive”. Amendment 276 removes the “intent to deceive” ground for the offence and replaces it with the words, “without reasonable excuse”. That aligns with our discussions with the Law Society in respect of the offence of pretending to be regulated.
In response to the views of the Law Society, amendment 277 imposes a new requirement on the Scottish ministers to consult each category 1 regulator and other persons considered appropriate before making regulations to increase the maximum penalty for an offence of pretending to be an authorised legal business and to publish responses.
Section 41 requires a category 1 regulator to prepare and operate a set of rules to authorise and regulate legal businesses, which are referred to in the bill as “ALB rules”. Amendment 279 expands what legal business and legal services ALB rules may relate to by including services—other than legal services—that form part of the professional practice of solicitors or individuals that are regulated by a category 1 regulator within a legal business.
Amendment 280 transfers to the Lord President—rather than the Scottish ministers—the power to approve an amendment to ALB rules. Amendment 281 restricts the requirement to consult about changes to ALB rules to apply only in cases where the change is “material”. Amendment 283 requires the consultation response to be submitted with the amendment of the rules sought by the regulator. Amendment 282 makes a consequential change.
Section 41(2)(c) confers power on the Scottish ministers to specify in regulations such other regulatory matters that ALB rules are to deal with. Amendments 284 and 285 provide that the Scottish ministers may exercise that power only when requested to do so by the Lord President, the consumer panel or a category 1 regulator. The provisions also specify the process in respect of consultation and for obtaining the Lord President’s approval.
Amendment 288 provides that regulator rules for authorising legal businesses may make provision about imposing or varying the conditions or restrictions that apply to existing authorisations.
Amendment 291 adds to the list of things that authorisation rules can be about, to include
“circumstances in which an authorised legal business may surrender its authorisation”.
Amendment 289 means that
“renewal of a legal business’s authorisation”
is no longer one of the particular matters that the authorisation rules must include. Amendments 293 and 298 are consequential to that.
Amendment 292 removes examples of particular fees that may be covered by authorisation rules, such as a fee for renewal, leaving a general provision, which states that authorisation rules can be about chargeable fees.
Amendment 295 provides that authorisation rules can include
“rules or arrangements relating to the continued authorisation ... of a legal business that is a partnership other than a limited liability partnership if ... a person ceases to be a partner ... or ... a person is admitted as a partner”.
The purpose of amendment 295 is to provide clarity regarding such arrangements, following a request by the Law Society.
Both amendments 296 and 297 amend section 43 to recognise a right of appeal to the sheriff by an authorised legal business against a regulator’s decision after an internal review. Amendment 299 provides that the sheriff may
“impose, vary or revoke conditions or restrictions”
in relation to that appeal.
Section 45 allows practice rules under section 44 to provide for the imposition of a financial penalty. Amendments 301 and 302 provide for
“the withdrawal of the imposition of a financial penalty”
where the regulator considers that it is not reasonable to seek payment of it.
Amendment 303 provides that the regulator can recover from the authorised legal business the reasonable cost of collecting any financial penalty that is imposed on the business. The purpose of amendment 303 is to allow the regulator to recover the costs that they incur when collecting any financial penalty from an authorised legal business.
Section 45(2) of the bill allows the Scottish ministers to specify, by regulations, the maximum amount that the financial penalty can be. Amendment 304 requires the Scottish ministers, before making such regulations, to consult the category 1 regulator—and other persons or bodies that they “consider appropriate”—and to publish the responses.
Amendment 305 provides that the Scottish ministers can make such regulations in respect of reconciling different sets of regulatory rules only if they have received a request from the Lord President, a category 1 regulator or the consumer panel, which has undertaken a period of consultation and has included with the request information about the consultation responses that have been received. Following the request, the requester must publish the documents that are included in the request.
Amendment 308 requires the Law Society to seek approval for its first ALB rules under the bill.
Amendment 309 removes section 49, which would have allowed Scottish ministers to intervene to establish a body
“with a view to it becoming a category 1 regulator”
or allow for direct authorisation by ministers. I wrote to the committee in January last year, accepting that the
“risk of the Law Society of Scotland being unable to operate its regulatory functions as a category 1 regulator is ... low”,
and again in April, undertaking to
“lodge an amendment at Stage 2 to remove section 49.”
Amendments 271, 272, 278, 286, 287, 290, 294, 300, 306 and 307 are on minor technical and consequential points.
As I mentioned when speaking to group 7, on special rule changes, Paul O’Kane’s amendment 556 in the current group is not a full replacement for the special measures approach to be taken, as it would apply only to legal businesses and not to all legal services providers. As I said previously, that would leave a gap with regard to the Faculty of Advocates and the Association of Construction Attorneys, so unfortunately I cannot support it.
With regard to what Pam Gosal and Paul O’Kane seek to do through amendments 549 to 556 and amendment 641, amendments 273 and 642 in my name will cover a mixture of a legal business as wholly owned by either solicitors or qualifying individuals and will cover registered foreign lawyers where appropriate. My amendment 275 will also address the concerns by confirming the approach in respect of any such multinational practice. That is subject to alternative provision made by rules approved under section 41.
That means that the Law Society of Scotland will be able to make rules, but the starting position is that multinational practices that are wholly owned by solicitors enrolled in Scotland, or qualifying individuals, or a mixture of both, will be treated as authorised businesses under the controls in part 2 of the bill, unless or until the Law Society makes alternative provision in rules. The amendments in my name will therefore achieve the stated aim, while providing a proportionate level of flexibility.
I believe that we all share the same intention in this area, and I am happy to consider working with Pam Gosal and Paul O’Kane again at stage 3 to see how we can adjust the explanatory notes to the bill to ensure that the position is clear.
I ask members to support each of my amendments in the group. In particular, I ask members to support my amendments 273 and 642, and not amendments 549 to 555, and 641, from Pam Gosal and Paul O’Kane. I also ask Paul O’Kane not to move his amendment 556 on special rules for legal business, in favour of the approach that is taken in the bill to special rules changes for all legal services providers. If he moves that amendment, I would ask members not to support it.
I move amendment 271.
My stage 2 amendments to the bill are centred on the definition of legal businesses and how that definition is affected by the bill. When I spoke to representatives from the Law Society, they expressed concerns that the bill would make it difficult for certain businesses to operate in Scotland. The bill defines
“a legal business”
as being
“wholly owned by”
either
“solicitors, or ... qualifying ... individuals”,
but not a mixture.
The language in the bill makes no provision for any share of ownership being held by any registered foreign lawyer, which includes a lawyer who can practise law elsewhere in the United Kingdom. That is why my amendments 549, 551, 552 and 554 would clarify that registered foreign lawyers can participate in, and own, a legal business “in combination with” solicitors.
Other amendments in the group also seek to improve the definition of legal businesses, which, as currently drafted, is not wide enough to cover ownership and employment outwith Scotland. Amendments 553, 555 and 641, in the name of Paul O’Kane, would build on my amendments by specifying that a law firm can be owned by a “combination of ... persons.” I am happy to support those amendments. I am also happy to support amendment 556, which would add to the list of what authorised legal business rules should contain.
I am happy to support Scottish Government amendments 271, 272 and 274 to 309, which will significantly remove powers of Scottish Government ministers to regulate the legal sector, and which offer clarity where needed.
11:45
My principal amendments in this group deal with the issue of registered foreign lawyers and the regulation of legal businesses therein. Much of the content and purpose of my amendments is similar to what Pam Gosal has outlined and relates to how we ensure that there is no detriment to businesses that are trying to operate in Scotland. For the benefit of the committee and the minister, I do not intend to repeat too much of that.
However, the issue of registered foreign lawyers more generally has been raised with me throughout the process. Although many come from qualifying jurisdictions within and beyond Europe, we must reflect jurisdictions in which relevant law firms provide legal services internationally and where many of their solicitors are in the UK, either in England and Wales or Northern Ireland. Evidently, there will be much cross-border work with Scotland, so we want to avoid a situation in which that would not be possible because of the definition of a registered foreign lawyer. It is important that we recognise that, and that safeguards are in place in relation to some of the issues that have been raised.
A foreign lawyer can be registered only if they are to be an owner of a practice where at least one other qualified lawyer is able to practise in Scotland. They cannot practise as sole practitioners or provide legal services that are reserved to those who are qualified in Scotland. I heard what the minister said about guidance. It would be useful to have those definitions in statute and to be clear about what we are trying to achieve.
As I said, Pam Gosal’s amendments are similar to mine but, on the basis of the advice that I have taken, I think that mine will move forward in the way that we are trying to advance. However, I appreciate that there is some duplication.
On the other amendments in the group, I recognise the minister’s offer to try to work together to look at how we might broaden the scope of regulation. I am happy to meet her on those issues ahead of stage 3 to see how we might further develop the bill, as we discussed earlier this morning.
More broadly, the minister has done important work through the amendments. I believe that the majority of the amendments in the group make good improvements to the bill, so I will support them. However, we need to be clear on the issue of registered foreign lawyers to ensure that there is no detriment, particularly on cross-border issues.
As no other member wishes to come in, I call the minister to wind up.
I believe that Scottish Government amendments 273 and 642 achieve the intention behind Pam Gosal’s amendment 549 and Paul O’Kane’s amendments 555 and 641, given that our amendments relate to qualifying individuals and will also cover registered foreign lawyers where appropriate.
I know that the issue is very technical, so I am happy to have further discussions before stage 3 on how we can improve things.
Amendment 271 agreed to.
Amendment 272 moved—[Siobhian Brown]—and agreed to.
Section 38, as amended, agreed to.
Section 39—Requirement for legal businesses to be authorised to provide legal services
Amendment 549, in the name of Pam Gosal, has already been debated with amendment 271. I call Pam Gosal to move or not move amendment 549.
I thank the minister for her engagement on the bill and for our meeting last week, and I acknowledge the amendments that she has lodged. However, after speaking to the Law Society, I believe that my amendments sufficiently clarify some nuances when it comes to the ownership of legal businesses. For example, amendment 549 clarifies that a “solicitor” could include a foreign solicitor. Section 39 does not make that clear, and nor does any of the other amendments.
At this point, you need to move or not move amendment 549; you should not be responding to the debate.
Okay. In the light of what the minister said about discussing the matter with us before stage 3, I am happy to not move amendment 549. However, I wanted to put on the record those important points, which have not been clarified through amendments.
Amendment 549 not moved.
Amendments 550 to 552 not moved.
Amendment 273 moved—[Siobhian Brown]—and agreed to.
Amendments 553 and 554 not moved.
Amendments 642 and 274 moved—[Siobhian Brown]—and agreed to.
Amendment 555 not moved.
Amendment 275 moved—[Siobhian Brown]—and agreed to.
Section 39, as amended, agreed to.
Section 40—Offence of pretending to be an authorised legal business
Amendments 276 and 277 moved—[Siobhian Brown]—and agreed to.
Section 40, as amended, agreed to.
Section 41—Rules for authorised legal businesses
Amendment 278 moved—[Siobhian Brown]—and agreed to.
Amendment 556 not moved.
Amendments 279 to 287 moved—[Siobhian Brown]—and agreed to.
Section 41, as amended, agreed to.
Section 42—Authorisation rules
Amendments 288 to 295 moved—[Siobhian Brown]—and agreed to.
Section 42, as amended, agreed to.
Section 43—Appeals in relation to authorisation decisions
Amendments 296 to 299 moved—[Siobhian Brown]—and agreed to.
Section 43, as amended, agreed to.
Section 44—Practice rules
Amendment 300 moved—[Siobhian Brown]—and agreed to.
Section 44, as amended, agreed to.
Section 45—Financial sanctions
Amendments 301 to 304 moved—[Siobhian Brown]—and agreed to.
Section 45, as amended, agreed to.
Section 46—Reconciling different rules
Amendment 305 moved—[Siobhian Brown]—and agreed to.
Section 46, as amended, agreed to.
Section 47—Monitoring of performance of authorised legal businesses
Amendments 306 and 307 moved—[Siobhian Brown]—and agreed to.
Section 47, as amended, agreed to.
Section 48—Law Society of Scotland
Amendment 308 moved—[Siobhian Brown]—and agreed to.
Section 48, as amended, agreed to.
Schedule 1
Amendments 5 to 26 moved—[Siobhian Brown]—and agreed to.
Amendment 27, in the name of the minister, is grouped with amendments 638, 639 and 508.
Following engagement with Tess White on amendment 638, I am content to support her provision and I will not be moving my corresponding amendment 508. Similarly, I am content to support Paul O’Kane’s amendment 639. We may have to revisit the issue at stage 3 to ensure that the revised provisions work fully with the wider legislation and make any adjustment to reflect the intention.
However, I require to move amendment 27, which is consequential to the Government’s principal amendment 508, in order to allow the debate on this group to take place. I will seek members’ permission to withdraw amendment 27 at the end of the debate.
The Government is willing to support amendment 638 rather than our amendment 508, and I would urge members to support amendments 638 and 639.
I move amendment 27.
I call Tess White to speak to amendment 638 and other amendments in the group.
12:00
I will speak briefly on group 13. Amendment 638, in my name, is from the Law Society. Along with amendments 27 and 508 from Siobhian Brown and amendment 639 from Paul O’Kane, amendment 638 seeks to safeguard the interests of clients in circumstances where an authorised legal business is unable to continue to operate. Such circumstances could include death, incapacity or suspension.
The provisions in amendment 638 repeal sections 45 and 46 of the Solicitors (Scotland) Act 1980 and replace them with new provisions—sections 45A and 46A. Consequential amendments are made to paragraph 5 of schedule 3 to the 1980 act.
Client money would be immediately protected as it would be placed under the control of the regulator, which would be able to issue directions that set out how clients’ other assets, such as files and documents, are to be dealt with. I have engaged on this issue with the Law Society, which believes that the Scottish Government’s amendment 508 would leave consumers in a worse position than they are in today because there would be potentially time consuming applications to the court. That could lead to delays for clients when time is of the essence.
I have discussed my amendment with the minister and thank her for her constructive engagement. I appreciate that the Law Society having the agility and flexibility to respond in such situations must come with checks and balances, but we must find a route through on the issue that satisfactorily protects the client.
The minister has indicated that she is happy for amendment 638 to replace amendment 508, so I will press amendment 638. Ahead of stage 3, I am happy to engage with the minister and the Law Society further on the provisions
I call Paul O’Kane to speak to amendment 639 and other amendments in the group.
I am grateful for the opportunity to speak on the group and on my amendment 639 in particular. I thank the minister for her comments and for accepting the amendment. It essentially does what everyone’s amendments in the group intend to do, which is to ensure that there is fair recovery of costs and a polluter pays principle in regard to the approach taken when additional costs are incurred in pursuit of regulatory objectives. Obviously, the issue relates to the behaviour of certain individuals and the way that the Government can legislate to support the reclamation of costs.
It is clear that Tess White’s amendment and a number of amendments in this group merit further discussion when we progress to stage 3, but agreeing to my amendment at this stage would begin that process.
Would you like to wind up, minister?
I thank Paul O’Kane and Tess White for their amendments, which I am happy to support. However, as I said, we will have to ensure at stage 3 that the revised provisions work within the wider legislation.
Amendment 27, by agreement, withdrawn.
Amendments 28 to 37 moved—[Siobhian Brown]—and agreed to.
Schedule 1, as amended, agreed to.
Section 49—Powers of the Scottish Ministers to intervene
Amendment 309 moved—[Siobhian Brown]—and agreed to.
Section 50 agreed to.
That concludes today’s meeting. Next week, we will continue our stage 2 consideration of the Regulation of Legal Services (Scotland) Bill. I remind members that the deadline for amendments to the parts of the bill that we have not yet reached is noon tomorrow. Next week’s meeting will start at 9.30.
Meeting closed at 12:05.Air ais
Attendance