Legal Services Bill [Lords]

Public Bill Committee, 26 June 2007.

Frank Cook (Labour, Stockton North)

Hon. Members will know that the Modernisation Committee has introduced a number of pilots. It seems that these days we in Westminster have more pilots than British Airways. The pilot for the Committee is the use of explanatory statements on amendments. Having introduced those measures for trial, it is important that we get some feedback on their efficacy or benefit. Members of the Committee will find before them a survey, which I encourage each and every hon. Member to complete sensibly to allow an assessment to be made, one way or another, of whether the pilot has been gainful.

Further written evidence to be reported to the Houses of Parliament

Clause 133

John Mann (Labour, Bassetlaw)

I beg to move amendment No. 288, in clause 133, page 68, line 11, at end insert—

‘(c) The provision of an independent avenue of reviewfor complainants who consider that an approved regulator’s consideration of a regulatory issuewas inadequate or that its determination was unreasonable.’.

Having rescued my papers from the flooding of my constituency overnight, I come well prepared on the amendment.

The issue behind the amendment is the fact that the Bill provides consumer rights, but what happens if the regulatory system is not working effectively? How and where does one complain? What we have seen in the miners’ compensation scheme and the complaints in relation to that, and what we may well see from other complaints that have recently worked through the system, is the ombudsman’s ability to oversee and to direct and affect the individual consumer complaint. I fear that that ability will be so watered down in the Bill that it will become non-existent.

Many of the major victories for consumers have rightly taken place because of direction by the ombudsman—indeed, only last night, I was informed in writing of two further cases—and that service is enormously significant to thousands, and perhaps tens of thousands, of potential complainants.

One of the weaknesses with the regulatory system is that if the regulator makes its own rules and abides by them, it is easy to palm off complaints into the never-never. I will illustrate that fact with an example from a letter that I received early yesterday from the Bar Standards Board, to which I have made three sets of complaints. The board claims that it cannot deal with two of those because they are outwith its remit. They are generic complaints that potentially deal with thousands of people from my constituency, never mind from elsewhere, so where do my constituents go? The answer is that they will go round and round in a loopif there is no opportunity to take a case to an ombudsman with clear, precise powers.

There needs to be a robust, overseeing complaints procedure for the individual. The purpose of the amendment is to strengthen that process. I politely suggest to the Minister that, as things stand, it will be all too easy for the profession to say that a complaint is outwith its powers and thereby dismissed. That is precisely the problem that people were having in my constituency four years ago, and I want the Committee and the House to ensure that it does not affect my constituents or anyone else in future.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The hon. Gentleman’s amendment raises an interesting issue that we are familiar with from constituency experience, which is that people are often willing to pursue an additional avenue of complaint if their first one has been unsuccessful. We all have many constituents who have already been to various people and come to us as their second or third port of call, and if we do not give those people what they see as a satisfactory remedy, often they may go to other politicians and pursue other established legal procedures. If it is a local authority matter, they will go to a councillor. They may then go to their MP, then to their MEP, and then to lawyers and so on.

I am sympathetic to the argument that having an internal regulatory procedure for the profession, which is what it is, should not preclude there being a general oversight outside, which is an ombudsman’s role. The difficulty is that there is a difference between dealing with public authorities for which we are used to having an ombudsman’s role, whether they relate to local government or central Government, and with authorities that are not public authorities.

I will be interested to hear the Minister, if she is good enough to do so, setting out the Government’s philosophy on the issue, as well as dealing with the individual points made by the hon. Gentleman in relation to his amendment. The Government need to address what the structures are for the public sector—I think that we know the answer to that—and for the professions. The same argument would apply for the medical, dental and nursing professions and others. In some senses, there are complaints procedures within the professions. Logically, ought there to be something that overarches that. If we had such a thing, should it have the power to direct or only to advise?

Bridget Prentice (Labour, Lewisham East)

Welcome back to the Chair, Mr. Cook. I can understand why my hon. Friend the Member for Bassetlaw tabled the amendment, but we need to make it clear that the Bill sets out a clear distinction between redress and discipline. The ombudsman can consider only matters that relate to redress and the approved regulators deal with disciplinary matters, as clause 113 states. Because of that, we do not think that the ombudsman should have a role in reviewing an approved regulator’s disciplinary decision. That is a regulatory matter, and it is not what the ombudsman scheme is being set up for.

The Bill will not allow the Legal Services Board, the complainant or the ombudsman to challenge a decision of the approved regulator on an individual disciplinary case, but it will allow the Office for Legal Complaints to build up a comprehensive picture of how well the regulators are dealing with disciplinary matters and, if necessary, report that to the board.

That results from the power in clause 144, which allows the ombudsman to require a report to be made on any disciplinary matter that has come to the ombudsman’s notice as part of a complaint and has then been referred to the approved regulator. If that report gives cause for concern, the ombudsman can inform the board. The OLC will also be able to collate information from such reports, which, because they do not rely on a person alleging a failing in a handling of a disciplinary case, are likely to be far more common than complaints about disciplinary cases brought before the legal services ombudsman.

That will allow the OLC and the board to build up a picture of how well the disciplinary arrangements of each regulator are working. If the board has any concerns about that, it may take action against the approved regulator to ensure that it deals with disciplinary matters properly.

I return to my hon. Friend’s example of a scenario equivalent to the miners’ compensation issue. In such an example, if the ombudsman referred a large number of cases to the appropriate regulator for it to consider disciplinary action and the reports that the ombudsman received back suggested that the regulator was not taking appropriate action, I strongly suspect that the OLC would be straight off to the board, asking it to do something about that.

If the board agreed that the regulator was not taking appropriate action, it could use its powers, which are far wider and far weightier than those of the legal services ombudsman, to rectify that. Because the ombudsman has that ability to get a report on disciplinary matters and refer any concerns he might have to the board, there is that vital safeguard to ensure that disciplinary issues are dealt with properly. On that basis, I think that we have robust powers in the Bill to deal with the genuine and important issues that my hon. Friend raises. I therefore ask him to withdraw the amendment.

John Mann (Labour, Bassetlaw)

Not for the first time, my reading of the Bill seems to be different from that of the Minister. The amendment is not aimed at disciplinary powers; it is aimed at consumer redress. I hear what has been said by the Minister and the hon. Member for North Southwark and Bermondsey, but I am not particularly bothered about serial protesters who go round the houses looking for a way of venting their frustration and anger at the system. Whether they are right or wrong, we all get visited by people of that kind. In my area, they seem to come to me first; in other areas, they perhaps go to their Member of Parliament last. That is not my concern in this matter. I am concerned about decent, ordinary people who have never formally complained about anything in their lives, who do not realise that there is a complaints procedure in place, who have never met their solicitor and may not even know what a solicitor is.

Those people do not realise that they have been done over, or that a barrister has been involved—they do not know what a barrister is. They do not know about the counsel’s opinion that closed down their case, or who asked for it, who is paying for it, or who has been contracted to pay for it. They do not have a clue about any of that. I am dealing with such people in large numbers—not just miners, but a range of other people. Last night, a case involving an engineering worker was referred to me; it has nothing to do with the mining industry, but the principle is the same. Those people have not had the opportunity to make a proper complaint.

The legal profession says, “Ah, you needed to know that you have to complain within a set period about a solicitor or a barrister who you have never met and who you did not know existed.” Who on earth is going to have any consumer rights if they are in that position?

Kevan Jones (Labour, North Durham)

Does my hon. Friend agree that information is sometimes given to solicitors? I give the example of Watson Burton in Newcastle, which has signed an agreement with P&R Associates. When clients complained about money being spent on such a claims handling company, Watson Burton claimed that it was legally obliged to pay that money. Therefore, the advice that it is giving its clients is that the company would somehow be penalised if it did not make such payments.

John Mann (Labour, Bassetlaw)

My hon. Friend is right. The legal profession uses these threats against people—in that case, precisely to feather its own nest, and disgracefully so. Were disciplinary matters involved? Such issues, however, are quite separate. We will come to the disciplinary matters later, and the fact that, in the case of Watson Burton, the issue was kept private and confidential until we revealed it to the outside world, which is disgraceful in itself. That, however, is not the point of the amendment.

I am attempting to beef up the right of the consumer who is dealing with a profession that he has not dealt with before, and who does not know anything about complaints procedure. If, in that minority of cases, something has been done wrong, it is important to ensure that the claimants are not out-manoeuvred by the precise detail put in by the regulators. That happened to me yesterday in a letter from the Bar Standards Board, which said that two thirds of the cases that I am trying to look at are out of order before they have even gone in. How does anyone know that? They have not been investigated. Where are the consumer rights there?

Mr. David Burrowes (Enfield, Southgate) (Con) rose—

John Mann (Labour, Bassetlaw)

I will be happy to hear from the hon. Member for Enfield, Southgate once I have introduced the other amendments—I want to curtail the discussion. I might be right or wrong about whether the amendment would do what I want it to, because I do not have a battalion of civil servants advising me. I am happy to leave it with the Minister to contemplate, but the issue will not go away. It will come back on Report.

The powers for the ombudsman to overturn a consumer decision wrongly taken by a regulator, which has looked at its own rules and been restricted by them, must be in the Bill, because the public interest in some of those cases is sufficiently strong that the decision should be sent back. That is what I am attempting to do. Reading the Bill, it seems to me that there is a danger that the consumer interest for vulnerable people will be weakened. I am using my definition of vulnerable people—those who do not have great knowledge of the legal profession.

I suggest to the Minister that that goes against the interests of the profession. The decent majority of the profession, who write to me in large numbers, day by day, after each sitting of the Committee, are saying, “We support what you are saying because we are the decent majority whose reputation has been tarnished by the minority.” The way to deal with that is a strengthened system.

I hear what the Minister has said and will give her the benefit of the doubt on the technical detail because the amendment might or might not do what I intend. I suggest to her, however, that it would, and I hope she will consider it, but something like it must be added to the Bill before it is passed. I beg to ask leave to withdraw the amendment.

John Mann (Labour, Bassetlaw)

I beg to move amendment No. 289, in clause 133, page 68, line 17, leave out ‘may’ and insert ‘must’.

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss the following amendments: No. 290, in clause 133, page 68, line 18, leave out ‘specified’ and insert ‘all’.

No. 291, in clause 133, page 68, line 18, at end insert

‘in which he considers it reasonable to do so’.

No. 292, in clause 133, page 68, line 22, at end insert

‘only by the Chief Ombudsman or an assistant ombudsman.’.

John Mann (Labour, Bassetlaw)

Again, the amendments would strengthen the Bill. I will home in on the key consideration of time limits; it is fundamental.

When elected an MP, I was an amateur in these matters and had no idea what time limits existed for complaints to the legal profession. I had not been involved in taking any complaints forward and, strangely, having talked to my friends and associates, I found that none of them had ever made any complaints or knew about the processes. I talked to solicitors and they were not particularly clear about the processes. They had not had any complaints made against them because they do run-of-the-mill work with which people are generally happy, and often very happy. I had to root around to get any idea of what was going on. It is probably fair to say that in getting to know the law, trial and error succeeded better than a well defined campaign or strategy.

I put it to the Committee that my constituents are, if anything, probably slightly less well informed and slightly less adept than me at finding out how systems work and what can be done. Therefore, how will they know that they have a complaint when they are not aware of what the solicitor or the barrister has done, and do not know what mistakes have been made? If, for example, half an industrial disease claim has not been put in, how will they know? Even if they have the medical records, they are not experts who can assess them—that is what a solicitor or barrister is paid for. How can they know whether something has gone wrong?

The hon. Member for North Southwark and Bermondsey has vanished from the room, but I will rebut his point about serial complainants anyway. The irony is that it is the serial complainants who will know the time limits, will work the system and might not even have a real complaint at all. Their complaint may well be about the outcome rather than the process, but what if the process is wrong? For large numbers of my constituents, it is arguable what the time limit is because they are not clear about whether their claim has been completed or even dropped. If that was ever put to the test, it would be a case in law of arguing what the precise time limit is. I have had to make those arguments.

My experience of such disputes when I first took complaints to the Law Society was of repeatedly getting knocked back. The role of the ombudsman in looking again at the process was vital, giving me and my constituents a second chance to present the case, and every time that the ombudsman has been consulted, he has ruled in favour of my constituents, without exception. That suggests to me not that there is a bias, but—quite the opposite—that the case was good but had not been looked at properly in advance.

Therefore, I put these very modest proposals to the Minister. She is on a high today, because this is a time when things are on the up in the Government. Here is a chance for the Government to strengthen their resolve on the Bill, which must be done, one way or another, because there must be an opportunity to ensure that the regulator has to regulate and that, if the regulator gets it wrong, the consumer has the proper ability to challenge the decision—not least in respect of cases that we have dealt with—through their MP.

Bridget Prentice (Labour, Lewisham East)

My hon. Friend must know things that I certainly do not and I have my phone switched off, as you wisely suggested, Mr. Cook. Nevertheless, I find it difficult to have to stand up and resist the amendments, because my hon. Friend argued for them so forcefully and so well, on behalf of not just his own constituents, but consumers around the country.

I must resist the amendments for two main reasons. One is that their combined effects would mean the scheme rules having to provide for an ombudsman to extend the time limit in any circumstance that he considered reasonable. There are two aspects to that: first, the scheme rules must allow the ombudsman the power to extend the limit, and, secondly, if and when an ombudsman uses that power, he must do so in a way that is reasonable in the circumstances, rather than by reference to the scheme rules.

I am not particularly convinced on either point. One reason for that is that we rarely use “must” instead of “may” in the Bill and, on this occasion, I am content to leave the matter to the OLC’s consideration when it draws up the rules. It is highly likely that the OLC will want to make rules that allow the ombudsman to extend the time limits in certain circumstances. I think that the OLC would see my hon. Friend’s examples as reasonable in those cases. That is appropriate, fair and flexible, but it is a matter for the OLC.

I am also not entirely convinced on the second issue, because the matter would be left to the ombudsman to decide in every case. That would preclude what the Bill tries to do, which is give clarity or guidance in the rules about when the time limits could be extended. That could act against consumers, as well as sometimes being in their favour.

My hon. Friend said in a previous debate that a lot of consumers do not know how to complain or who to go to. That is certainly the case at the moment. One of the points of the Bill is to make that clearer and simpler so that people know where to go. Therefore, it is better to make the position clear in the clause so that consumers will know whether their complaint is likely to be entertained. That does not mean that there cannot be any discretion in the rules.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am listening carefully to the Minister and it seems to me that she has not answered the point made by the hon. Member for Bassetlaw. If there is an injustice, the fact that someone did not know that they had to complain to the regulator within a set time will not be remedied by the answer, “I am sorry, but you are too late.” There is a difference in damages claims in which there is a good argument for a limit—memories fade and the evidence suffers—and complaints about process. Such complaints should be able to be reopened in the way that other matters are—by application to the courts.

Bridget Prentice (Labour, Lewisham East)

I do not disagree with the hon. Gentleman’s point. It is important to recognise that it may be some time before an individual knows that something has gone wrong and that they want to complain, but the rules deal with the issue of time limits. They provide that the time runs from the moment the complainant becomes aware that something has gone wrong and they need to make a complaint, rather than from the day that they walk through the solicitor’s door. That is fair and reasonable, and the rules allow for it to happen. I hope that that gives my hon. Friend the Member for Bassetlaw some reassurance, and on that basis I ask him to withdraw his amendment.

Amendment No. 292 addresses the dismissal of complaints by the ombudsman alone. Again, I agree entirely with the intention of that amendment. In fact, if my hon. Friend looks further into the Bill, he will see that the function of dismissing complaints summarily cannot be delegated by the ombudsman; it has to be dealt with by him. Therefore, that amendment is unnecessary because we cover those matters inclause 134. On that basis, I ask my hon. Friend not to press the amendment.

John Mann (Labour, Bassetlaw)

When I listen to the Minister and look at the sceptical faces of official Opposition Members, I see that there is no sympathy for anything that will benefit the consumer. We must make a tactical decision on the amendments, which I am contemplating as I think over the Minister’s response.

The issue is not going to disappear. I have a significant number of constituents who are unhappy with the time taken by their solicitor or the fact that they did not realise that they could complain. Some of them—the ones with the solicitors Raleys, for example—are unhappy that their complaints have been outstanding for as long as three years. Out of the blue, a delegation came to see me on that matter yesterday, and I attempted to reassure them, but there are rumblings. A large delegation might be determining to descend before the Bill becomes law to ensure that it is toughened up.

Time limits are fundamental, and I merely repeat my point for the Minister so that she can think through how the matter can be best handled. If people do not know that there is a complaints procedure, how can they know about the specifics within it? Clearly, there should be some constraints—that is fair and reasonable—but there must be an opportunity for those not aware of the system not to be caught out by what are generally the reasonable constraints within it.

The whole problem with the tone of much of the discussion, not least in the House of Lords but also here, is the idea that well-informed consumers are represented in their tens of millions by consumer bodies and that, if everyone is kept happy at the table in some way, all will be fine. As I watched the water flowing past my house at the weekend, I took the opportunity to consider the consumer panel of the Bar Council. All the great and the good are on it, including consumers’ bodies. However, I could not find anyone who had identified the problem of barristers and the cases of textile workers and launched an investigation into it, just as earlier I could not find anyone from the professional bodies who had raised the issue of industrial deafness and the scandal that solicitors were dealing with claims over the telephone. While all the various pressure groups and professional bodies are important, a mass of consumers do not fall within any category and are not represented in any way because they are not the informed consumer. The danger with the Bill is that it is for the informed consumer who writes for the informed consumer.

I intend one way or another to ensure that the Bill is strengthened so that it is for the uninformed consumer who has been badly done over, too. That is the purpose of the amendment. I shall leave it to the Minister to contemplate whether she can come up with a better alternative. There does need to be some strengthening in such areas before the Bill becomes law. On that basis, I beg to ask leave to withdraw the amendment.

John Mann (Labour, Bassetlaw)

I beg to move amendment No. 293, in clause 133, page 68, line 25, at end insert

‘but not, for the avoidance of any doubt, to an approved regulator.’.

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss new clause 17—Handling of complaints by an external regulator —

‘(1) The OLC may direct that part or all of a specific complaint within the jurisdiction of the ombudsman scheme shall be determined by a relevant external regulator where it concludes that—

(a) the complaint relates to matters which would more efficiently, cost effectively or in the interests of the maintenance of justice be determined by a relevant external regulator; or

(b) the matters which give rise to the complaint cannot be divided into service and misconduct matters without undue duplication of process, provision of information or in the interests of justice should be determined by an external regulator; and

(c) the complainant, authorised person or either will not be unduly prejudiced by the determination of the complaint by the relevant external regulator.

(2) Any such complaints the OLC refers to a relevant external regulator for determination shall remain within the jurisdiction of the ombudsman scheme.

(3) The OLC shall be free to vary or cancel any such direction made under subsection (1) if it considers that the complaint is being handled in a manner inconsistent with the provisions of the ombudsman scheme.

(4) The OLC shall remain entitled to award compensation in addition to or instead of any amount awarded by the relevant external regulator in respect of the complaint if it determines that to do so would be in the interests of justice and consistent with the provisions of the ombudsman scheme.

(5) The OLC shall not direct that a complaint is to be determined by a relevant external regulator unless it is satisfied—

(a) that the external regulator has agreed to be subject to the jurisdiction of the OLC for the purposes of handling the complaint; and

(b) that the external regulator’s complaint handling and relevant associated processes are appropriate for the purposes of the resolution of the complaint.

(6) For the purpose of this section “external regulator” means a person other than an approved regulator who exercises regulatory functions in relation to a particular description of persons with a view to ensuring compliance with statutory or non-statutory rules by those persons.’.

John Mann (Labour, Bassetlaw)

My aim is to ensure that matters are not batted backwards inside the system. Whoever is regulating, it is important that there is clarity. I tabled this modest amendment to clarify the position.

Henry Bellingham (Conservative, North West Norfolk)

It is a pleasure to be with you this morning, Mr. Cook. It is also a pleasure to see the Minister and her team. I am certainly intrigued as to why her colleagues are clustered far away from her. She is obviously her usual fragrant self this morning, although perhaps they regard her as an isolated Blairite on the penultimate day of the great man’s reign so they are distancing themselves from her.

Frank Cook (Labour, Stockton North)

Order. Pertinence, please.

Henry Bellingham (Conservative, North West Norfolk)

However, I hope very much that we shall have a constructive morning’s work.

We will come to hybrid complaints when we reach the Government amendments on clauses 143 and 156, where the complaint concerns not just misconduct matters but also service matters. Where the two are intertwined, it can be very difficult to reach a conclusion in the interests of all concerned. Therefore, there may be occasions when the handling of complaints by an external regulator makes a great deal of sense. New clause 17 has to be read in conjunction with the Lords’ amendments to new clause 144.

Bridget Prentice (Labour, Lewisham East)

I happen to be wearing a rather expensive perfume today, so I am deeply disappointed that the hon. Member for North-West Norfolk feels that it is not appropriate or that my hon. Friends are suffering as a result.

My hon. Friend the Member for Bassetlaw, whose amendment I will take first, knows that my intention is to reverse the amendments made in the other place that allow complaints handling to be delegated to the approved regulator. I want the Committee to be in absolutely no doubt that ombudsmen will be prevented from sending any complaint to an approved regulator for determination.

Clause 133(3)(b) simply allows an ombudsman, with the consent of the complainant, to refer the complaint to another body, to be determined there instead. We expect that clause to be used when a person’s complaint to the Office for Legal Complaints really ought to be dealt with under another ombudsman scheme. For instance, when a person complains to the Office for Legal Complaints about the sale by their lawyer of a financial product, such as a mortgage or insurance policy, but it transpires that the lawyer is operating under separate authorisation from the Financial Services Authority and would be subject to the FSA’s regulations, it would be appropriate for the OLC to transfer that complaint to the Financial Ombudsman Service, which would be better equipped to deal with it. I must emphasise that a transfer can be done only with the consent of the complainant and will not—cannot, by virtue of clause 158—be used to allow approved regulators to determine complaints. On that basis and that of the debate that we will have about the reversal of those amendments made in the other place, I hope that my hon. Friend will be able to withdraw his amendment.

I understand the intention behind new clause 17. I know that it is important that the most experienced and appropriate complaints organisations deal with the complaint. Again, if a complaint substantially relates to a financial service, the best ombudsman scheme to deal with that will almost certainly be the Financial Ombudsman Service.

Once ABSs arrive, there will be potential for complaints to the OLC that are not strictly about legal services, or might be about issues outside the ombudsman scheme in the Bill. However, because we appreciate the importance of that, there is specific provision—clause 133(3)(b)—that allows the ombudsman to refer the complaint, with the complainant’s consent, to the most appropriate body. The scheme rules will set out the arrangements under which that will operate.

The new clause envisages that the OLC will retain a role in overseeing a complaint passed to another body. I am not convinced that that is necessary. When another scheme is more appropriate for dealing with a complaint, I would imagine that the OLC would want to pass that complaint on fully, without retaining any control over the determination. On the other hand, where the matter of the complaint lends itself to the scheme within this Bill, but the ombudsman dealing with the complaint needs expertise from elsewhere in order to resolve it, he or she can make arrangementsto seek assistance from that other body underschedule 15. That would allow the complaint to be resolved within this system while using expertise from elsewhere. All of that can be set out in the scheme rules.

I stress that we recognise the point that the amendment makes. The Bill already allows for complaints to be transferred appropriately and therefore, although the amendment makes a worthwhile point, I am not convinced that it adds anything to the Bill. I therefore ask the hon. Gentleman to withdraw it.

John Mann (Labour, Bassetlaw)

In this instance, I am happy with the Minister’s response and I am delighted to ask leave of the Committee to withdraw this amendment.

Bridget Prentice (Labour, Lewisham East)

I beg to move amendment No. 8, in clause 133, page 68, line 42, leave out paragraph (i).

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss the following: Amendment No. 228, in clause 133, page 68, line 44, leave out from ‘complaint’ to end of line 4 on page 69.

Amendment No. 229, in clause 133, page 69, line 5, leave out paragraph (j).

Government amendments Nos. 9 and 10.

Amendment No. 231, in clause 136, page 70, line 39, leave out paragraphs (a) to (c) and insert—

‘(a) the complaint against the respondent is determined or otherwise resolved at least partially in favour of the complaint; or

(b) in the ombudsman’s opinion the respondent failed to deal with the complaint in accordance with the regulatory arrangements which the approved regulator has made under section 112.’.

Amendment No. 232, in clause 136, page 71, line 5, leave out subsections (3) and (4).

Government amendments Nos. 11 and 12.

Bridget Prentice (Labour, Lewisham East)

The amendments made in the other place allowing the OLC to charge case fees are over-restrictive and unfair, and I therefore seek to reverse them. I have particular difficulty with subsections (2) and (3) of clause 136, which set out the circumstances in which, even though a complaint has been upheld, the OLC will be required to reduce or waive a charge. It is completely unacceptable to say in primary legislation that charges would be required to be waived or reduced just because the lawyer was acting pro bono or the charge might be relatively large compared with the amount paid for the legal services.

The amendment made in the other place takes no account of the effect of the lawyer’s actions on the consumer or the reasons for the complaint being before the ombudsman at all and is more interested in the effect on the lawyer. I am sure that my hon. Friends would agree that that is the wrong way around.

Bob Neill (Conservative, Bromley and Chislehurst)

I understand the Minister’s logic, but does she concede that, if that is right, there should not be any circumstance in which a lawyer of any branch of the profession who has been cleared of a complaint should be expected to pay either?

Bridget Prentice (Labour, Lewisham East)

We have discussed this part of the Bill over some time. I have sympathy with the proposition that where a person is entirely innocent they should not have to pay, but the clause allows for a charge to be waived or reduced. So, if a complaint that is vexatious—or even if it is a genuine complaint but the lawyer, through proper in-house complaints systems had not only dealt with the complaint butwith the original situation properly—reaches the ombudsman, it is perfectly within the power of the Office for Legal Complaints to waive any charge. The amendment made in the other place did not take any account of the way that lawyers can behave and the effects of that on consumers.

I also have difficulty with the proposition that charges should always be waived or refunded where a complaint is upheld in the complainant’s favour. It is fine where the complaint turns out to be completely unfounded and the respondent has done everything properly to co-operate with the OLC, but that is not the effect of the amendments made in the other place.

The way that the Lords amendment is worded is that even when a respondent has been unco-operative, uncommunicative, and could have resolved the matter without it going to the OLC, the OLC will not be able to impose a charge to assist with the cost of handling that complaint, which should never have reached it. I do not see how that sends the right message to potential respondents or consumers.

The provisions on charges, before they were amended in the other place, already allowed for a fair system to be set up. That is why the clause specifically stated that the rules setting out the charges could provide for the OLC to reduce or waive them, set different charges for different stages of the proceedings on a complaint, or provide for charges to be refunded in specific circumstances.

The benefit of the provisions before they were amended was that they allowed for all those issues to be addressed in the scheme rules. That gives operational flexibility and the opportunity to adapt and change over time, rather than being restricted permanently in primary legislation.

Nowhere did they say how the charging scheme would work. Therefore, all those who are worried about it acting unfairly and disproportionately should wait before making a grand statement until they have had a chance to comment on the draft rules, which are bound by the Human Rights Act 1998 and are compatible with the European convention on human rights.

The rules setting out the scheme of charges require the consent of the board and the Lord Chancellor. They have to be made in line with the regulatory objectives, including the public interest. There is also a requirement under clause 206 that the scheme rules are subject to consultation. Ultimately, those rules will be open to challenge in the courts. That ought to be enough. It is on that basis that I ask the Committee to support me in reversing the amendments made in the other place.

Henry Bellingham (Conservative, North West Norfolk)

I am grateful to the Minister for explaining why the Government are trying to remove the amendments made in the House of Lords after important debates in the other place in Grand Committee and on Report. The Minister has given us an interesting summary on how she sees the situation, why she feels that the Government amendments have to be made this morning and why the amendments in the Lords do not stack up.

However, the Opposition are not very happy with what she has said. What the Lords put in was fair, reasonable and sensible. A key principle is at stake. People who have been exonerated following an investigation should not be penalised for being found blameless. That to me is a pretty fundamental point. That point was made again and again in the House of Lords. I would also underline the point by saying that Clementi made it very clear in his report that payment should be made by those against whom a complaint has been upheld.

If Government amendments Nos. 8 to 12 are agreed, the principle laid down by Clementi would be contravened. Eminent Members of the House of Lords spoke at some length on the issue. I will quote from two noble Lords who spoke in the debate. One was Lord Neill of Bladen, who on Second Reading said:

“It cannot stand up to any outside scrutiny that a man who has a false charge made against him has to pay [for] the costs of the proceedings.”—[Official Report, House of Lords, 6 December 2006; Vol. Volume Number, c. 1185.]

Lord Neill is a very distinguished individual indeed.

I also have a quote from Baroness Butler-Sloss in the Grand Committee debate of 21 February when she said:

“The idea that unfounded complaints, some of which last for anything up to 10 years after the case is completed, should be met by the respondent having to pay is quite unjust.”—[Official Report, House of Lords, 21 February 2007; Vol. 689, c. 1115.]

That clearly sums up our concerns.

I should like to add a few points, and the first concerns younger members of the profession, on the solicitors’ and the barristers’ sides of the law. If the Government amendments are agreed to and the Bill reverts to its original form, a significant trend could emerge whereby there is a deterrent to younger members of the profession who want to practise in those areas where unjustified complaints are often likely to be made. I am particularly thinking of criminal and family law cases, for example. We all know examples from our constituencies where people have fought and lost a case, but have nothing to lose by complaining.

A couple of cases spring to my mind immediately. One was that of a policeman charged with corrupt practices who is a 100 per cent. convinced that he is innocent. He fought his case through the Crown court, the Old Bailey and the Appeal Court and now seeks leave to take the case to the House of Lords. He feels very strongly that he did not get the best legal advice and that his barrister let him down. He has nothing at all to lose by complaining about the legal team who represented him.

I have another case, which is very sad, of a constituent who was accused of child abuse in incidents that took place many years ago who also claims his innocence. I believe that his legal team did their level best on his behalf but, again, his sense of grievance and outright anger and distress is enormous, so of course he will complain against everyone in sight.

Again, Baroness Butler-Sloss, a very wise person, speaking in the House of Lords, said:

“Family cases are highly emotional and very unhappy for those who engage in them. It is almost impossible to be objective about your own family problem. Whether in public law or in private law, the distress caused to litigants is enormous. Almost all litigants go away dissatisfied, most of them with the judge, which is fair enough, and many of them with the lawyer—the solicitor as well as the barrister—who represented them.”—[Official Report, House of Lords, 21 February 2007; Vol. 689,c. 1115.]

That sums up my concern. I am worried about the onus and cost that that would put on some of the younger members of the profession, particularly those who will be going into those areas of law where we want young practitioners.

I understand why the Minister is keen to bring in a simple and straightforward system, which is easy follow. I also understand why the Government are keen to replicate the Financial Ombudsman Service scheme—there is a standard charge for all respondents in that scheme, and one can take the complaint and know that at the end of the day the respondent will have to pay. However, financial services are very different from legal services. A provider of financial services can always say, “Look, I am not going to take your business,” and tell the person to take a running jump, but when it comes to the law, one cannot do that. Many of my colleagues understand the cab rank rule, which I remember from when I was at the Bar, whereby the brief must be taken even if one knows that the previous five or six barristers to have acted on behalf of the client have been the subject of complaint. In fact, the barrister taking the brief is doomed unless he can perform an extraordinary miracle and end up winning the case.

I understand why the Government are keen and anxious to bring in a simple and straightforward system, which everyone can understand, but surely that should not be at the expense of the innocent, punishing people who might be in the firing line. The law of unintended consequences comes into play, because the Government amendments could lead to more complaints taking place; there could be a proliferation of complaints, because the complainers have nothing to lose. I also submit that it might discourage practitioners from operating proper in-house complaint resolution procedures. What about the actual costs? What about the resources of the OLC? Such issues are causing us great concern. The Government are trying to put in place a simple, straightforward system. I understand exactly why they want to do that, but it should not be at the expense of justice and fairness, nor should it have the unintended consequences to which I have alluded and which will undoubtedly ensue if the Government’s amendments are accepted today. That is why Opposition Members feel strongly that the Government have it wrong and why we shall vote against the amendments.

John Mann (Labour, Bassetlaw)

That is the first time that I have seen the hon. Member for North-West Norfolk so animated and enthused. Something must be striking hard at the vested interests of his professional colleagues. I have heard the Minister make the best of proposals and the most outrageous of cases put against them. I do not know how many complaints the hon. Gentleman advises on and insists on taking forward, but I am as happy to say to constituents of mine that they have no valid complaint and will receive no assistance other than my writing to a regulatory body and saying that, as I am to take forward a valid complaint. I take such action, and I lose a few votes each time because those constituents feel unrepresented, but that is the nature of the job. If people have a valid complaint, they are assisted. However, a clearly spurious complaint made by someone trying to vent their frustration destroys the credibility of the honourable complainant. That is fairly fundamental.

Kevan Jones (Labour, North Durham)

Does my hon. Friend agree that, if someone puts forward a frivolous complaint to the ombudsman, it does not reach the stage to which reference has been made, but is thrown out at the beginning?

John Mann (Labour, Bassetlaw)

Not only are such complaints thrown out at the beginning, but cases that are not frivolous are sometimes thrown out at the beginning. People have to persevere strongly even to get valid complaints investigated. The balance of assumption is towards the profession, not against it. That is probably a rational way in which to do business. I am not over-complaining about it. The complaints that I receive are about advice, information and assistance for people taking matters forward. There is almost a working presumption that the profession is honourable rather than dishonourable. Sometimes, with the most scandalous of professionals, that gives an inbuilt bias towards the presumption of probity and honesty that may not be 100 per cent. there.

The most extraordinary outburst from the hon. Member for North-West Norfolk was completely out of context. It is totally irrelevant as such complaints would get nowhere. Arguments put by vested interests include the fact that a complaint cannot be valid any more because the complainant is dead. Yet the complainant is dead because of the industrial disease that he had contracted. When challenged, some solicitors have not been too keen to put such matters in writing, but have dared to suggest that a complaint should be dropped because the person for whom justice is being fought is dead. Well, that is not usually the view of the person’s family. They believe that, if a fight for justice has been going on, it is right and proper that it should be continued. However, that is one of the arguments put forward.

Let us consider the way in which some of the respondents to complaints deal with such matters. In case there is any misunderstanding, I shall give some examples. Graysons solicitors have repeatedly breached the Data Protection Act by passing information to a third party in the hope and presumption that it will persuade the complainant to drop the complaint. That has happened on a number of occasions and it is only by threatening them with the Data Protection Act that their open and upfront public breaching of the law has stopped.

Or there is the case of Thompsons solicitors, the biggest firm of solicitors dealing with industrial injury and disease claims in the country. They deducted money directly from one of my constituents—not to a third party, but into their own coffers—and then they had the gall to deny it. I had to cite the individual case to prove that they had made direct deductions and then badmouthed unnamed hon. Members in briefings to organisations such as the TUC, suggesting that we do not know what we are talking about and we do not have the facts right, when the facts that we have are document based and proven and have won the case when they have been put before the regulatory body.

Another case is that of Robinson King solicitors, who suggest that they cannot afford to pay. In cahoots with the scandalous claims handler Union and General Services, they have taken large amounts of money off my constituents and others—£2,000 to £3,000 from people who are dying of emphysema. Their defence for not making such payments is that they cannot afford them. But where has the money gone and what have they been doing? And if they cannot afford it, that is tough, because my constituents cannot afford not to have the money that is duly theirs. Those are the kind of people that we are dealing with.

I answered a case against Beresfords, which states unequivocally in its defence, “We doubt that the individual has a complaint and has made a complaint”. When I rang the gentleman up to confirm whether he still has a complaint, strangely enough, he has, and it was he who made it. But that is part of their defence. These are weasel words from solicitors, trying to abdicate their responsibility to pay out to people whom they should never have misrepresented in the past. The suggestion that my constituents, who have never dealt with the legal profession before, should then face the threat of having to pay for a case resulting a complaint that they have made is a scandal. It is unbelievable in the context of what has been going on.

I commend the Government in reversing this outrageous proposal from the House of Lords which came from those with vested interests and who should never have had the gall to put it there in the first place.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

This is obviously a heated issue. I believe that the debate in the Lords was described as one of the most lively and passionate. In this group, amendments Nos. 228, 229, 231, 232 are a set just as the Minister’s amendments Nos. 8, 9, 10, 11 and 12 are a set. They relate to the same issues and to clauses 133, 134, and 136. They are on the same subject of charges.

The amendment from the Lords was carried by a significant majority. It did not sneak through by just one or two votes; there was a coalition of Cross-Bench peers and peers from the two major opposition parties—I am not sure whether there was Labour support as well.

Henry Bellingham (Conservative, North West Norfolk)

As the hon. Member for North Southwark and Bermondsey rightly points out, the vote was contents 183, not contents 127. I have counted a substantial number of Labour peers who were in the contents list and supported the amendments put into the Bill—there must have been at least a dozen or so.

John Mann (Labour, Bassetlaw)

How many of them were lawyers?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful to the hon. Member for North-West Norfolk. In answer to the hon. Member for Bassetlaw, I suspect that there were some lawyers. He can do the adding up from the figures. The more interesting question is how many of them were not lawyers.

The parts of the Bill that the Minister wants to change state that—[Interruption.] To explain the amendments, it is helpful to read these things so that people can see what the proposed changes are. Clause 133 states:

“Scheme rules made under subsection (1) may (among other things) make provision—

(i) for an ombudsman to award costs against the respondentin favour of the OLC for the purpose of providing a contribution to resources deployed in dealing with the complaint if—”.

There are then two qualifications, which are that

“(i) the complaint against the respondent is determined or otherwise resolved substantially in favour of the complainant, or

(ii) in the ombudsman’s opinion the respondent failed to deal with the complaint in accordance with the regulatory arrangements which the relevant approved regulator has made under section 112”.

Paragraph (j), which is the other part of the proposal, states that there can be provision

“for an ombudsman to award costs against the complainant or the respondent in favour of the OLC for the purpose of providing a contribution to resources deployed in dealing with the complaint, if in the ombudsman’s opinion that person acted so unreasonably in relation to the complaint that it is appropriate in all the circumstances of the case to make such an award”.

That is the situation now, after amendments were made in the Lords.

Clause 136 states:

“The rules must provide for the OLC to reduce or waive a charge in circumstances where—

(a) the complaint relates to activity undertaken otherwise than for reward,”—

that is about pro bono work—

“or

(b) it appears to the OLC that the amount of a charge, unless reduced or waived, would be disproportionate having regard to the gravity or nature of the complaint, the value (if any) of the subject matter of the activity to which it relates, or the consideration payable for the services used by the complainant which consist of or include that activity,”—

that is about a disproportionate penalty—

“or

(c) it appears to the OLC that the amount of a charge, unless reduced or waived, would cause the respondent undue hardship.”

There are three circumstances in which the law would allow the payment to be waived.

The amendments that stand in my name and that of my hon. Friend the Member for Birmingham, Yardley effectively suggest a compromise way forward. I will be grateful if the Minister considers them during her winding-up speech, because I am seeking to take some of the heat, which we have already encountered, out of the debate by coming up with something that might, in general, meet the concerns on both sides of the Committee.

Amendment No. 228 would take out clause 133(3)(i)(i) and (ii), and amendment No. 229 would take outparagraph (j). Amendment No. 231 would take out clause 136(2)(a) to (c) and insert the alternative, which is on the amendment paper. Lastly, amendment No. 232 would leave out clause 136(3) and (4). Those amendments would replace what the Government have suggested in the two relevant clauses.

I will explain the thinking behind the changes and hope that the Minister can be positive about them. The argument is that if the OLC is permitted to award costs against complainants, the prospect of paying costs might put people off making the complaints in the first place. The system is open to abuse by unscrupulous lawyers who might convince people—in the sort of case raised by the hon. Member for Bassetlaw—not to pursue their claim on the grounds that they could face costs if they lost.

We have heard about how the Bill was amended in the Lords. However, it is perfectly reasonable to argue that those changes will not necessarily prevent the abuse. They are also unnecessary because, as we touched on earlier, the OLC could decide not to pursue an investigation if it thought a complaint was frivolous or vexatious, and therefore only marginal costs would be incurred. It acts as a check in that the OLC could say, “We aren’t going to look at it at all,” and therefore there would be no great expense incurred in that context. We have a power ready to deal with unreasonable behaviour, by saying, “No, that is nonsense, you are back for the third time, fourth, or fifth time.”

I think, and the hon. Member for North-West Norfolk hinted at this, that the Financial Ombudsman Service is the only ombudsman scheme that can award costs against a complainant. However, I am told that the ombudsman has never used that power, which suggests that it is unnecessary. I stand to be corrected by the Minister, but that is my information. I hope that our amendments would at least correct the provision dealing with something that has not actually happened, and may be only a theoretical situation.

Our amendments would require the OLC to set rules enabling charges payable by respondents to be reduced or waived. The amendments suggest that the complaint is resolved in the complainant’s favour, at least in part, if there is no satisfactory in-house resolution. There might be other relevant reasons for why the OLC thinks that it should use this power. I accept that amendment No. 231 would take out the specific provision that limits it to pro bono work, which refers

“to the gravity or nature of the complaint”

and the causing of hardship. Therefore, that provision does not tie it down as much as the amendment would.

Going back one step further, the wording in the original Bill—again I stand to be corrected, but this is how I recollect it—enabled the OLC to reduce or waive charges payable, but did not set out any circumstances in which that should apply. There was some satisfaction with that approach among consumer organisations, and there is an understandable willingness to have more flexibility than there is currently in the Bill. However, it important to have clear principles so that people know what the circumstances are in which they might be liable to pay up.

I also understand that the general view presented to the Minister by consumer organisations is that it would be unfair for respondents—solicitors or lawyers—to pay charges once they had been exonerated on the main issues, and the complaint had been adequately considered in-house. Therefore, the amendments retain the wording of those made in the Lords, with the exception that instead of “resolved substantially”, there are the words “resolved at least partially”. That means that lawyers would be liable to pay some costs if they are at any fault, and addresses the problem that the phrase “resolved substantially” might be interpreted inconsistently or could be difficult to prove. I hope that that deals with the major concern that lawyers would not be liable if found to be at fault.

The second condition relating to in-house complaint arrangements is obviously important if we want to ensure that the arrangement is satisfactory, without having to go to the external ombudsman. A complaint that is rejected by the OLC will not necessary have been made without justification. For example, many complaints arise because firms are not very good at explaining things to their clients, and the true state of affairs comes to light only once the ombudsman gets involved. It is important to give lawyers an incentiveto resolve matters in-house where possible, ratherthan relying on an appeal outside the system. The flexibility to reduce, refund or waive charges in circumstances apart from the two mentioned, is provided by clause 136(5).

Work carried out on a pro bono basis should not, in our view, be exempt from charges. If, as the Minister hinted, respondents were exempt from paying charges for lower-value complaints, that could exclude many areas of legal work such as drafting a will, which we talked about earlier. Therefore, it might not be possible for simple work to be the subject of complaint and payment, and that would clearly be unsatisfactory. The hardship provisions might not be necessary; I am informed, and it certainly should be the case, that all lawyers carry indemnity insurance.

The relatively small administrative costs charged by the OLC for handling a complaint are unlikely to be a significant deterrent. I suggest a middle way, although that is not always my position. I hope that the Minister will be positive, but I sense that in any event the issue will return on Report. If we could get agreement between the parties represented on the Committee and on the arguments that have been bouncing around, that would be the best way forward, but we are clearly not there yet. I hope that the Minister will be supportive of an attempt to get us there at the end of the debate.

Kevan Jones (Labour, North Durham)

I support the Minister on this issue. The amendment gets to the heart of what she is trying to put forward in the Bill; it is about protecting the consumer.

Like my hon. Friend the Member for Bassetlaw, I come at the Bill after dealing with numerous complaints about how a lot of my constituents were dealt with in the miners compensation scheme. Clearly, the other place and Conservative Members come at it from the position that all lawyers are honourable and true, and act in the best interest of their clients. If that were the case, it would be okay, but unfortunately they do not.

The Law Society has moved a huge distance in the last few years. When my hon. Friend and I first got involved, there was a reluctance in the society about properly dealing with complaints, and not just those from Members of Parliament. People came forward who were not used to dealing with solicitors, and they were asked why their MPs had made representations and whether they should be part of the complaints system at all. Quite frail and elderly constituents were sent voluminous legal tracts on their rights and what they might wish to do, which just confused people. My hon. Friend and I pleaded with the Law Society to stop sending this stuff directly to the constituents because it was adding to their concern and worry.

The way in which the Legal Complaints Service operates now is very good. It has recognised the fact that, as with the cases that my hon. Friend and I put forward, a lot of complainants are not used to dealing with the system. Anything that stops people having access to justice and putting the complaint forward is wrong.

Clearly, the measure has been introduced in the other place as a way of trying to reduce complaints and protect the vested interests that I have seen in complaints that I have dealt with. There is not always a clear reaction from solicitors to admit where they have got it wrong. I shall refer to the case of Silverbeck Rymer v. Mr. Jobes, a case that I took a few years ago. Mr. Jobes was a 72-year-old, very seriously ill gentleman who had £3,500 of his compensation taken by Silverbeck Rymer, a Liverpool-based firm of solicitors. The case had been referred to Silverbeck Rymer by a company called Industrial Disease Compensation Ltd. of Ashington. The solicitors then deducted the money at the conclusion of the case and passed it to IDC, which had done nothing. My constituent lost money, but the solicitors did not advise Mr. Jobes that he had no reason to pay that amount.

I give credit to the Legal Complaints Service. I cannot remember what it was called in those days; its title has changed since then. The case officers pursued the case very well, but the attitude of the solicitors was not to admit that they were wrong. They took the case all the way through to adjudication. If it had not been for my intervention and the case worker who dealt with the case and understood it very well, that individual would never have got justice and would not have had that money awarded to him.

I challenge the idea that when solicitors know that genuine mistakes or scams have taken place—I refer to that case as a scam—they suddenly roll over and admit that they are wrong. They do not. We have a difficult system for complainants, so anything that makes it more difficult for complainants to come forward has to be discouraged. The Bill would be weakened significantly with regard to consumers if the amendment tabled by my hon. Friend the Minister were defeated. Therefore, I am happy with the amendment’s proposals and I plead with the official Opposition to recognise the fact and not to look at it from only a solicitor’s point of view. If Opposition Members want to meet some of my constituents and those of my hon. Friend who have been scammed by not only small backstreet law firms, but by some well known national chains as well, they should please contact us. They will find that those constituents are genuine, should have been given clear legal advice and went to solicitors thinking that the solicitors were acting in their interests, but it is clear that they were not.

My final point is about internal complaints procedures, which the hon. Member for North Southwark and Bermondsey raised. Internal complaints procedures are okay in practice if a solicitor or lawyer is clear about who they are acting for or in the best interests of. I will give the example that has already been mentioned. The National Union of Mineworkers in Durham signed people up to take forward chronic obstructive pulmonary disease claims and passed those cases to Thompsons solicitors. My constituents who were affected asked who they should complain to. The first port of call was clearly the NUM in the Durham area, which was being paid 7.5 per cent. for doing absolutely sweet Fanny Adams, and was not going to give that money back or look at those complaints in any way because it had signed the agreement with Thompsons solicitors.

It would be expected that Thompsons would say to those constituents, “You’re my client, so I should be giving you clear advice that you do not need to pay this money.” But Thompsons did not do that, because there is a confusion over whether it was acting for the NUM or the constituents, and I have said that to some of its senior partners. The £5 million that has been paid to the NUM in Durham by my constituents and those of other hon. Members makes it clear that Thompsons was not acting in the best interests of those constituents. They could have gone to any high street solicitor and got the work done for absolutely nothing because the Government were paying all the legal fees that related to those cases.

It is not simply the case that some of the issues concerning solicitors can be dealt with internally because some of those firms—Thompsons is one and my hon. Friend the Member for Bassetlaw mentioned a few others—have conflicting interests and do not act in the best interests of the clients as they should. That is because they have relationships with either claims handling companies or, in Thompsons case, with organisations such as the NUM in Durham. The poor consumer does not know where to go, so that must be made clear. With regard to the complainant, the Bill clarifies the process and the fact that complaints against a solicitor will be dealt with fairly.

I was told very early on by some solicitors that some of my complaints were frivolous, and certain solicitors even wrote to constituents of mine saying, “How dare they come to me?” The other week I heard of one solicitor who is apparently going to give me a piece of his mind when he sees me, which I am waiting for with anticipation. Some asked how I dared to put forward complaints against certain firms of solicitors. It has got to be a fair system, and one where those who are dealing with solicitors’ firms know where to complain and can get justice. If the provision is taken out, I suspect that the threats that solicitors make to clients about potential costs involved will end.

Many people who do not deal with solicitors regularly and who, in some cases, are quite poor will be discouraged if they think that they will be landed with a big bill from the solicitors at a later stage. That was clearly the case for Mr. Jobes. If he had thought that he would be penalised at the end of that process by a very aggressive firm of solicitors such as Silverbeck Rymer, he would not have pursued that case. That would have been an injustice, and would have been so not just in that case, but in the many hundreds and possibly thousands of cases that my hon. Friend and I put forward.

Bob Neill (Conservative, Bromley and Chislehurst)

My interest as a non-practising barrister is recorded, and all the people that I know and worked with over many years at the Bar want to ensure that those people in our profession who behave badly are disciplined and dealt with. That is what the vast majority of lawyers from both branches of the profession want. The hon. Members for Bassetlaw and for North Durham have gone into considerable detail over individual instances of injustice suffered by their constituents. With respect, the point is that those are clear cases of misbehaviour or negligence by solicitors. Those were genuine complaints, and it is right that justice should be done for their constituents under those circumstances; none in the profession want to stop that.

Kevan Jones (Labour, North Durham)

May I ask the hon. Gentleman why the Law Society was not just slow, but very diffident in relation to the fact that a large scam was going on in the early days when my hon. Friend the Member for Bassetlaw and I were pursuing this? Having met the president of the Law Society at a reception a few months ago, I have to say that her attitude is still very dismissive.

Bob Neill (Conservative, Bromley and Chislehurst)

I have not had a conversation with the president of the Law Society, but I think that the hon. Gentleman himself conceded that there had been considerable movement and far greater recognition of the issues by the society. He made that point, and we accept that there is a need for a new and better system. We do not have a problem with that.

It concerns me, however, that the desire of Labour Members to see justice done for their constituents might perhaps genuinely cloud them to the risk that injustice may be done to some practitioners in the legal profession by dishonest, vexatious, frivolous and malicious complaints. If Labour Members do not believe that that happens, I am afraid that they have no experience of the real world in which many lawyers work. For 25 years, I practised almost exclusively in the criminal courts of this country. For about five years before that, I did a good deal of family work, which was virtually all publicly funded work of one kind or another. That is the way it is at that end of the profession; it is not the “fat cat” end of the profession. Disproportionately, the people who practise in those areas tend to be younger members of the Bar. The rewards are also less. They are, therefore, more vulnerable to the risk of financial penalty and more vulnerable to the people with whom they deal.

I do not think that some hon. Members appreciate the importance of what is called the cab-rank rule at the Bar. That is the fact that people cannot turn a client away because they do not like the look of them. That is absolutely fundamental and very important in ensuring access to justice for people with unattractive criminal cases—sometimes, with very fraught family cases—who, none the less, must have someone to argue their case as a right, until, a prosecution is proved against them beyond reasonable doubt.

Against that background, and under that principle, I defended some pretty unpleasant and nasty people over the years, as have many of my colleagues. The sort of person who is prepared to murder, rape, beat his wife or his partner senseless, or stick a shotgun to the head of a sub-postmistress or something, is perfectly prepared, when serving his long, deserved prison term, to turn on everyone that he has come across in between and make vexatious, false complaints. Do not think that that will always automatically be seen through immediately, as many of these nasty people are persuasive, plausible, manipulative and devious. It is not just experienced lawyers such as myself who have to deal with them; the young barrister who has to go and deal with the remand hearing in the magistrates court—receiving £40 for the appearance—is as much vulnerable to complaints by those sort of mendacious people as a senior practitioner such as myself, who might be more robust in dealing with it. I hope that hon. Members will not forget that there is another side to the coin, and that is hugely important. That is why we think that the Lords amendments are significant.

There is a principle in criminal law that, if a defendant is acquitted, he or she should not be penalised in costs, unless his actions—the judge’s use of phrase there—have brought the prosecution upon him; he has behaved badly in a way in which he might have told lies to the police or concealed matters that would have brought the investigation to a close sooner.

In a sense, that is what the Lords amendments would address. When someone against whom a complaint is made is cleared, and it is shown that there is no fault against them, it is clearly wrong and unjust that they should run any risk of penalty. That is what the Bar Council and the Law Society are concerned about.

The Minister effectively says, “I don’t see why that should be in primary legislation,” but while removing sub-paragraph (i), which would enshrine in primary legislation a measure of protection for lawyers who are the victims of unjustified complaints, she is content to leave sub-paragraph (j), which would put a similar restriction on circumstances in which costs could be made against complainants rather than respondents. There is no logical consistency in saying that no constraints on the rules can be referred to in primary legislation. It seems fair to do so, and I urge the Government to think again. The amendments would not protect vested interests and fat cats, but the vulnerable in the profession doing a necessary public service, who will be those most at risk if the amendments are swept away.

David Burrowes (Conservative, Enfield, Southgate)

I am pleased to follow my hon. Friend, who has put discussion of the amendments into the proper context. The hon. Members for Bassetlaw and for North Durham also had the right context when they recognised that the Legal Complaints Service has made considerable progress in putting its house in order. Indeed, I was flicking through the Law Society’s Law Gazette only today. The hon. Member for Bassetlaw is featured in the centre of this week’s issue as recognising the improvement. It is there for all to see. It is interesting that he is becoming the champion of such interests as solicitors’. Perhaps he is not their centrefold pin-up, but one recognises the progress made by the legal services.

John Mann (Labour, Bassetlaw)

I thank the hon. Gentleman for creating such good publicity. I am sure that he would want to recognise that that progress has been made precisely in the context that my constituents have not had the threat shoved down their throats by solicitors that they might have to pay if they take a complaint against those solicitors.

David Burrowes (Conservative, Enfield, Southgate)

The context is right in terms of progress, but it is wrong in terms of the amendments and of dealing with those genuine complaints where scandals have been revealed and conduct that we all deplore is found to have occurred. The book must be thrown at such cases, but we are considering not so much those genuine complaints, which the hon. Gentleman has been diligent in bringing to the Committee’s attention, as unfounded complaints and how to deal properly and proportionately with them.

The hon. Gentleman raised concerns about delay, although some progress has been made in improving the situation. The amendments that the Government are seeking to overturn would cause problems in dealing with matters expeditiously. I suggest that the Bill’s intention is to deal with matters quickly and, as may be the case, properly in-house. There would be unintended and problematic consequences if the amendments were allowed to stand.

The Minister justifies the amendments on the basis that the Bill is inflexible and unfair as presently amended. As for inflexibility, the rules are directory, not mandatory, and must be followed with due discretion. There is no mandatory element to them. As my hon. Friend the Member for Bromley and Chislehurst pointed out, other clauses have a degreeof restriction, but all of them involve directory requirements.

The Minister and the Government seek to justify their approach on the basis of the Financial Ombudsman Service. Can the Minister explain how the legal profession is so similar to the ombudsman service in how it deals with complaints? How is there no distinction in terms of particular lawyers specialising in areas disproportionately likely to be subject to unjustified complaints? Let us see the justification to put them on such an equal footing when there may be a requirement to pay charges in respect of handling complaints, whatever the outcome.

Fairness cuts a number of ways. Let us consider lawyers who have never been subject to complaints, whom we all commend and support. Given that it is proposed that the Office for Legal Complaints is to be funded mainly by practitioners on a general levy, is it appropriate, proportionate and fair for those lawyers to bear that burden? As for lawyers against whom complaints are not upheld, the key objective of the Bill is to encourage the handling of complaints to be resolved expeditiously when possible through in-house means. Those lawyers will be affected by the Government’s approach. Why should the profession, not the practitioner who failed to deal properly with the matter in-house, collectively bear the cost of the Office for Legal Complaints when dealing with such cases?

Sir David Clementi identified the risk, as did the Joint Committee, of not properly allowing the polluters to pay. The Government favour a system under which charges are paid whatever the outcome of the complaint, so the issue would just be based on administrative simplicity. It is wrong to put administrative simplicity ahead of the need to avoid causing injustice to authorised persons who had been subjected to unfounded complaints. Will the Minister make it clear that she does not wish that to happen? It must be made explicit in the Bill that such an outcome should not take place.

Bridget Prentice (Labour, Lewisham East)

The debate has been interesting and quite lively, as it was in the House of Lords. With reference to the amendments tabled by the hon. Member for North Southwark and Bermondsey, I repeat that there was nothing inherently unfair in clause 136, as originally drafted. I am confident that, after consultation, the OLC, the board and the Lord Chancellor with oversight of it will draw up a pretty fair system of case fees.

The system might provide for fees to be waived or reduced in the circumstances set out in the amendments. I can see considerable merit in that. However, if they were to be waived, I should prefer that to happen when the complaint was not upheld and when the respondent co-operated and had shown that the matter has been subject to proper in-house complaints procedure. I am keen to avoid a position in which the respondents who could have resolved the matter much earlier have no incentive to do so, but just send it to the OLC. I want the Bill to result in a proper, robust and responsive in-house complaint systems in the legal profession.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I should have thought that there was no dispute about that. We have all put forward arguments in favour of good in-house complaints procedures and the more complaints that can be resolved on that basis, the better.

Bridget Prentice (Labour, Lewisham East)

I wanted to make sure that the Committee was aware of the important principle in the Bill that the in-house complaints system has to be robust and responsive. However, I am keen to consider the issue raised by the hon. Member for North-West Norfolk about a respondent who has gone through his own in-house system and co-operated fully with the OLC, and is not then charged the additional fee. I shall look at that matter to see if we can amend that part of the Bill to reflect that more clearly.

The hon. Gentleman and the hon. Member for Enfield, Southgate referred to my proposals as akin to the Financial Ombudsman Service. The reason is that the Financial Services and Markets Act 2000 allows for a contribution to be made by a complainant where appropriate. The hon. Member for North Southwark and Bermondsey is right that the Financial Ombudsman Service has never used the rule, which appears to mean that it is redundant, but it has told us that it is a good deterrent against people bringing vexatious complaints. However, we must also be clear that the provision is not a means by which an unscrupulous lawyer can prevent a consumer making complaints. My hon. Friends raised the point of people being frightened off making a complaint by the lawyer trying to say, “Well, you may have to pay for this at the end of the day”. The provision will act as a deterrent against those who are trying to waste the time and resources of the OLC, to the detriment of people who have valid complaints.

I said at the beginning and now repeat, the amendments made in the other place go too far. They are a long way from being fair, which is why I wish to overturn them here. However, I accept what the hon. Members for North Southwark and Bermondsey and for Bromley and Chislehurst said in pointing out that where the solicitor or barrister has behaved properly, reasonably and honourably—they have gone through a proper complaints system, after which the case has still gone to the OLC—and is then found to be exonerated absolutely, there is a case for that person not to have to pay those costs.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The Minister is being very helpful. I do not think that this has yet been asked in Committee, but would she follow the implication of what she said by making sure that, after we have finished in Committee, she gets representatives of the three parties on the Committee together for a session in which we can come to some agreement around the table, rather than bouncing further amendments around? I hope that she will still be in post, but will she make sure that the undertaking is given departmentally in case there is any shift of responsibility in the days ahead?

Bridget Prentice (Labour, Lewisham East)

I am not sure whether I am about to sign my own death warrant or something. We are living in interesting times as to what the situation this time next week might be. Yes, I will give the hon. Gentleman that assurance. Cross-party discussions to ensure that we get this particular matter right would be useful. The hon. Members for North Southwark and Bermondsey and for North-West Norfolk know that I have always been keen to involve people in seeing where our minds are going on such issues. I am happy to try to make that happen, because I agree that if we can resolve matters in that way, the passage of the Bill will be much pleasanter.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

There are still some residual concerns from the current legal services ombudsman about some improvements that are not hugely controversial. We seem to have an agenda—looking at the complaints system in the light of this debate and any other concerns—and, if such a meeting were possible, that would be really positive.

Bridget Prentice (Labour, Lewisham East)

There will be further debate today about some of those other areas of complaint. No doubt we can deal with them then. As I say, I am happy to be open about how we move things along for the examples given, so that the entirely innocent respondent is not unjustly and unfairly dealt with. On that basis, I would ask the hon. Gentleman to withdraw his amendments and for the Committee to support my amendments.

Henry Bellingham (Conservative, North West Norfolk)

The Minister has been fair-minded and understanding. The Opposition would like to accept her invitation to enter a cross-party bipartisan approach to sort out the problems in the event of her amendments being made. We will vote against those amendments because we feel very strongly that this was a victory won in the Lords after a great deal of debate. I do not accept what the Minister has said, but in the event of us losing, it would be churlish of me not to accept her kind invitation.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 230, in clause 133, page 69, line 14, at end insert—

‘( ) for the identity of respondents to be published.’.

This debate is over a much more straightforward single point amendment than the last debate, which stretched over lots of interconnected points and arguments. The amendment is an attempt to put a provision in the Bill that would require the OLC to make rules about identifying legal service providers it has upheld complaints against. The amendment comes as a suggestion from the professions, which want to ensure that people who do wrong are seen and known publicly to have done wrong because that then protects them from a tarnished reputation by association. That is very important. If people offend and they are dealt with, we ought to know who they are. The rest of the profession should be regarded as good, proper and honourable in what they do.

I accept that the Bill as it stands does not prevent the OLC from identifying firms it has upheld complaints against. We are the subject of freedom of information legislation, and anyone, including parliamentarians and, more importantly, users of the service—ordinary citizens and local papers—will be able to obtain that information. The amendment is to avoid any doubt and to ensure that the OLC proactively names firms so that all consumers can benefit and not just those who happen to make an inquiry or who are clued up and on the ball.

The amendment is entirely consistent with Government policy. The White Paper stated that consumers would benefit from the OLC making information available about complaints that have been upheld against providers. The Government strongly support the principle of informing the public about providers’ performance. They also recently accepted the recommendations of the Macrory review, which includes a proposal that regulators should disclose to key estate holders and the wider public when and against whom enforcement action has been taken.

Consumers clearly have a right to know when the behaviour of a lawyer casts serious doubts on the integrity of or confidence in that lawyer. Evidence suggests that there is a small number of firms cited, understandably and reasonably, by the hon. Members for North Durham and for Bassetlaw and others, who are tarnishing the image of the majority. It is often the way that crime is committed by the minority of people. A lot of young people are tarnished with committing crime although it is only a small number who do so.

The latest figures show that from 2005, 7 per cent. of solicitors firms referred to the Law Society’s now renamed the Legal Complaints Service accounted for one third of the complaints it received. That is evidence of how a few can spoil the reputation of the many. The other day we had the report by Lord Lofthouse—formerly an eminent Member of this House—into the miners’ compensation issues. The report shows—I heard him talking on the radio about it—that the worst excesses were concentrated in the hands of a relatively small number of solicitors and it names and shames them. That seems to be a perfectly acceptable way forward: if people do wrong and are shown by the proper process to have done wrong, they ought to expect the publicity that follows from that.

Lawyers who breach their obligations to consumers do not deserve the protection of their general reputation. It is still difficult in the marketplace to find out exact information about competence. We now know what people do and we can read up on the subjects they offer, but that does not tell us anything. It is a bit like schools: it takes a while for people to know the score and if one is not local, one will not necessarily have that information available to hand. People rely on personal recommendations, on instincts and a reference. If there is poor performance, we need to protect consumers from going through that door, making that telephone call and writing that letter unwittingly. It also means that standards are likely to go up. The more we expose those who do badly, the more we raise general standards because the incentives will be to abide by the rules and treat clients fairly. People will vote with their feet if they are aware that lawyers have been shown to have broken the rules which will lead business towards those who have a good reputation. That adds professional support to the regulatory system the Government are setting up.

Lastly, the Legal Complaints Service has recently announced its intention to publish the complaints record of solicitors firms. That shows that the profession has arrived at this conclusion itself and is happy to support this. This means that what has been arrived at as a result of the mixed history of recent years in the profession can be continued in the Bill. It is not a prescriptive amendment but gives flexibility for the Office of Legal Complaints to decide a policy on when it will be appropriate to publish. It would clearly be disproportionate to do it if there was only one minor breach and only that is the flexibility that is left. I hope that the Minister will accept that this is therefore a coming together of views for the consumer organisations, the professions and the public and that she can be supportive.

Bridget Prentice (Labour, Lewisham East)

There is some concern that the Bill does not allow for the OLC to publish the names of lawyers who have had complaints upheld against them by an ombudsman. If that were the case, I would be snatching this amendment from the hon. Gentleman’s hand straight away. However, I am going to ask him to withdraw it. If he looks at clause 151, he will see that the OLC can publish a report on any case that has been handled by the ombudsman scheme and that, when it does that, it must not name the complainant, unless he or she consents to be named. There is nothing to stop it mentioning the lawyer concerned and it is inescapably and clearly implicit in that drafting that the OLC may identify them if it considers that appropriate.

It does not perhaps go as far as the idea of naming and shaming, partly because I would be concerned that one would end up with a league table of the 10 worst lawyers. That would not necessarily be helpful, because it would not always be comparing like with like: different firms have different types of business, different numbers of partners, and so on. I am not sure that it is the role of the OLC to be actively engaged in naming and shaming, in case it would, in effect, mislead consumers into thinking that a particular firm is really bad, when in fact, although it may have had a large number of complaints, there are other factors that may need to be taken into account. Therefore, I am not sure that it is appropriate for the OLC to respond in that way.

John Mann (Labour, Bassetlaw)

If it was a good firm of solicitors and it was being caught out often, presumably it would have conciliated those cases, as the very reputable Mansfield firm of solicitors, Hopkins Solicitors, did with every single case it dealt with under the miners’ compensation scheme; they paid back everyone, were roundly praised locally for doing so and restored their reputation. Conciliation provides that option for firms.

Bridget Prentice (Labour, Lewisham East)

My hon. Friend makes a very valid point. That is an example of where complaints are made, but the firm responds appropriately and so can restore its reputation.

Having said that, I am not sure that getting into a league table situation is necessarily a good thing. Of course, I understand that there are websites now that provide such tables, and people are perfectly capable of taking the information that the OLC will produce and doing with it what they will; that is entirely up to them. However, there is nothing in the Bill that precludes the OLC from naming lawyers who have had complaints upheld against them. On that basis, the amendmentis unnecessary and I ask the hon. Gentleman to withdraw it.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I hear what the Minister says. I refer to clause 151, which says:

“The OLC may, if it considers it appropriate to do so in any particular case, publish a report”.

There is quite broad flexibility and discretion there in respect of the opportunity to publish a report, which means that the OLC can publish a report. The amendment was obviously seeking to say that, without it being absolutely prescriptive, the ability to publish a report is clearly one of the things that the rules should provide for. I understand the Minister’s point. In passing, I understand that league tables for solicitors, just like league tables for schools and other bodies, are not always a very accurate or helpful tool, because they suggest one thing whereas, in fact, they may be evidence of something else.

There is probably agreement that we do not want simplistic league tables, but people need to know about solicitors who regularly receive complaints, as opposed to solicitors, including big firms, who receive one-off complaints. I am happy to withdraw the amendment. Again, this is an issue that we can have further consultation on outside the Committee, as well as inside it. It may be an issue that we need to return to. However, I am keen that the public should know about this issue, and not just the public who are on the internet and using modern technology, but people such as the retired person for whom modern technology is not where they go for their information, or the person who has never used a solicitor in their life except for one occasion. We need to ensure that such people are looked after.

On that basis, I am happy to withdraw the amendment. May I just say that I share the Minister’s observation that, on 26 June, this room is about as cold as it normally is on 21 December, before we break for Christmas? I have given in and put my jacket back on. The Minister clearly needs something to warm her up during her lunch hour, so I will not go on and I hope that we make such speedy progress that we will warm up as a result.

I beg to ask leave to withdraw the amendment.

Clause 136

Clause 137

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 233, in clause 137, page 71, line 34, at end insert—

‘( ) In considering what is fair and reasonable in the circumstances, the Ombudsman shall take into account the relevant levels of damages awarded by courts in similar circumstances, and relevant codes of practices, professional rules, standards and guidance.’.

The amendment relates the section headed “Determinations under the scheme” and to the clause headed “Determination of complaints”. It would add criteria at the end of subsection (1) for assessing what was fair and reasonable in respect of the ombudsman’s handling of a complaint. At the moment, the Bill says:

“A complaint is to be determined...by reference to what is, in the opinion of the ombudsman making the determination, fair and reasonable in all the circumstances”,

and the amendment would simply elaborate on that.

The amendment is supported by the hon. Member for North-West Norfolk and his colleagues. It argues that the ombudsman should take into account

“the relevant levels of damages awarded by courts”

so that there is comparability between the proposed adjudicatory system and the court system where the circumstances are similar. The amendment also suggests that the ombudsman should look at

“relevant codes of practices, professional rules, standards and guidance.”

Obviously—this is one of the purposes of the Bill—the jurisdiction proposed for the Office for Legal Complaints is rather different from that currently exercised by the professional bodies. The Law Society and the Bar Council have their own methods of adjudication and determination. Under current arrangements, redress can be awarded where a client has suffered “inadequate professional service”. Under the Bill, the present jurisdiction is replaced by a much broader phrase, which refers to what is

“fair and reasonable in all the circumstances of the case.”

A sound argument exists for making that change. The proposed arrangements are similar to the jurisdiction of the Financial Ombudsman Service, which is a regular point of reference. The service is the most similar system in place at the moment and generally has an increasingly good reputation as a reasonable redress scheme.

There have also been difficulties deciding what “inadequate professional service” means and what it should mean in terms of the determination, so it is right to move on from that definition to a new one. For example, in the case of complaints against solicitors, it was thought at one time that inadequate professional service could not cover situations in which clients suffered as a result of a breach of conduct rules by the practitioner or where a remedy for negligence existed elsewhere through the law. Those restrictions have been overcome, but there is an inflexibility.

It is important, however, that there is no unpredictability about the way in which the office for legal complaints should act. The amendment therefore suggests that there should be guidance on the approach that should be taken to ensure flexibility and consistency. In the context of legal services, it is desirable for the guidance given to the office for legal complaints to include a requirement to consider the professional obligations under which practitioners operate—that may add to or take away from the degree of infraction committed—and the way in which the courts consider similar issues. I gather that it is identical in every material sense to the Legal Profession and Legal Aid (Scotland) Act 2007, which is how similar matters have been dealt with in Scotland. The proposal is drawn from good recent precedent and I hope that it commends itself to the Minister.

Henry Bellingham (Conservative, North West Norfolk)

I have a 25-minute speech, which will take us to 1 o’clock, but the Labour Whip is glaring at me so I will restrict it to 2.5 seconds and say that I support the hon. Member for North Southwark and Bermondsey.

Bridget Prentice (Labour, Lewisham East)

I shall make no predictions about how long I will take. On that basis, I will not look at the Government Whip so that I cannot be glared at.

The issues that the hon. Member for North Southwark and Bermondsey raises—relevant codes of practice, professionals and so on—are all likely to be taken into account by the ombudsman when determining the complaint, but it is not necessary for them to be in the Bill. The idea is that the scheme should work as flexibly and informally as possible, which means that much of the detail of how the determination is made, what will be taken into account and the criteria that should be applied, should be set out in the scheme rules, rather than in the Bill. It will make quick and fair redress more likely and give the maximum flexibility to adapt to changing circumstances and the changing needs of consumers.

All the scheme rules made by the Office for Legal Complaints will be subject to the consent of the board before they can take effect, so safeguards are already in place to ensure that the scheme rules work in the interests of the consumer and operate fairly in terms of the regulatory objectives. That includes leaving to scheme rules the criteria that an ombudsman must take into account when determining what is fair and reasonable. That is how the financial ombudsman service operates, providing that the ombudsman’s determination is made according to what he considers fair and reasonable in all circumstances. It leaves all further guidance to the rules. It is the model to which we have referred regularly throughout our proceedings; it is the closest to what the Bill sets up and is a great deal better than tying an ombudsman to an inflexible list of factors that may not, over time, be relevant. I am not convinced that the amendment should be included in the Bill.

On the Scottish issue, I realise that the wording in the hon. Gentleman’s amendment is similar to that in the Legal Profession and Legal Aid (Scotland) Act 2007, but like many things legal in Scotland, it is quite different from those that are set out in the Bill. For example, the Scottish system allows for a complaints commission that determines complaints and runs the complaint-handling scheme, and the members are appointed by Scottish Ministers after consultation with the Lord President of the Court of Session. It is a very different structure from that in England and Wales, where Ministers, whoever they may be, do not and will not appoint the ombudsman, who will operate in a much more flexible scheme, which is intended to provide quick, fair and final redress to the consumer.

There are arrangements for internal reviews of the complaint but the scheme will not be fettered by a long-winded appeals process, which is how the financial ombudsman service has operated. I would prefer to leave it to the OLC and the board to decide what factors the ombudsman should take into account when determining what is fair and reasonable. I hope that the hon. Gentleman agrees with me and will therefore ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful for the Minister’s reply and I shall happily reflect on what she has said and consider the Scottish experience. I note that she prayed in aid the example of lack of co-decision between the Minister and the Lord President of the Court of Session, and no doubt she will remind us of that, although she said that it was not an exact parallel. If I am persuaded, I shall not pursue the matter later. For today, I beg to ask leave to withdraw the amendment.

John Mann (Labour, Bassetlaw)

I beg to move amendment No. 284, in clause 137, page 72, line 25, at end insert—

‘(4A) For the purposes of paragraphs 2(d) and (e), in the event of a respondent’s failure, within a reasonable period, to act on a determination, the ombudsman may order, at the expense of the respondent, the necessary rectification to be secured or action to be taken by an alternative authorised person.’.

I am sure that the Minister will want to accept this “big tent” amendment, which appears to bear the names of everyone apart from the Liberals. The amendment could be best described as the Rayleys amendment, and it is in the interests of every good, decent and honourable solicitor and of every honourable person in the legal profession. Large numbers of cases have been brought by individuals against the Rayleys solicitors firm, which deducted significant amounts of money from those individuals. It is clear that the money was taken—there is no ambiguity about that, and my view and the view of many other people is that it was taken wrongly.

The cases were taken through the Law Society and went through the due process. The case worker considered the cases and they went to adjudication, which was duly made. The result was that my constituents were successful. In one case, Rayleys refused to pay up. That case went to the solicitors disciplinary tribunal, which also made a ruling. Despite that, Rayleys has refused to pay out in relation to the other cases. Rayleys’ rather pathetic defences included the assertion that my constituents and others were confused and did not know what they were talking about.

I took four constituents to stand outside Rayleys’ headquarters in Barnsley, where we were warmly applauded by local people for demanding that the firm pay up. We were kindly invited inside, where, for an hour, Rayleys tried to persuade the four constituents that they were confused and did not have a complaint. They argued their case very eloquently, and pointed out that they held Rayleys accountable.

Those constituents were people who had made a complaint against the legal profession, and of all the cases that could have gone through a complaints process, those cases are the clearest in the country; they could not be any clearer. The senior partner of the firm about which the complaint was being made had the opportunity to put his and his firm’s case in open, face-to-face dialogue with the complainants. He brought in his specialists, who sat alongside and argued too, and they heard what my constituents had to say. The constituents spoke for themselves—and did so clearly, and they demanded justice. Yet still the firm has not paid up.

There is nothing that can bring the entire legal profession into greater disrepute than that example. If regulation is meant to work, then it has to do just that. What are my constituents meant to do in that context? They put in a complaint more than three years ago—three years and three months ago, in fact. They are not making a complaint in principle, although principle is involved, or to make extra money, although they might well be due extra money for all the hassle and expense that they have gone through to make their complaint. Their fundamental complaint is that they had some of the compensation that they received for their industrial diseases taken away from them. That money was not charity. If I recall correctly, the money in the cases of the four men—certainly in the majority of those cases—was compensation for bronchitis and/or emphysema. We are talking about people who are ill or dying. Some of the Rayleys cases involve people who are very seriously ill and who need the money because, for example, they would like to buy additional breathing equipment. That was categorised and quantified as what the people would spend the money on.

Unfortunately, it is too late for Mrs. Beckett, a constituent of mine. I attended her funeral. A widow, she wanted the money for a headstone for her late husband, but Rayleys refused to pay out. When Mrs. Beckett died, her family wanted the money for the headstone. In that case, the Law Society has done a decent and honourable thing by making an ex gracia payment, but it should not have had to do so—it should have been a matter for the firm of solicitors. Not only was there no ambiguity about the case, but even the case put by the firm was straightforward, as it should not have taken the money and handed it to the NUM, because the NUM rulebook specifies that widows are not charged and that has been the case for 100 years. Mrs. Beckett’s case was the ultimate in unambiguous cases, yet the firm has not paid out, and there are no powers to force it to do so. The amendment would create the opportunity to force a firm such as Rayleys to pay out, and I commend it to the Minister.

Firms of solicitors such as Rayleys should not be allowed to continue unhindered. There is no question in my mind about the fact that the firm and its partner should be struck off. If the legal profession wishes to hold its head up high with the general public, it has to remove such firms. That is the only basis on which a self-regulating closed profession can have a future. It must remove the bad apples. People would demand such action in any other walk of life, and rightly so, and that should happen in the profession. There is no worse or more disreputable example than Rayleys, as is demonstrated by the fact that, uniquely, it has refused to pay out money that it owes to decent people who are ill and dying.

Henry Bellingham (Conservative, North West Norfolk)

I am grateful to the hon. Member for Bassetlaw for moving the amendment. If he decided to press for a Division, we would be happy to support him, not that I wish to foment any discord on the Government Benches—I would not start trouble in such a way.

Although amendment No. 284 would be an excellent amendment, the Minister will be aware that my colleagues in another place amended the Bill in a similar way. Will the Minister reflect on whetherclause 137 goes as far as the hon. Member for Bassetlaw wishes? If she decides that that is not the case, and if the hon. Gentleman wants to press to a Division, we will support him. The amendment would certainly clarify matters and would, importantly, add detail to the clause, on which basis we support it.

Bridget Prentice (Labour, Lewisham East)

The hon. Member for North-West Norfolk is being very naughty today. I thought that my hon. Friend the Whip would continue to glare at him on that basis.

The amendment, which would allow the ombudsman to order a second lawyer to rectify the work of the respondent when they fail to comply, would not add to consumer protection. First, let me make it clear that it is unusual for the respondent not to comply with the ombudsman’s directions, because in all ombudsman schemes so far, the majority of people will respond and comply fully, so we would expect full compliance from lawyers. Any failure to do so should, as my hon. Friend the Member for Bassetlaw says, be treated very seriously and as a disciplinary matter by the approved regulators. There are enforcement powers in the Bill so that determinations can be enforced by court order if necessary.

The hon. Member for North-West Norfolk discussed what happened in the other place, where my noble Friend Baroness Ashton tabled Government amendments in response to the debate to strengthen the enforcement provisions in clause 141, so that the ombudsman can bring enforcement actions on behalf of complainants. To a large extent, therefore, the amendment is trying to resolve a problem that does not exist. Let us suppose that the relationship between a lawyer and client broke down and the ombudsman ordered the respondent to redo work, but they refused to do so. Such a situation would be likely to result in enforcement action, and would therefore certainly come to the attention of the relevant approved regulator, so there is a very strong incentive for the respondent to avoid taking that attitude.

Leaving that aside, another point that concerns me is that it is not the OLC’s role to hire lawyers on behalf of complainants. It must be clearly independent of the legal profession and so should not recommend lawyers to do the work of other lawyers who have been complained about. I understand that the amendment is intended to give further protection to the consumer, and that is very much the aim of the Bill, but it is important to get the direction right in the first place, and then to enforce it as a last resort.

John Mann (Labour, Bassetlaw)

The Minister is right to say that we need to get the direction right, but what about the detail? Some of my constituents and others have made complaints against Rayleys that have by and large been adjudicated in their favour, in that Rayleys is required to make financial payments to them. How will they get the money that they have been waiting a long time for?

Bridget Prentice (Labour, Lewisham East)

As I said, enforcement action will be possible. It is also important that if the ombudsman makes a direction and a lawyer fails to rectify an error within a reasonable time, it will be perfectly possible and right for the complainant to engage a different lawyer for whose costs the first lawyer will be responsible. The ombudsman could direct that that should happen, but the amendment puts the onus on the OLC to provide the second lawyer, and that is not appropriate. It is certainly right for the OLC to say to the complainant, “Find another lawyer and the first one will have to pay the costs,” if that is appropriate, but it should not be in the business of having a checklist of lawyers to whom it farms out complainants’ cases, which would be the effect of the amendment. On that basis, I ask my hon. Friendto withdraw his amendment. I understand the circumstances of his constituents, and I should like to ensure that such instances are covered by the Bill, but his amendment goes beyond what is appropriate forthe OLC.

John Mann (Labour, Bassetlaw)

It is not just my constituents; it is constituents in Rother Valley and Selby, the 150 who attended a public meeting last week in Leigh and many more. The Minister needs to spell out in writing precisely how the cases with Rayleys will be resolved. If she can do so, people will be satisfied, but if not, the amendment will be tabled at a later stage and pushed to a vote. However, in this instance, I shall give her the opportunity to see whether there is a route through. I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Clause 137 is quite important for consumers and aggrieved people complaining against the service, but it is hardly written in the most consumer-friendly way. First of all, it refers to “determination” rather than to a decision, which is a slightly odd phraseology. The burden of my request is to ask the Minister to ask her civil servants whether the clause can be made to read in a way that ordinary people will understand. It is about what remedies are available and what the ombudsman can do to put right things that have gone wrong.

Subsection (2) says, for example:

“The determination may contain one or more of the following”.

The first item on the list is fine—it is an apology. That is clear. The second is:

“a direction that—

(i) the fees to which the respondent is entitled in respect of the services to which the complaint relates...are limited to such amount as may be specified in the direction, and

(ii) the respondent comply, or secure compliance, with such one or more of the permitted requirements as appear to the ombudsman to be necessary in order for effect to be given to the direction”.

It is not really a remedy that somebody would necessarily recognise as something that they want, or understand even if they want it.

The third item would be better with a bit of tidying up:

“a direction that the respondent pay compensation to the complainant”.

The language of the fourth is a bit old-fashioned, and I am sure that we could tidy it up:

“a direction that the respondent secure the rectification”.

What we mean is that the respondent should put right at their own expense

“any...error, omission or other deficiency”.

The requirement is much the same. Subsection (3) gives us the definition for subsection (2)—which, if anyone is trying to understand it, tries to explain that one can get all the money or some of it back.

I just wanted to make that request. This is one of the bits of the Bill that is not for lawyers. If someone says, “What am I entitled to if I complain?”, somebody ought to be able to say, “This.” When the Office for Legal Complaints or the ombudsman are asked, they should be able to supply a bit of paper with a quotation from the Bill that people can read. I hope that the Minister will be kind enough to consider this issue so that we can have more user-friendly legislation. That must be possible in relation to this clause.

Bridget Prentice (Labour, Lewisham East)

I am happy to consider making any legislation more user-friendly, and I take on board the hon. Gentleman’s comments.

Clause 138

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 234, in clause 138, page 72, line 32, leave out ‘£20,000’ and insert ‘£100,000’.

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss the following: Amendment No. 265, in clause 138, page 72, line 32, leave out ‘£20,000’ and insert ‘£50,000’.

Amendment No. 266, in clause 138, page 72, line 39, leave out subsection (3).

Clause stand part.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Whether it is one’s own bank account in which £20,000 coming in or going out would be replaced by £100,000 will determine one’s view on this amendment, but it is important. There are others like it—the hon. Member for North Durham has tabled one suggesting that the figure should be £50,000. It is all about the upper limit—

Nicholas Winterton (Conservative, Macclesfield)

It is 4 o’clock and although we are living in very interesting political times, we have to direct our undivided attention to the Bill. I want no mention of other matters during contributions to the debate and I always look forward to progress when I am in the Chair. When the Committee adjourned, the hon. Member for North Southwark and Bermondsey was moving his amendment. I know that he has further words of wisdom to utter, so I ask him to resume his speech.

Nicholas Winterton (Conservative, Macclesfield)

I remind the Committee that with this we are discussing the following: Amendment No. 265, in clause 138, page 72, line 32, leave out ‘£20,000’ and insert ‘£50,000’.

Amendment No. 266, in clause 138, page 72, line 39, leave out subsection (3).

Clause stand part.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Thank you, Sir Nicholas. We are very glad to welcome you back to the Chair. I know that you have come here flushed with excitement at events elsewhere and I would not dream of suggesting anything out of order, other than to say that the amendment proposes a change far less unexpected than the events of the past hour, which could be called the Lincolnshire development.

Kevan Jones (Labour, North Durham)

Much less welcome!

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The amendment is much more welcome.

Bob Neill (Conservative, Bromley and Chislehurst)

Will the hon. Gentleman give way? I just want to say—

Nicholas Winterton (Conservative, Macclesfield)

Order. There can be no reason whatever for the hon. Gentleman, who is a lawyer, to intervene at this point.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

A consensus of view was just about to break out in the Committee. However, we will try to bring ourselves back to the more mundane and predictable matters in hand.

The amendment would increase the total amount that the ombudsman could decide was an appropriate remedy in financial terms from £20,000, which is the figure in the Bill, to £100,000. I hope that the Minister, refreshed by her three hours in other places, will be as positive on this amendment as she was earlier. The temperature is slightly warmer, and the Minister’s perfume is still reaching this side of the room, where it is very much appreciated. [Interruption.] Her colleagues may not appreciate it, but we do. We hope that she will feel generous in any event and because of our keenness to see her back in her place.

The figure in the amendment was not plucked out of the air, nor was it chosen just for the purpose of having a debate. I have a very clear view that if we limited the upper amount that the ombudsman could award for everything—it is the inclusive, total amount, the aggregate amount, as clause 138 goes on to describe—to £20,000, that would be too low in many circumstances. If the Office for Legal Complaints is to be effective and seen to be effective—if justice is to be done and seen to be done—consumers need to know that they can have decent redress for high-value claims.

There are various examples, but I shall give two obvious ones. Let us say that something went terribly wrong in a personal injury action that someone had taken; the solicitor had completely messed it up. It is well within the realms of contemplation that £20,000 would be an entirely inadequate remedy. If someone’s conveyancing was completely messed up, it is very possible that the damage suffered would be worth more than £20,000.

It is not clear why the figure of £20,000 was chosen. The Law Society’s current limit is £15,000, but other ombudsman schemes have significantly higher figures. Again, I have drawn on the best parallel that we all have, which is the financial ombudsman scheme, for which the redress limit is £100,000. There should be a comparable starting point.

There are non-statutory regimes such as the ombudsman scheme for estate agents. Incidentally, it is probably good to know that there is one. I was not previously aware of it, but I can imagine people being angry with estate agents, too, and feeling that they have been misled by them on occasions. Even that non-statutory scheme has a maximum redress limit that is higher than that proposed in the Bill—I think that it is £25,000.

The Minister will tell the Committee, if I do not, that clause 139 allows a variation in the redress limit, on the recommendation either of the consumer panel or of the OLC. In my honest view, that is to allow, quite properly, for relatively small adjustments to take account of inflation or other things. It is not intended to allow for a significant change. Similar provisions have been made in other legislation to allow for flexibility, but not for a fundamental change of starting point.

I propose that we start at a realistic level. If we do not, there will soon be pressure to change it. It is better to set it too high and to allow it to be the upper level from the beginning. Otherwise, there is a severe danger that people will say that the legislation is a lot of sound and fury signifying not very much when it comes to delivery. We might get an apology or an admission of failure, but in a day and age when, on Lewisham or Borough high street, house prices do not start at £20,000 or even £100,000, but at £200,000 or £250,000 for a one-bedroomed flat, we need to compensate complainants at a realistic 2007 level for their financial loss.

Kevan Jones (Labour, North Durham)

In speaking to amendment No. 265, I am working on the reverse principle of the one that I used as a trade union official. The hon. Member for North Southwark and Bermondsey suggested a limit of £100,000; I thought that I would be modest and say £50,000, on the basis that the Minister, given some options, might wish to accept the lower amount.

The hon. Member for North Southwark and Bermondsey made some serious points. I can give an example from my experience of a situation in which the £20,000 limit would be have been unacceptable and would have failed to deliver justice to one of my constituents. I raised it on Second Reading. I shall refer to the constituent as Mrs. X, because I do not think that she wants her name in the public domain. She was a miner’s widow from Stanley, in my constituency, who had the misfortune to be involved with a solicitors’ firm in Newcastle called Mark Gilbert Morse. She was making a chronic obstructive pulmonary disease claim for her late husband. She is an elderly lady—she is in her 70s—who does not understand the law or the way that lawyers work, and she rightly expected the solicitors to act in her best interest.

Last year, the Department of Trade and Industry made an offer to Mark Gilbert Morse to settle the claim for £42,000. Without Mrs. X’s knowledge and without contacting her, the solicitors rejected that offer on her behalf and said that they would like a higher figure. There was great shock six months later, when the Department of Trade and Industry came forward with its next offer, which was only £22,000. She contacted me at that point. I must give credit to the Legal Complaints Service, which investigated the complaint and shamed Mark Gilbert Morse into paying the £20,000 difference between the higher and the lower offers, so she got the original sum of £42,000.

Under the Bill, the original figure would have been £20,000. People may argue that there are other means open to individuals such as Mrs. X, who could go to litigation, but there is no way in which she could afford that process or would risk the possibility that she might not get the higher figure. The figure as it stands—£20,000—is too modest in the case that I cite.

Mining compensation cases have thrown up many cases in which solicitors have clearly not only given bad advice, but have not always dealt with the cases so the clients have had second best advice. I am worried about how many people have had the same experience as Mrs. X, but whose cases have not come to light.

The figure in the provision is modest and, as the hon. Member for North Southwark and Bermondsey said, the financial services ombudsman can award £100,000. I was not aware that there was an ombudsman for estate agents, but he can award £25,000. If we do not initially put a high enough figure in the Bill—I know that clause 139 allows the Legal Services Board to increase the amount—the resistance of the legal profession’s vested interests will prevent any great increase in the compensation figure. The Minister has said throughout the progress of the Bill that it should be about the rights of consumers, and the best way of protecting those rights is to set the figure at a high enough level to protect their interests. I would not hold out a great deal of hope that it will rise substantially over a period.

On the broader issue of compensation, something that has frustrated many of my constituents and those of my hon. Friend the Member for Bassetlaw is the prevarication by some solicitors in trying to settle cases, and the threats that they make. It never ceases to amaze me that in mining compensation cases, which involve poor and vulnerable individuals, arrogant solicitors do not seem to care how many threats they issue—for example, that if clients do not pay up or agree to a certain course of action, they may be held legally liable, even when they may not in fact be held liable for further costs. It is important to get the figure right now for consumers’ protection. If the Minister does not concede that today, it should be considered on Report.

I do not intend to speak to amendment No. 266, so I ask the Minister seriously to consider increasing the figure substantially today.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The point to recognise, particularly when dealing with claims against solicitors, is that if the claim is not made through the ombudsman process, another firm of solicitors must generally be employed. This area of regulation is complicated because there are all sorts of difficulties.

I shall cite a couple of cases in which a firm of solicitors let down their clients but monetary compensation was not the whole story. One of my constituents, who suffered from mental illness, was imprisoned because the court believed that he wanted a hospital order. He ended up being imprisoned because the solicitor failed to notice certain things in the paperwork. Oddly enough, I managed to draft an appeal, and the good news is that it will be heard. The difficulty was that the solicitors had clearly failed to do their job properly, and when they were asked for the paperwork they did not respond in a timely manner. One difficulty with appeals is that they generally have to be made within 21 days, and it causes great problems if people sit on the paperwork. If they do so for more than 21 days, it is a greater problem.

In another example that I have been looking at recently, it seems that some children were taken into care and adopted because correspondence went to the wrong address. The firm of solicitors involved is failing to respond to me, so I have written to the Law Society to ask it to intervene.

In such cases, there is no easy way of quantifying the loss, but in cases where someone will arguably have £1 million or £10 million—I was an expert witness in a case involving more than £250 million—people can afford to go somewhere and control the whole process. However, when it involves £25,000, someone could easily lose out. If we consider that somebody may have lost five years of their life in jail because of the incompetence of a firm of solicitors in not doing some basic things, it is clear that the system is quite difficult as it stands. Therefore the limit of £20,000 is far too low and my hon. Friend’s probing amendment—I presume that it is a probing amendment—is very good.

John Mann (Labour, Bassetlaw)

I support the principle of increasing the figure to £20,000, but I am not particularly inclined to support the Liberal Democrat proposal because there needs to be a balance between regulatory financial remuneration and other actions that can be taken. It is important to recognise the need for balance.

The figure of £20,000 is a modest increase on the current limits for solicitors, but is too low because it would not catch those people who have lost out financially and do not want to trust another solicitor to engage in civil action to sue for financial remedy. Indeed, the amounts of money fall between what it is viable for a solicitor to present to a client in terms of likely incentive gain, because £100,000 would seem well worth fighting for through the courts if there was a loss. If it is a much smaller amount, people are much less likely to consider it worth fighting for. A balance must be drawn somewhere, but the figure of £20,000 is too low.

I am dealing with a number of ongoing cases in which the amount of financial loss that can be quantified, aside from any compensatory loss, is between £20,000 and £30,000. Those cases are in a range of different areas—they are not all about industrial disease—but they are the exception and in the majority of cases the figure is much lower. The limit should incorporate the potential exceptions to the rule precisely because that would provide the full parameters and should not create any expectation of an upward drift overall. There is no logic in suggesting that there would be an upward drift. What the upper quartile of potential claims might be is important.

I suggest that £20,000 is not sustainable and that the figure needs to be higher. I am attracted to the suggestion of £50,000 made by my hon. Friend the Member for North Durham, but if the Minister proposes something more realistic that might also be acceptable. However, £20,000 is too low because there are too many cases in which the individual would win, but would lose out financially. That is why the figure needs to be increased somewhat to a more realistic amount.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

From the hon. Gentleman’s experience of the sort of cases that he has shared with us, can he tell us about examples where, in his assessment, there was the highest loss relative in what someone was able to obtain?

John Mann (Labour, Bassetlaw)

The highest loss that I have dealt with without having to go through regulation was £31,500. That was the actual financial loss. I have a significant number of ongoing cases in which I estimate the loss will average around £25,000. Therefore, in that context, there is a significant difference between £20,000 and £25,000, and £20,000 and £30,000. Such losses are significant, especially when they are the result of poor representation of whatever form. People’s health might be affected, so the money is not only compensation for a wrong, but a remedy that is calculated to take account of necessity.

Industrial compensation payments is the best example of what happens when lazy solicitors manage not to put in claims. It might not be deliberate; a solicitor might not have said “I won’t put in for that because I don’t get paid much and I’m not bothered”. The laziness is of systems and approaches whereby solicitors manage to tick boxes, but fail to ask additional questions. The miners compensation scheme compensates people for things that they will not be able to do in future because of their industrial disease and amounts are calculated precisely. Financial compensation is required for things that need to be done—it is not a charitable donation or a sum in principle; it is for practical purposes.

A maximum of £30,000 would do in the cases that I know of, but there might be cases that would require a higher figure. A maximum of £20,000 would leave too many cases in which a person could win, but would have the trauma of taking civil action and of going to another solicitor. That is not sensible, both practically and with regard to the profession’s reputation.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I hear the figures. The hon. Gentleman is aware that there are two sorts of loss: a direct financial loss of wages, income, salary and pension; and a loss of the damages that compensate for injury such as the loss of the use of a limb. Is he saying that, in his experience, the total of the prospective claims would only be of the order of £30,000-plus? I know of cases in which the combination of loss of income plus damages would be considerably higher than £30,000.

John Mann (Labour, Bassetlaw)

No, I am not saying that. There are exceptions to any rule.

The more endemic problem is when the obvious part of the claim is put in, but the less obvious parts are not. The more I investigate, the more that that type of case appears to be endemic in the system. The average necessary amount—the figure will vary—is around £20,000 or £25,000. Therefore, the figure of £20,000 is somewhat low, but there is no logic in setting the figure too low. The figure of £20,000 has been set by updating the current figure. That is rational, but it does not fully incorporate what will, by definition, be exceptional cases of actual loss, rather than compensatory loss for less quantifiable things. It would be prudent and sensible to increase the maximum amount—both sides of the Committee will feel that.

Bridget Prentice (Labour, Lewisham East)

Let me explain the rationale behind the £20,000 limit. It is based on the current maximum of redress in the Law Society, which was recently increased to £15,000. The Bar Council figure remains £5,000. Taking into account the fact that, on average, the awards made by both the Law Society and the Bar Council are somewhere between £400 and £500, the Government decided to increase the limit from £15,000 to £20,000 to take account of the time between now and when the OLC will be up and running. For the moment, that is an appropriate figure, but that does not mean that it cannot be increased in the future. That is why the hon. Member for North Southwark and Bermondsey mentioned clause 139, which allows for the Lord Chancellor, by order, to increase the limit if the board, the OLC or the consumer panel recommend it at any time. It is perfectly possible, for example, for the consumer panel on day one to make a recommendation that the limit be increased.

I want to make it absolutely clear that this rise is not just about dealing with inflation. It is also about allowing the board and the other interested bodies to increase the amount substantially if they thought that that was the right thing to do. It is on that basis that I ask the hon. Member for North Southwark and Bermondsey to withdraw his amendment.

It may be some comfort to the hon. Gentlemen to know that I have no personal attachment to the figure of £20,000. I hear the arguments that all parts of the Committee are making. A figure of £100,000 would be going way too high to begin with and if we look at some other ombudsman’s schemes, we see that their upper limits are slightly higher than £20,000. It may be worth considering the average figure of some of those schemes.

I also add that a series of groups gave evidence to the pre-legislative scrutiny Committee and almost all were in favour of a figure above £20,000, and I heard their arguments. Interestingly, the one group that was not in favour was the Legal Aid Practitioners Group, which said that it could not really imagine a situation in which the redress would be of that scale, or far beyond it. However, that is not the argument on which I am basing this limit.

As I said, I am not personally attached to the figure of £20,000. I would be happy to look at it again and to consider, across the board, other schemes to see whether another figure is more appropriate. However, it is important not to get too carried away, so that the consumer panel and the board itself can respond with a figure that they think is appropriate at the time; this measure is obviously not going to come into effect for a little while yet. Having argued in this Committee about the flexibility that we must give to the board, and so on, I do not want in any way to undermine that flexibility now. However, I would ask the hon. Gentleman to withdraw his amendment on the basis that I will look again at how this figure of £20,000 compares with the upper figures of other ombudsman’s schemes.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I hear what the Minister says, but I would like to press her on one matter; I do not think that she addressed it, so I apologise if she did and I missed it. Does she accept that the Financial Ombudsman Service has a £100,000 upper limit, which is the only absolutely comparable, or very nearly comparable, scheme? Does she accept that that is the upper figure for that scheme?

Bridget Prentice (Labour, Lewisham East)

The Financial Ombudsman Service certainly has that upper limit of £100,000 and there is quite a good argument as to why that scheme has that upper limit. However, I would like to see how many cases have got anywhere close to that £100,000 limit and consider where the awards are being given. That might help us to come to a better conclusion at a later stage.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful to the Minister for that response. Rather than us all trailing through the FSA’s ombudsman’s track record, if the Minister would be kind enough to press her buttons to produce that information, that would be really helpful.

I agree that, even if we get those figures, they will not be absolutely comparable, because we are talking about two different types of organisations and two different types of issues. However, I am very clear that we need a higher limit. I hear the Minister saying that she is not wedded to the current limit. She has heard voices from her own party arguing, from different perspectives, for a limit higher than £20,000. I sense that a higher limit would be where the centre of gravity of the debate is.

On the basis that the Minister will give us the comparable figures from other schemes and will then give us a chance to consider those figures and that she is not closed to the idea of us increasing the limit on Report, I beg to ask leave to withdraw the amendment.

Clause 140

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 235, in clause 140, page 74, line 19, after ‘complaint’, insert

‘either while the ombudsman is considering the complaint or’.

The clause states at its end:

“Neither the complainant nor the respondent, in relation to a complaint, may institute or continue legal proceedings in respect of a matter which was the subject of a complaint, after the time when a determination by an ombudsman of the complaint becomes binding and final in accordance with this section.”

In other words, you cannot take legal action once you have been to the ombudsman and the ombudsman has decided. The amendment would prevent people from taking legal action while the ombudsman was considering a complaint as well as when it had finished doing so. I hope that the reason for that is obvious: it seems ridiculous to allow a legal process when at no separate court expense or report obligations the ombudsman is considering the matter. Let us keep to one process. The amendment would be a bar on two processes taking place at the same time. I hope that that is sensible and that the Minister will accept it.

Bridget Prentice (Labour, Lewisham East)

When I first looked at the amendment I wondered why a lawyer would bother to sue their client if they did not think that they would be successful. It would be a much more expensive process to pursue hopeless legal proceedings than to endure the ombudsman’s determination. I wondered whether it was therefore a situation that would never arise.

Whether it does or not, I cannot accept the amendment because it would have undesirable, although I am sure unintended, consequences. The reason for the provision in clause 140(11) is to achieve finality of determinations under the ombudsman scheme. An additional provision such as the amendment proposes would go considerably further and raise questions about the Bill’s compliance with the Human Rights Act 1998.

The amendment could prevent a lawyer from taking legal action or require them to put on hold ongoing legal proceedings in the interests of a process that might not produce a binding determination, as the complainant might not accept the outcome. That barring of access to a determination of civil rights and obligations does not seem appropriate to the end that is sought in the amendments, particularly given the unlikeliness of a lawyer pursuing unfounded claims through the courts, with all the attendant costs, simply to avoid an ombudsman’s determination.

If a client was to refuse to pay legal fees, then it is clearly only right that the lawyer is able to recover those through the courts. If they could be stopped simply by the client making complaint to the OLC, that could undermine the court process and prevent the lawyer from seeking just restitution, which is obviously not a tenable position in which to put someone. The OLC could end up getting unnecessary complaints from those simply wishing to slow down or stop legal proceedings, which would clearly be a waste of the ombudsman’s time. We do not want to go down that road.

Let me explain how the Bill works with an unscrupulous lawyer trying to avoid or delay the complaints scheme by initiating legal proceedings, which is the other side of the same coin. Whether legal proceedings were begun before or after the complaint was made to the ombudsman scheme, the ombudsman would still be able to deal with the complaint. Whether it would be appropriate to do so in a particular case would be at the ombudsman’s discretion. However, rest assured that I consider it of vital importance for unscrupulous lawyers not to think that they can avoid a complaint by starting legal proceedings. They must realise that the ombudsman scheme is able to deal with all complaints.

The Bill, as drafted, gives suitable and sufficient protection. It already prevents the respondent from initiating or continuing legal proceedings once the determination has been accepted by the complainant. The intention here is to ensure that the determination is treated as a resolution of the matter in dispute, which I hope will provide respondents and complainants with the all-important certainty without which timely resolution of complaints and the informality of the system would be lost. On that basis, I hope that the hon. Gentleman will withdraw his amendment

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The very mention that there might be a risk of the amendment not complying with the European convention on human rights is enough to frighten anyone into submission. As somebody who promotes the convention and all its works and has worked for the Council of Europe supporting it, I would not want to embarrass myself or anyone else. The Minister made what may be a good point about compliance, which our advisers and I had not thought about. Clearly we would not do something that was not compliant. For that reason, we ought to go away and look again. If there is a way of making progress without the problems set out by the Minister, then fine, but, if not, we may have to think of other solutions, by other means. I beg to ask leave to withdraw the amendment.

Clause 143

Bridget Prentice (Labour, Lewisham East)

Here is one of those complicated areas of procedure where we have to have a stand part debate in order to negative the clause. The Government want to remove clause 143, which allows the board to direct that complaints may be

“determined by an approved regulator instead of an ombudsman”.

In other words, it allows complaints handling to be delegated. The clause was added in the House of Lords in support of the position held by the Bar Council and the Bar Standards Board.

As I said on Second Reading and have said throughout the Bill’s existence, any form of delegation will undermine the principle of a single independent complaints handling body and will not in any circumstances restore consumer confidence in complaints handling. The clause has no place in a Bill that is about putting the consumer first. It must be removed, along with any amendments that refer back to it.

We all know that the clause comes from the Bar, which made no secret about the fact that it wants to continue to handle complaints about barristers. It will argue—I have its briefing for this debate—that it has an excellent record of complaints handling compared to the Law Society, or that complaints about barristers are much more complicated and no one other than the Bar can deal with them effectively. It will argue that complaints about barristers are almost inevitably intertwined with elements of substandard service and misconduct, which should be investigated by the same body, and that having two bodies to investigate a complaint will lead to inconsistent decisions. It will argue those points; we may well hear them argued today. It has argued them before, but the arguments—although they are barristers—simply do not stand up to scrutiny.

The Bar will say that the legal services ombudsman gives it a clean bill of health, but if we dig a little deeper into the ombudsman’s 2005-06 annual report, we can see that the picture is not quite as black and white as the Bar would like us to believe. On page 48, we see that the Bar Council dealt with 560 complaints and that 183 complainants were unhappy with how their complaint had been handled. That is almost a third of all those who took their complaint to the Bar hoping that it would be dealt with in a consumer-focused way, went away disappointed and had to go to the legal services ombudsman to have their case dealt with.

At the same time, the Law Society handled 18,299 complaints, a huge number. However, just under 10 per cent. of all complaints against solicitors went to the legal services ombudsman for review. That does not in any way suggest that the Law Society is doing a magnificent job. It is appalling to have 18,000 complaints. But if we are to argue that the Bar is better and more professional in dealing with complaints than the Law Society, let us ensure that we are arguing about the same issues and that we look at the figures objectively.

From the data, we see that the legal services ombudsman considered 3.9 per cent. of complaints about barristers to have been dealt with unsatisfactorily, compared with 3.1 per cent. of complaints about solicitors. There is next to no difference. There is no indication that the Bar is qualitatively and substantially better at handling complaints than solicitors; in fact, those figures suggest that it is the other way around.

The clause must be removed. It will absolutely and completely undermine not just the Bill but consumers’ confidence in the Bill and the legal profession. It is the one thing that, above all the other issues, consumers have raised with us throughout: delegation is a no-no, and I agree with them in that.

David Kidney (Labour, Stafford)

Does my hon. Friend agree that logic does not support an OLC that handles complaints only about some and not all lawyers?

Bridget Prentice (Labour, Lewisham East)

My hon. Friend is absolutely right, and he reminds me of another part of the Bar’s detailed briefing. The Bar complains about the fact that a number of Law Society staff—the LCS staff—might well transfer to the OLC, and it says that the OLC will be a rebadged LCS. Quite frankly, if we left the Bar’s complaints system out of the OLC, it would have a point. If the OLC dealt only with complaints about solicitors, we might as well have simply rebadged the LCS, and that is most certainly not our intention.

All of the consumer bodies—Which?, the National Consumer Council, and citizens advice bureaux—have made it absolutely clear that they do not accept or support delegation of complaints handling to approved regulators. Anyone who seeks to represent the views of consumers, rather than the self-interest of the Bar Council, would share that view, and for that reason and for the other reasons that I have given on Second Reading and that have been given in the other place, I urge the Committee not to support the proposed clause.

Henry Bellingham (Conservative, North West Norfolk)

It is a pleasure to be with you again this afternoon, Sir Nicholas. We had quite a degree of consensus this morning, and there was a great deal of good will on both sides, but I am afraid that that good will is now looking a little less solid. However, the Minister has done very well in this Committee, and I am sure that she will be promoted in the reshuffle. I am sure that her existing Parliamentary Private Secretary will be promoted as well, so if she is looking for a new one I can recommend the hon. Member for Grantham and Stamford (Mr. Davies), who might well be looking for early preferment in the new Administration.

Nicholas Winterton (Conservative, Macclesfield)

Order. I have to say to the hon. Gentleman who leads for the Opposition that I made a plea—indeed, stronger than that, a request—that no mention be made of extraneous matters that have occurred this day.

Henry Bellingham (Conservative, North West Norfolk)

I must apologise; I must have been doodling on my note pad when you issued that stricture at the start of the sitting, Sir Nicholas.

I declare an interest, because although I do not practise, I am a barrister. So far, however, there have been not—touch wood—been any complaints against me or anyone who has instructed me.

There was a wide-ranging debate in the other place, both at Grand Committee stage and indeed on Report. When the vote took place on delegated complaints handling, there was a substantial majority in favour of the Lords amendment; it had significant all-party support. There are many people in the other place who are not linked to the legal profession and who know a great deal about the subject. For many years, the Bar combined the representative functions of the Bar Council with the regulatory function. Although it did a good job, as indeed the Law Society did with its complaints procedure, everyone realised that both mechanisms could be improved.

That is what Clementi was all about; it made clear that there could be improvement. That is why the Bar Council responded pragmatically and imaginatively by setting up the Bar Standards Board in January 2006. That is an independent, ring-fenced regulator, chaired by Ruth Evans, the former CEO of the National Consumer Council. The Minister mentioned that Which? and the NCC and other organisations were against the Lords amendments, but she did not mention that.

Furthermore, the Bar Standards Board has a consumer panel, chaired by Dr. Diane Hayter, who sits as a board member of the NCC.

The key objective of the Bar Standards Board is to protect consumers, which is why it puts a lot of emphasis on its lay membership. The Bar Standards Board complaints committee has 10 lay members who have a veto. Every complaint to the board has to go to its independent complaints commissioner, Robert Behrens, who is a non-lawyer.

The Minister said that she was concerned about a regulatory system that allowed lawyers to judge their own, but that is simply not the case. It is a ring-fenced organisation in which lay members predominate. The system that the Bar Council put in place—the Bar Standards Board—relies on lay members and members of the profession, barristers and QCs, who provide their services on a pro bono basis. It is extremely cost-effective and the result is that it costs about £640 to deal with the average complaint, which compares with more than £1,000 under the new unified system. I will come to the costs in a moment.

We should consider what the board has endeavoured to do by putting in place a system of excellence. It is not just about handling complaints; it puts a great deal of focus on issues such as education, training and qualifications and on accountability, transparency and consultation.

In the board’s annual report for 2006, its chairman says:

“Within a little over twelve months from Sir David Clementi’s recommendation...the Bar Standards Board was able to hold its first meeting on 26 January 2006. I believe this rapid pace is just one of many examples of the profession’s willingness to adopt new ideas whilst making sure that the best of what has gone before is retained. This is an ethos that we in the Bar Standards Board share and it underpins all that we do.”

The organisation has built critical mass and it is doing an excellent job. It was told to get on and set up an independent regulator, which is exactly what it did, and now it is threatened with having the rug pulled from under it and being wiped out. That is why many of their lordships found that the Bill needed improving and proposed their amendments; they are very concerned and angry that the Government are going to remove them.

The Committee should consider not just what Conservative Members say, but also the third party endorsement of the BSB. In her report for 2006-07, Zahida Manzoor, the legal services ombudsman, commended the BSB for its very strong performance. When we consider some of the figures that the Minister bandied around, it is interesting to note that Zahida Manzoor said that she was satisfied that out of the 166 cases referred to her, 84 per cent. had been handled properly. The adverse figure was only 16 per cent., which compares with the Law Society figures that showed a 29 per cent. adverse figure.

We can look at the relative figures until the cows come home, but the bottom line is that the new organisation is delivering. Zahida Manzoor said that

“the Bar Standards Board continue to deliver good turnaround times... for closing cases in 4-6 months”.

She said that the BSB is to be commended on appointing a non-lawyer, Ruth Evans, to be its chair. Zahida Manzoor has made it clear time and again that she thinks this is an excellent Bill, although she said that the Bill was designed for the OLC to be a single point of entry for all legal complaints, handling all redress complaints consistently regardless, of the type of lawyer complained about. In some ways, that backs up what the Government are trying to do. However, she says on page 22 of her report:

“The recent track record of the Bar Council, which is the second largest handler of legal complaints, has shown that it deals with those complaints more effectively than the Law Society. There is therefore empathy for those professional bodies that may feel that the handling of complaints by the proposed OLC in the West Midlands may be poorer than the current system they employ.”

That is substantial third-party endorsement, and the Government should listen to it carefully.

John Mann (Labour, Bassetlaw)

Will the hon. Gentleman give way on that point?

Henry Bellingham (Conservative, North West Norfolk)

I was trying to be brief. I want to talk about safeguards. The Minister seemed to imply that, as it stands, the Bill will have no safeguards. That is not the case. As presently drafted, the LSB has the power to make a direction allowing an approved regulator, such as the Bar Council, to determine such complaints as may be specified in a direction.

When deciding whether to make a direction, the LSB is bound to act compatibly with the regulatory objectives and other regulatory principles in the Bill. In other words, safeguards are built into it. It is just a matter of one size does not fit all. That point was clearly made by the Law Society. It does not want the LSB to delegate service complaints to it. It wants them to go to the successor to the Law Society’s legal complaint service, the OLC. That is manifestly clear.

The Law Society has made it clear that, by definition, many more complaints will be made against solicitors. In fact, the Minister mentioned 17,000 to 18,000 complaints against solicitors and roughly about 600 against barristers, which is obviously a reflection of the respective sizes of the two branches of the profession. We should remember that barristers are at the sharp end of presenting cases in court. They are instructed to perform the advocacy role.

When we debated clause 133 this morning, we discussed cases going badly wrong, particularly family law cases. I quoted from Baroness Butler-Sloss at some length. People lose their cases; they lose their liberty; they lose their children and families, and they end up being extremely angry because they believe that they were in the right. Of course, they will complain against their advocate.

Some branches of the law will, of course, attract a disproportionate number of complaints. Indeed, my hon. Friend the Member for Bromley and Chislehurst made the point clearly and effectively that young barristers will do their best in court, but lose the case and a complaint will be made against them. Over years, the Bar Council has done well. It recognised a need for improvement, as did the Law Society. We now have a wholly improved system. However, if we consider the amount of effort and work that has been put into such matters and how it has resulted a really excellent body, why throw it away at this stage?

I wish to make two further points. There will be an explosion in work for the OLC if the alternative business structures system takes off in the way in which many people consider it will. My hon. Friend the Member for Huntingdon is convinced of that, and he is an expert on such issues. He dealt with this part of the Bill for the official Opposition and believes that there will be a far bigger increase in the number of new operations under the ABS system, which undoubtedly will lead to more complaints being made against the profession.

While the OLC is busy dealing with complaints from the new operators, surely it will make great sense to allow the existing system under the Bar Standards Board to stay in place. It will provide flexibility. As I said, it is a matter of one size not fitting all. I accept the point about value for money, and I have looked carefully at the figures that the Government have come up with. Let us consider what the Under-Secretary of State for Justice, the hon. and learned Member for Redcar (Vera Baird), said on Second Reading. She stated that the professionals were getting a bargain because, when the new regime was brought in,

“it will cost less overall than the existing system.”—[Official Report, 4 June 2007; Vol. 461, c. 98.]

We have heard, however, that PricewaterhouseCoopers’ forecast for the transition costs of the OLC has been raised from £26.8 million to £32.1 million. We have also heard that the forecast of the annual running costs of the OLC have been raised from £16.8 million to £19.9 million. Let us look at what happened to the Financial Ombudsman Service, which is based on a similar model to the OLC. When the chief ombudsman gave evidence to a Joint Committee, he made it clear that he had experienced a very substantial increase in workload. In the first five years of operation, his workload had quadrupled and staff numbers trebled.

I do not see how Ministers can come to Parliament and say that there is going to be a reduction in the running costs of the new system when we know that there is going to be a big increase in the number of complaints. We know that the number of alternative business structures will increase the amount of legal activity in many areas.

If the Government have their way, they will wipe out a system that has worked extremely well. The system has been given third party endorsement by many different organisations.

I will conclude by quoting from Lord Borrie, who speaks from the Government Benches. He said that the Bar Standards Board has done an excellent job. He particularly focused on the pro bono work that was done by both the lay members and the QCs who gave their time on a pro bono basis. He pointed out that that was one of the key advantages that the Bar Standards Board had. He congratulated the board on its complaints handling mechanisms. He said that it would be a great pity if such mechanisms were lost to the Bill.

I ask the Minister to reflect again on the matter. I know that she feels very strongly about this. The Law Society is neutral. An organisation that is made up of decent honourable people—people who have listened to what the Government have said and heeded their strictures and listened to what Clementi had to say—has gone away and done exactly what the Government have asked them to do. The Government cannot then turn around and effectively say, “What you have done is not enough. We are going to emasculate you and bring in amendments that will result in your organisation losing critical mass.” All the good work that has been done, all the investment, effort and training the Government have put money into is basically going to be wiped out. Therefore, I will ask the Minister to think again. That is why the Opposition cannot accept the amendments and we will be voting against them.

John Mann (Labour, Bassetlaw)

I want to talk about climate change. That is not off the point because I mean a change of climate. That is the key point behind the Government amendment. It is why I wholeheartedly endorse it and wish to speak in favour of it. What is needed is a change of climate in how barristers see and perform their role. There is a certain irony in this strongest of closed shops, with the mentality of a closed shop—a mentality that I fully understand—attempting to defend its privilege against outsiders. There are other professions that have done that temporarily over recent years. They have attempted to fight for their privileged position and exclude all outsiders.

The hon. Member for North-West Norfolk, who has thrown even further back the principles of debate within the House, has eloquently advocated on behalf of his own closed shop. I congratulate him on the way he puts his case. However, the climate must change, and let me illustrate why. There is an idea that this particular closed shop can look after itself and the rest of the world need not bother. I recall they used to say that on Fleet street, and in other professions as well, with equal eloquence, vehemence of argument and self-belief. It was not an idea that stacked up when one looked from the outside. I will give two reasons why. They are unusual ones, but they are real cases. The first relates to the way in which barristers are complicit, including with solicitors, in providing opinions to legal executives carrying out the work of solicitors and giving a professional veneer to a case being put forward to a solicitor.

I raised that point in the Committee either last week or the week before and wrote to the Bar Standards Board, which of course said, “Not our business. We don’t accept complaints about that. That’s one for the solicitors.” In today’s strange climate, let me be the one to vehemently defend the Law Society and its systems against the unprincipled and inaccurate attacks on it.

The whole point about why the Law Society is getting so many more cases is not that there has been an enormous change in the performance of solicitors. There is a particular problem that has led to a particular kind of case coming in larger volumes than one would normally expect. The Law Society has made itself more outward-looking, open and accessible to complainants.

We now have an incredible situation whereby I wish duly to hold to account some of the barristers who have been complicit in doing over my constituents, but the Bar Standards Board says that I can do that only through the Law Society—by attacking and seeking remedy from the solicitor. The solicitor who has allowed the legal executive to take the case when they are not competent to do so is clearly complicit. The solicitor has then got the barrister to give an opinion so that the case can go forward and has fed that opinion back without consulting my constituents. There is clearly a fault in the system but there is equally a fault with the barrister who has been complicit in hoodwinking my constituents.

One way or another, I shall take that case forward. It is absolutely not the case that it is merely the solicitor who should be held at fault; the barrister should as well. Indeed, consider legal executive versus barrister—there is a certain hierarchy there. If anything, the balance should be the other way. The whole point is ensuring that there is equivalence in the system. If there is bias either way it should not be against the poor, downtrodden solicitors, whom I have been happy to attack when they have deserved attacking but whom we should not over-attack.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The hon. Gentleman is right that if a member of the Bar is at fault they should be subject to a complaint. If that complaint is justified, it should be upheld. From all the cases that he has dealt with as an MP, has he been party to complaints against members of the Bar? If so, how many of them have been upheld and how many not, and how does that compare with what we have heard from him about solicitors?

John Mann (Labour, Bassetlaw)

At the moment one has to make a tactical decision on where to take a complaint. The Law Society is more accessible, but the financial penalties are greater. If I want financial compensation for my constituent at an appropriate amount, there is clearly a bias in the system meaning that one has to make a complaint against the solicitor. The case will be won only if the solicitor is at fault, so it is not as though one were trying to bring an undue case.

In a number of the cases, which tend to be the more complex ones and those in which the potential compensation is higher if the arguments of my constituent and myself are upheld, the amounts of money and the scandal are much bigger. I allege that my constituents have been ripped off. There have been many cases with the Law Society, and some have been won, so that is not a vague allegation. The Law Society has upheld some complaints, but the barrister complicit gets off scot-free.

My second example is the case of Hobson and others v. AMS and others, in which 65 miners were wrongly advised on a number of issues but fundamentally on how to take forward a group litigation order. The key advice in the documents presented to me was the barrister’s opinion. The barrister said, “This can be done, this is the way to do it.” The judge disagreed and said that that was not the way to do it, throwing the case out of court, from which all sorts of problems emanated. The detailed case against the solicitor was won through the Law Society; compensation was paid out, so that none of those people lost out financially, which was right and proper. However, it was left to the solicitor found negligent in the case then to take action against the barrister.

In the context of access to justice and of regulation, it should be equally easy to take a case against a barrister. More importantly, it ought to be easy to take a joint case. Why should my constituent, Mrs. X the textile worker, who I allege has been badly advised and treated, have to determine whether it is solicitor or barrister? It may well be—my advice to her in some of those cases—that it is both. Therefore, a joint case ought to be possible. Frankly, that would lead to complications—if there is an adjudication in her favour, who should pay out? However, the principles of the system are self-evident to me. Therefore, this classic closed-shop response needs knocking back. It is absolutely fundamental to access to justice that it is knocked back.

I studied the discussions in the House of Lords with interest and—given my inside knowledge of some of the solicitors and barristers employed by some of those who were attempting to get justice—with incredulity; absolute incredulity at the way in which the case was put, because the case is so weak, so poor, that it can barely be put. The case is one that I used to put to certain employers many years ago. “Look, we have got these jobs, we are the skilled workers, and we think that just us should have these jobs and everyone else can get lost, because we are looking after ourselves.” In essence, that is the case. There is an honour in that, but it is an outdated honour, an honour of past generations and traditions, and one that no closed shop should be allowed to maintain today.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The hon. Gentleman has not yet dealt with the case—let us imagine—of somebody making a complaint about the service, which included solicitors and barristers, through the one door of entry. It is checked originally by the overarching regulatory authority, the view of which is that the fault is entirely that of the Bar; the solicitors were not at fault. Is there not a case in that example? What if the regulator thinks that it is appropriate for a body dealing with Bar complaints to be passed that case, having gone through the process that assesses whether it is all one department’s fault, as it were, or another department’s?

John Mann (Labour, Bassetlaw)

I will have to consider what the hon. Gentleman had to say. However, I have another example, where it is possible to attempt some remedy. That is with the Crown Prosecution Service. I find that if my constituents have a complaint—they have lots if they lost their case—the easiest target in the legal profession is the Crown Prosecution Service. People want to have a go at the police, the judge, the decisions made, the advocacy and the rest, but there is that one isolated example, which stands out and which we—certainly as politicians—can hold to account with relative ease.

In conclusion, I restate my first point. The critical reason why this Government proposal will be so important is that it will change the climate. If the barrister giving the opinion has to think through the consequences if his opinion is not good, far more thought will be given to the case than is given at present. I base that on the many cases that I have reviewed. In some instances, the answer will be, “Actually, I have nothing additional to contribute. I have no knowledge about the matter. My opinion is valueless, and therefore I will not cover up what you are doing to strengthen your case purely because you are trying to do it on the cheap as a solicitors firm.” That would be a good thing for the legal profession as well as for the consumer. Therefore, I strongly support the amendment.

John Hemming (Liberal Democrat, Birmingham, Yardley)

One of the difficulties with the issue rests in the complication of determining where something has gone wrong. As hon. Members may be aware, I am concerned about miscarriages of justice in the criminal courts relating to medical evidence and medical expert witness evidence. In cases such as those of Sally Clark and Angela Cannings, the defendants were initially convicted but at a later stage were proven innocent. The proof rested in the medical evidence; the cases involved arguments about it.

A question then arises if a complaint is made about the solicitor or the barrister. Were they at fault in the initial stage? A recent case in Mold of shaken baby syndrome looks on the surface to be a miscarriage of justice. The solicitors may have taken the view that it was in the best interests of their client to try to negotiate the best deal that they could get as they would not be able to beat the medical evidence from the doctors, the difficulty being that medical evidence from doctors is conflicted. They make a lot of money out of it and it ends up being wrong much of the time, and a complicated situation develops.

The question that we have to ask about all of this, and I include the patent agents and trade mark attorneys, is that much as there is great merit in having a single point of entry for complaints—if someone has a complaint, they go there—is there not merit in giving a permissive power to the Legal Services Board?

Kevan Jones (Labour, North Durham)

Does the hon. Gentleman agree that it is also important that the body that deals with the complaint is seen to be totally independent of the profession? Referring a complaint to the Bar Council would give the impression, possibly quite rightly, that the barristers were looking after the barristers.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The hon. Gentleman makes a valid point. Whatever system the Legal Services Board uses for managing complaints, it must be seen to be adequate to manage complaints. The point about clause 143 is that it gives a permissive power to the Legal Services Board to delegate cases; for example, if someone has a complaint about patents, which are a complicated area. It may be that over time decisions will be made to do things differently. Without legislation empowering the Legal Services Board to devolve decision-making, it will have no power to do so—it will have to operate in accordance with statute.

There is a reasonable case for the Legal Services Board to be allowed to operate things in the way that it sees fit. There is not inherently injustice in having a process whereby there is an initial consideration—in this instance, the Bar complaints process—followed by a subsequent response at some other point. Without that power, the board cannot say, “You have a look at this and see if you can resolve it. Failing that, we will move to another process.” It does not have the permissive power.

When the Bill becomes an Act and starts being implemented, there will be a process whereby it will come into operation. To say that on day one, we have to move immediately to everything being in one big organisation—including the patent agents and trademark attorneys, about whom we have seen no figures relating to complaints—seems overly inflexible. A more flexible approach allowing some discretion to rest with the Legal Services Board—

Kevan Jones (Labour, North Durham)

Does the hon. Gentleman have any evidence or any figures about how many cases we are dealing with? As I understand it, for the types of case that he is talking about—patents and so on—there are a very small number of complaints a year.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I accept the point. A very small number of complaints may be made about patent agents every year, and they may be handled very cost-effectively by the patent agents. It may seem that allowing the current complaints process to continue for a certain period rests with a body that is not necessarily seen to be inherently independent and would therefore have to involve a process of appeal to the legal services ombudsman, for instance, for a determination.

But we should not say at the start, “I’m sorry, we’re going to have to shove it all into one big organisation—trademarks, patents, barristers, solicitors and trade unions. Obviously, complaints about trade unions must be handled in exactly the same way, because there might be complaints about advice offered by regulated persons within the trade unions. We accept the point about the amendment—union conveners will not be regulated by the measures, and rightly so, because industrial relations should not be regulated by the Legal Services Board. But we are saying that any complaints about trade unions cannot be handled by the trades union complaint process. It must be handled with a one-size-fits-all approach. Everything goes—patents, trade unions, trademarks, barristers and solicitors.”

Clause 143 does not say that for forever and a day, the Bar Council should handle complaints about the Bar, but it gives the Legal Services Board a permissive power to say if it sees fit, “Complaints about trade unions will go through the trade unions’ process, and complaints about barristers will go through the barristers’ process.” The clause gives the Legal Services Board that option if it sees fit. It is not a requirement; it is permissive. To that extent, it is a good clause.

Kevan Jones (Labour, North Durham)

I rise to support the Government, returning to something that the Minister has stressed on numerous occasions—the rights of the consumer. I am sorry, but I do not accept the idea, which was supported by a rather confused argument from the hon. Member for Birmingham, Yardley, that people who want to make complaints are quite clear about whom to complain to and how to deal with their complaints. A one-stop shop for all complaints is certainly the right approach.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I agree that the one-stop shop is a good mechanism for handling the initial complaint, but would the hon. Gentleman say that that should preclude delegating the handling of the complaint process, so that the complaint might be received at a certain place but the handling occurs in different ways?

Kevan Jones (Labour, North Durham)

Yes, I would. The system must be seen to be independent from the organisations about which people are complaining. That is fundamental as well. Anything that smacks of people addressing complaints themselves will take us back to when, for example, the police investigated the police. It is the same principle here.

I shall give an example of a case of mine that, strangely enough, did not involve miners’ compensation. It was a divorce case in which I heard a complaint about a solicitor, and it demonstrates why it is important to have a one-stop shop. Mrs. D came to see me with quite a simple divorce case—no children or dependents were involved. She had gone to a local firm of solicitors who for some reason—I could not quite work out why—employed two barristers to deal with the case. Even with my layman’s knowledge, I would not have thought that it was a complex case. The first question that should have been asked was whether barristers needed to be instructed in that case, and I would have contended that they did not.

Not only did it take about five months to settle the case, she then had a problem with the solicitors about the release of monies in the divorce settlement. The problem was that the solicitors were complaining that they could not finalise the case because the barristers had not submitted their fees. Again, I asked the legal services complaints service to intervene, and it did a sterling job of putting pressure on the solicitor and raising questions. The poor woman was happy to have the case moved on to its final point, as she had no other means of support.

I wanted the case to be taken right through, but the solicitor offered Mrs. D compensation for the poor service that she had received and she was happy with that. I then wanted to go after the barristers, but she was reluctant to go any further. In that case, solicitors and barristers were clearly acting in cahoots. I do not know what the circumstances were or why the barristers were instructed in the case, but if there had been a one-stop shop that dealt with the problem as a whole, that would have given the case strength and made it easier to deal with.

My hon. Friend the Member for Bassetlaw made his point eloquently. Having also been a trade union official, I remember the arguments that I used to make on occasions—on why, for example, boilermakers in the shipyard should only do certain jobs and why shipwrights should only do others. Yes, it was an archaic age; perhaps there were reasons why such practices should have been supported in that dim and distant past, but we cannot support them any longer. The idea of making the complaints system simple and easy for people to take things forward is an important part of the Bill.

The complaints system should have credibility. Since the Law Society separated from it, people have had more confidence in its complaints system, which is seen to be independent of the legal profession. I would oppose totally anything that smacked of complaints being put back to the profession, as that would undermine the credibility of what the Bill proposes.

The hon. Member for Birmingham, Yardley seems to think that there should be a transition phase. I am sorry, but that is a clear attempt to keep control over the regulation of the Bar. If the amendment were not agreed to, I do not think that, given time, the Bar Council would wake up one morning, see a blinding flash of light and say, “We should now give things up.” No trade organisation, trade union or self-interested body ever gives up anything willingly, so that would not happen.

Arguments have been made that there will be a big bang that will swamp the system early on. There has been an argument about patent agents. I do not think that there are more than five complaints about patent agents in any one year, so I do not think that the system will be swamped. For those reasons, it is important that the amendments are agreed to. I say to the Minister that when the Bill goes back to the other place, we need to resist strongly any attempts to reintroduce this restrictive practice.

Bob Neill (Conservative, Bromley and Chislehurst)

It is good to see you back, Sir Nicholas. Had you been here this morning, you would have heard me remind Committee members of my interest as a member of the Bar—although not currently practising, which is important to what we are discussing.

I was once the subject of a complaint to the Bar Council. It arose when I was defending someone in Chelmsford Crown court who was acquitted because the jury concluded that the prosecution witness was not credible. That witness complained about me to the Bar Council because I had obtained an acquittal for my client. He also complained that the prosecuting counsel had not gone hard enough. That shows why we should be careful about the nature of complaints against members of the Bar. Although it was manifestly obvious to me, as a young barrister in those days, that what was being said was nonsense, my head of chambers and I none the less thought it right and proper to make everything available to the Bar Council. We got all the papers back from the Crown Prosecution Service, which had instructed me; we got the notes from the court clerk; I liaised with the defence barrister; and he got out all his notes and his instructions from his solicitors. We made all that documentation available, which took a certain amount of time and concern, and presented it, and in due course it was dealt with and the complaint was dismissed. Even though I knew in my heart of hearts that I had done no wrong, and my colleague on the other side knew in his heart of hearts that he had done no wrong, for a young member of the profession, it was a pretty unpleasant experience.

I have no doubt become rather tougher as time has gone on, but over the years many young colleagues have come to me and said, “I have had this complaint made against me,” and they have not dismissed it, treated it lightly or thought that it was something to be laughed off. It causes them concern, even when in the vast majority of cases, I am glad to say, nothing comes of it. The idea that the Bar wants to keep a closed shop because it wants to protect its own and it does not take the issue seriously is just not justified on the evidence.

Kevan Jones (Labour, North Durham)

The hon. Gentleman just said that in most cases, nothing comes of the issue. Is that not because barristers investigate barristers?

Bob Neill (Conservative, Bromley and Chislehurst)

No, and I shall come on to that point now, which unfortunately represents the certain measure of cynicism that creeps in, and demonstrates that the hon. Gentleman did not perhaps listen properly to my point this morning. The nature of the complaint arises because of the nature of the jobs that the Bar does, as opposed to the nature of the job that the solicitor does. I am not setting the Law Society against the Bar Council; the simple fact is that the Bar is a smaller, reference profession, which does not handle clients’ money, for example. As I said this morning and as is well documented, the vast bulk of the complaints made against barristers relate not to the advice given in such claims as miners’ compensation, when things clearly went badly wrong, but to family work, which was referred to, and to criminal work.

John Mann (Labour, Bassetlaw)

That is surely no surprise to the hon. Gentleman, because the Bar Council refuses to accept such complaints.

Bob Neill (Conservative, Bromley and Chislehurst)

No, with respect the hon. Gentleman is wrong and misses the point. My point, which the Minister accepted, was that the particular vulnerability to complaint of criminal and family work is due to the pressure that the client is very often under. I found that family work was the most stressful element of any legal practice that I ever undertook. It was stressful for the lawyers and for the clients, even when they were in the wrong, as the judge found them to be, because people believe passionately, if sometimes misguidedly, in the rightness of their situation.

Against that background of profound disappointment, when people lose something that is precious to them, a complaint will be made that is not necessarily susceptible to reason or conciliation. For the same reason, the professional criminal who has got his or her 15 years or more is more than capable of turning on those who advised him and making complaints against them, as he will against the police, the judge and the prison officers who deal with his welfare. The professional criminals are not shrinking violets, and that is a very different situation from the one that is posited.

John Mann (Labour, Bassetlaw)

How many family complaints were there against the hon. Gentleman’s good self in that context?

Bob Neill (Conservative, Bromley and Chislehurst)

In my 25 years, there were two, and the result was the same. Most criminal practitioners find that that sort of thing can happen to them. It is interesting that the most famous negligence case against a barrister, Rondel v. Worsley, was brought against one of the most eminent and impeccably correct Queen’s counsel that one has ever come across. If anyone thinks that there was anything improper about Michael Worsley, they know nothing of him or the Bar. Even the most eminent and successful people can be the subject of unfair complaint in the world in which we have to operate.

John Mann (Labour, Bassetlaw)

So there are all these greatly emotional family cases—I am paraphrasing—that have lost out and these various criminals who either went to jail when they should not have done or did not go to jail when they should have done. Yet, in those 25 years there were only two complaints against Michael Worsley. Is the hon. Gentleman not defeating his own argument?

Bob Neill (Conservative, Bromley and Chislehurst)

Precisely not. I find it very difficult to see the logic of the hon. Gentleman’s case here. I am making my point in response to the Minister’s point. She said that about a third of complaints against the Bar were made where people were unhappy. In response, I would say that that is the nature of the people who tend to complain about the Bar. They are invariably less likely to be happy, because of those types of cases, and also because the type of complaints that they make are less likely to be subject to conciliation or to be dealt with by any other means. It is also worth bearing in mind that about 70 per cent. of complaints involving members of the Bar are hybrid cases, dealing with questions of both conduct and service, which the Government’s system is rather rigid in dealing with.

I would accept the point that was made about climate change, save for this: the Bar itself has recognised that the climate needs to change and the Bar has moved. If the Bar had stuck where it was, in the position that it was in at the beginning of my career, the point about climate change would be much stronger, but the Bar has not stuck there. It has separated out the Bar Standards Board; ring-fenced it; made it independent; put in its chair someone who themselves had a distinguished career in consumer protection; appointed as its independent reviewer, who looks at every complaint, someone who was previously the secretary to the Committee on Standards in Public Life; and given its lay panel a veto. The Bar has taken all those steps to establish that separation of the Bar Standards Board. That is the big difference.

Kevan Jones (Labour, North Durham)

Is it not the case that, a little bit like the Law Society, the Bar knew that this Bill was coming its way and what the hon. Gentleman is describing is the Bar trying to duck under the wire and protect its interests? I would also like to ask the hon. Gentleman how he would address the point that the public’s perception of barristers investigating barristers is not something that the Bar can get away from.

Bob Neill (Conservative, Bromley and Chislehurst)

That perception, it seems to me, was sensibly dealt with by the hon. Member for Birmingham, Yardley, when he said that there is the Legal Services Board, which is the one-stop shop. The Lords propose to give a permissive power whereby if, and only if, the board is satisfied that a particular regulatory structure meets its required standard for protecting the consumer, then it can delegate; it does not have to delegate, but it can do so. That seems to me to be the key thing here.

Reference was briefly made to the patents and trade mark situation. There is some evidence regarding that situation. My understanding is that the Chartered Institute of Patent Attorneys has had 16 complaints in five years. That is 0.00128 complaints per member, which is a tiny amount. The trade mark body, the Institute of Trade Mark Attorneys, has had three consumer complaints in the last six years, all settled by conciliation. These are small bodies. The legal services ombudsman said of CIPA:

“I am satisfied that CIPA has in place sufficient systems for handling complaints that are fit for that purpose and appropriate for the size of its operations.”

They are small, specialist bodies that already have robust systems in place, approved by the legal services ombudsman, but under the Government’s current unduly rigid proposals they would be swept up disproportionately—to use one of the Minister’s favourite words—into an overly rigid regime, and that is wrong.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I think that the hon. Gentleman makes the point—if it ain’t broke, don’t fix it.

Bridget Prentice (Labour, Lewisham East)

If it ain’t broke, don’t fix it, but the problem is, of course, that the system is broke and it needs to be fixed.

John Hemming (Liberal Democrat, Birmingham, Yardley)

Can the Minister say why these bodies dealing with patents and trade marks are broken?

Bridget Prentice (Labour, Lewisham East)

I will go through the debate and I will say to the hon. Gentleman that, although the trade mark attorneys, the patent attorneys, the Bar Standards Board and the Legal Complaints Service for the Law Society are all—particularly the latter two—doing an awful lot better at the moment than they did in the past, that is not a reason for saying that we should have anything other than an independent office for legal complaints to which the consumer can go to have their complaint and claim for redress dealt with.

I have listened carefully to what hon. Members have said, and although I have heard all the arguments in the other place, it was good to hear them reiterated here. It was even better, however, finally to hear in the debate the voice of the consumer, and to hear it in this House, because quite clearly the other House was not listening. As I have said, the consumer organisations have told us in no uncertain terms that clause 143 must not stand part of the Bill. Allowing delegation would fly in the face of the reforms that we have sought since Sir David Clementi published his report in December 2004. Neither he nor the consumer organisations, nor the Government, have ever believed that it is acceptable to allow the present system to continue in any of its forms.

On the issues raised by the Liberal Democrat Members, it is entirely possible, for example, for an assistant ombudsman to be a barrister—as long as he or she does not hold a practising certificate. My hon. Friends the Members for Bassetlaw and for North Durham were not too happy about that idea in earlier debates, but that will be the position. The Office for Legal Complaints can request advice or assistance under schedule 15, paragraph 15, from any body or person, and they can get expertise if that is what they need. Providing that such advice or assistance is given in that way will ensure that the OLC remains visibly independent and that complaints handling will restore the consumer confidence that has been absolutely shattered during the past few years.

Before setting out some of the comments of consumer bodies, I shall pick up on the point that was made by the hon. Member for Bromley and Chislehurst. As a barrister, he made a very compelling case for barristers to carry on looking after themselves, but he seemed to have forgotten that more than 2,000 solicitors have rights of audience in the Crown court, yet have not asked for delegation. In fact, the Law Society has said that, if we offered them delegation, they would not accept it. He made a compelling case too about family law and about the difficulties and stresses of dealing with it. Do not solicitors deal with it too, however, as well as with immigration cases, and other hugely emotive issues? Are those issues not likely also to result in similar feelings? Again, however, the Law Society is not asking for delegation.

The hon. Member for North-West Norfolk talked about the legal services complaints commissioner and the legal services ombudsman, who performs a very important function under the current system, and whose work I very much value. I am in regular discussion with her, and I welcome her support of the reforms. I am aware of the issues that she has raised in her report, but as I said in my opening remarks, consumers, the Government and I all think that delegating complaints handling would undermine the purpose of the Bill.

The hon. Gentleman also said that the Law Society was neutral. That is not strictly true, and it is misleading to suggest that the society agrees with the Bar that one size does not fit all. The Law Society supports the establishment of the OLC as a new body that is completely independent of all the professional bodies and that is responsible for dealing with all consumer complaints. The Solicitors Regulation Authority is firmly and absolutely against delegation and has argued strongly that the co-operation of the Bar and its inclusion in the new system are essential to the success of the new arrangements.

What have the consumers said? The CAB says:

“We consider it is essential that complaint handling and adjudication on issues of service quality should not be delegated in this way”—

that refers to the amendment in the other place—

“as this would undermine the role of the OLC as a comprehensive ombudsman service.”

The hon. Member for North-West Norfolk prayed in aid the fact that Ruth Evans was once the head of the NCC. She was excellent in that role, as she is in dealing with complaints for the Bar Council. Another Evans, Deborah Evans, is the chief executive of the complaints service for the Law Society. I do not know whether the name Evans automatically qualifies someone to deal with complaints about lawyers, but clearly there is something there. Both women are doing excellent jobs in dealing with complaints received about the legal profession. However, they take different views about delegation.

The NCC says that delegation of complaints—clause 143—is its

“top priority in the Bill.”

It says:

“The Bill was amended in the Lords—following repeated lobbying by the barristers profession—to allow the LSB to direct that an approved regulator may deal with complaints...Consumers will not trust a regulatory system that allows lawyers to judge their own. Independence is the single most critical principle in any redress system.”

Which?has also said:

“Consumers will not trust a regulatory system that allows lawyers to judge their own.”

It says that it takes a very similar view.

The three organisations together wrote to Baroness Ashton about this aspect of the Bill, saying the same thing:

“Separating the regulatory and representative functions of the professional bodies will be insufficient to command consumer confidence in this respect, especially given the relevant governance and complaint committees will continue to have professional majorities.”

I am sorry that Opposition Members have fallen hook, line and sinker for the vested interest of the closed shop of the Bar. The lone voice in the House of Lords speaking up for the consumer—apart, of course, from Baroness Ashton, who was leading for the Government on the Bill—was Lord Whitty. They were the only Members speaking on behalf of consumers.

Kevan Jones (Labour, North Durham)

With great humility, may I correct my hon. Friend? Lord Bach also spoke in favour of consumers.

Bridget Prentice (Labour, Lewisham East)

I was getting carried with the comments made by Lord Whitty in the other place. His description of what would happen if we allowed delegation to go ahead sent shivers through the barristers who were there. My hon. Friend is right to say that Lord Bach also backed the consumer view.

As the hon. Member for North-West Norfolk said, the legal services ombudsman rightly said that the arguments made by the Bar should not be dismissed without serious consideration. Sir David Clementi gave them serious consideration, and then he dismissed them. The Government gave them serious consideration, and then we dismissed them. We heard what was said to the Joint Committee and we gave that serious consideration, but we have dismissed it. The LSO should be in no doubt that we have given serious consideration to the arguments made by the Bar Council, but I agree with my hon. Friend the Member for North Durham. If the clause does not stand part of the Bill today and there is any attempt in the other place to reinstate it, we must and will resist it.

Clause 144

David Kidney (Labour, Stafford)

I beg to move amendment No. 276, in clause 144, page 76, line 17, leave out ‘may’ and insert ‘must’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss the following amendments:

No. 277, in clause 144, page 76, line 19, at end insert

‘A copy of the report made to the ombudsman under this section must be sent to the complainant by the ombudsman.’.

No. 298, in clause 144, page 76, line 30, at end add—

‘(6) The ombudsman may, when so requested by a complainant, make a request to the relevant authorising body to review the decision it has made as set out in a report made under subsection (2), and may request the relevant authorising body to notify it of the result of any such review.’.

David Kidney (Labour, Stafford)

It is a pleasure to have you in charge of our proceedings again, Sir. Nicholas. This is about the procedure for a complainant to find out what happens after making a complaint. If I may start at the beginning of the process, a complainant who is dissatisfied with a service from a provider of legal services will first try to resolve their complaint with the legal server directly. If that fails, as we have just established with the last vote, there is only one place to go: the Office for Legal Complaints. Once there, the office can decide whether it is a complaint about the standard of service, the conduct of the professional who delivered the service, or partly one and partly the other.

To illustrate the points that I am about to make, let us take a situation where the ombudsman and Office for Legal Complaints consider that there is a mixed case of standards and conduct. The ombudsman will say to the complainant, “I think that there is possibly an element of poor standard of service here. I will investigate it and let you have my decision. However, I also think that there is possibly a problem with the conduct of the person who delivered the service to you and I shall refer that to an approved regulator”. The complainant might spot the difference between those two outcomes and say, “Just a minute. You have told me that I will hear about the result of the complaint about the standard of service, but I did not hear you say anything about what I will hear about the conduct”. The ombudsman will say, “That is quite right. Either I will not bother to deal with it and will ask for a report myself about how it is dealt with, or, even if I do take action, I do not have to tell you anything about it”.

As far as consumerism is concerned, that is a very unsatisfactory situation. As a matter of good standards of practice it ought to be the case that the ombudsman says, “I have decided that part of this matter is about standards. I will investigate it and let you have my decision. The other part is possibly about conduct. I am going to get somebody else to investigate that for you and I will let you know the outcome of that investigation too”. I do not think that any other outcome is satisfactory. However, at the moment, the way that clause 144 is drafted means that that is not the case.

First, the ombudsman does not even have to ask the approved regulator to let them know the outcome of an investigation because the Bill states that the ombudsman may request a report back, which means that they need not if they do not wish to. The clause is silent on the ombudsman telling the complainant the result.

Amendment No. 276 changes “may” to “must”, which means that the ombudsman must always ask for a report from the approved regulator. I was pleasantly surprised to receive recently from the legal services ombudsman a special report called, “Legal Services Reform—a perspective”, dated June 2007, in which my argument is echoed on page 26. It reads:

“The OLC rules must require a report from the Approved Regulators on every case that has been referred from the OLC for potential misconduct. The OLC could then use this information to build up a picture of any systemic problems in regulation”.

In addition to my argument that it must be best practice to let a person know the result of their complaint, the ombudsman has here given another very good reason—spotting systemic failure in the system and having that information every time.

My amendment No. 277 would provide that when the ombudsman has insisted on receiving the report, he ought to pass it back to the complainant. That, again, is my argument about best practice. I then push the boat out a little bit with amendment No. 298. What would happen if a result from the approved regulator is that no action be taken, but the complainant, on hearing that from the ombudsman, says, “But that is outrageous! This is the worst case I have ever heard of. How on earth could that be the outcome?”? There is no remedy if that is the attitude of the complainant. There is the possibility, of course, that the Legal Services Board, a long time down the road, might pick up a lot of similar complaints and take some decisive action, but nothing could happen as a result of that one complainant thinking that the outcome was poor. I suggest that the complainant could say to the ombudsman, “Will you please go back to the approved regulator and ask it to reconsider the decision and have a fuller look at it?” There would be a filter because the ombudsman could say, “This is a very unreasonable person. I have been dealing with their complaint for a very long time. I really do not think that there is anything in this”, or they could say, “Well, actually, I was a bit surprised by the outcome and on this occasion I will ask for a report back”. Again, I think that I am supported by the same report from the legal services ombudsman. Page 25 states:

“There is no mechanism for the consumer to ask for a review of any of these decisions, as there is no longer the Legal Services Ombudsman independent review available to them”.

A little later on the same page it states:

“The proposed new OLC process will therefore represent to the consumer the loss of the independent Legal Services Ombudsman review as against the current scheme.”

In other words, if we legislate as the Bill is currently drafted, we will introduce a system that is actually worse for the consumer in that specific situation than the current system. I do not think that that is what the Minister intends or what the consumer groups outside this Room are expecting to hear and find at the end of our deliberations. If she does not like my proposal in the amendment, she ought to consider another way of ensuring that the ombudsman system is replaced by something at least equally as robust.

Henry Bellingham (Conservative, North West Norfolk)

We support amendments Nos. 276, 277 and 298. I congratulate the hon. Member for Stafford on the way in which he proposed them. In fact, I gather that they have the full support of Which? and the NCC. I congratulate Which? and the NCC on the excellent briefing that they gave the Committee and on the practical stance that they have taken. Obviously, the Opposition have been unable to support every one of their requests, but certainly we support the amendments. I had a lot to say on them, but he has made the case strongly already. All that I would like to do is endorse what he said and point out that it has the support of everyone in the Official Opposition.

John Hemming (Liberal Democrat, Birmingham, Yardley)

The hon. Member for Stafford made an excellent point: for the measure to work properly, it must be driven by the consumer. Obviously, if the consumer does not know what is going on, they cannot drive anything and, therefore, we support wholeheartedly the three amendments.

Bridget Prentice (Labour, Lewisham East)

I was at first going to be very resistant to the amendments, but my hon. Friend has made a couple of very important points about the consumer knowing the end results and about how, having made the complaint, it is important in good practice for them to know the end result. I would therefore like to look at them again. I was initially resistant because my main concern is that the system should not be overly bureaucratic and costly. On that basis, I ask my hon. Friend not to press amendments Nos. 276 and 277.

David Kidney (Labour, Stafford)

Given that I have the advantage of everyone supporting me on this, I am obviously concerned that we should keep progress going forward. On the possible objection regarding costs, does my hon. Friend agree that if it is ingrained in the practices of everyone concerned, and they are already under duties to exchange information with each other, it need not be an additional cost?

Bridget Prentice (Labour, Lewisham East)

My hon. Friend makes a very good point. As everyone on the Committee knows, the parliamentary ombudsman always writes back to the relevant Member of Parliament and complainant when a complaint is made. I am sure that there is an efficient way in which these matters can be dealt with that is not too costly.

I cannot accept Amendment No. 298, however. It is not the OLC’s role to ask an approved regulator to review disciplinary decisions. We have to make sure that the Bill sets out a clear distinction between redress, which is for the OLC to consider, and discipline, which is a matter for approved regulators. I accept that the Bill does not allow the board or complainants to challenge a regulator’s decision in an individual disciplinary case, but it does allow the OLC to build up a picture of how well regulators are dealing with disciplinary matters so that they can report any concerns to the board. I do not want to accept the amendment because it could blur some of those issues. Allowing the board to build up a picture of how well the disciplinary arrangements of each regulator is working is an acceptable way forward and the Bill provides the necessary safeguards to ensure that discipline is dealt with properly. I therefore ask my hon. Friend not to press the amendment for reasons quite different to those for the previous two.

David Kidney (Labour, Stafford)

As it is very much scratch drafting in amendment No. 298, I shall not want to press it to a vote until the wording has been improved. However, on the principle that there should be some ability to query why no action has been taken in a conduct case, for example, I should like the Minister to consider that we are losing the ombudsman’s role and that nothing is replacing it.

Bridget Prentice (Labour, Lewisham East)

I should have said in my closing remarks that although I can see that the legal services ombudsman makes a very good job application on page 25 of the special report, I believe that what we are putting in place is far more robust and far stronger, more independent and better for the consumer than the current system. That is the very reason why we are making the changes.

David Kidney (Labour, Stafford)

I am grateful to my hon. Friend for giving me that opinion. Perhaps I can pursue her between now and Report to examine it and satisfy myself that it is the case.

I am willing to withdraw amendment No. 276, because the Minister seems to have fully accepted the principle of what I have said, and there is more than one way to achieve the result that I want to achieve, so I await with relish the Minister’s amendment on Report. I beg to ask leave to withdraw the amendment.

Clause 150

John Hemming (Liberal Democrat, Birmingham, Yardley)

I beg to move amendment No. 236, in clause 150, page 80, line 4, leave out ‘a person (“the defaulter”)’ and insert ‘an authorised person’.

I rise merely to provide clarification, to ensure that the right person is dealt with.

Bridget Prentice (Labour, Lewisham East)

I am afraid that I cannot accept the amendment, as it would mean that the ombudsman would not be able to enforce requests for information or documents from complainants. That would be unacceptable because it could result in unequal treatment of the two parties in a case under the scheme. As it would mean that the ombudsman would be unable to follow up requirements for information from complainants, it could result in people wasting the ombudsman’s time. It might be of some reassurance to the hon. Gentleman that I expect the power to be used rarely, if at all. It is nevertheless important for it to be included in the Bill, to act as a deterrent and so that, in the interests of fairness, both parties are treated equally.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am half-surprised that the Minister did not buy the amendment. She understands the argument. That she says that the measure will be rarely used is a consolation, but not a complete protection, which she also understands.

There is a difference between requiring disclosure and revelation of documents from organisations and requiring the same from the individual citizen. There is a general wish to protect the privacy of citizens’ information, which is why the amendment was tabled. That is the right starting point. We will consider the Minister’s concerns, but this is the sort of issue of principle on which we would want to be absolutely certain that we have guaranteed enough protection for the individual. We will return to it later if necessary. On that basis, I beg to ask leave to withdraw the amendment.

Nicholas Winterton (Conservative, Macclesfield)

I must say to the hon. Gentleman that the hon. Member for Birmingham, Yardley, having moved the amendment, has to rise to withdraw it if he wishes to do so.

John Hemming (Liberal Democrat, Birmingham, Yardley)

I beg to ask leave to withdraw the amendment.

Clause 158

Clause 173

Bridget Prentice (Labour, Lewisham East)

I beg to move amendment No. 16, in clause 173, page 91, line 25, after ‘Act’, insert ‘or any other enactment’.

Nicholas Winterton (Conservative, Macclesfield)

With this we may discuss Government amendment No. 17.

Bridget Prentice (Labour, Lewisham East)

I will be very brief. These are simple amendments that are necessary to ensure that the board is not left with a shortfall of funding so that it can perform all its functions and carry out enactments transferred to it as a result of other amendments to the Bill. I hope that the Committee can accept the amendments.

Henry Bellingham (Conservative, North West Norfolk)

On the basis that my hon. Friend the Member for Huntingdon and myself will hopefully be running the Department in a year or so—hopefully not with the hon. Member for North Southwark and Bermondsey—I am glad that the Minister has moved the amendments, and we support them.

Stephen Hesford (Labour, Wirral West)

On a point of order, Sir Nicholas. Is it not in order that comments to the Committee have a smidgeon of credibility, which cannot be said of the last comment?

Nicholas Winterton (Conservative, Macclesfield)

I say to the hon. Gentleman that these matters are outside the scope of my responsibility. They have no relevance to this particular Public Bill.

Clause 174

Henry Bellingham (Conservative, North West Norfolk)

I beg to move amendment No. 301, in clause 174, page 92, line 6, at end insert—

‘( ) In apportioning or imposing a levy the Board shall have regard to—

(a) the extent to which any resulting increase in the regulatory fees of a Regulator will be reasonable and proportionate in comparison to the fees already levied on relevant regulated persons;

(b) the extent to which the levy might discourage entry to or retention in the regulated sector;

(c) the extent to which the number of persons regulated by a regulator might be reduced in consequence of the amount of the levy;

(d) the extent to which the regulator might be disadvantaged and another regulator might derive an advantage, in particular through the movement between regulators of regulated persons as a consequence of any differences in the levy imposed;

(e) the likely ability of the Regulator to raise the levy from Regulated Persons;

(f) the impact of the levy on the Regulator’s viability.’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss amendment

No. 302, in clause 175, page 93, line 13, at end insert—

‘( ) A debt recovered under subsection (5) may only be recovered from practising fees held by a regulator.’.

Henry Bellingham (Conservative, North West Norfolk)

I shall be very brief, because we are making substantial progress. The clause is on the levy, which is an important mechanism in how the board will run its affairs. The amendment would insert a new subsection setting out various factors to which the board must have regard when imposing a levy. It is basically a tidying-up exercise and would put various qualifications into the clause. It would improve the Bill, addressing in some detail a concern that a number of outside bodies have put to us. That is why it is important that the clause be amended as suggested, and I hope that the Minister will consider the amendment.

If the wording of the amendment is not up to scratch and the Minister can consider it and return to us on it, we will be more than happy to accept that. The amendment is probing, but it strikes me as a sensible way of improving an important clause. The same can be said for amendment No. 302, which would add to clause 175 the words:

“A debt recovered under subsection (5) may only be recovered from practising fees held by a regulator.”

That speaks for itself and would remove any semblance of doubt on the matter.

Bridget Prentice (Labour, Lewisham East)

I have listened carefully to both what the hon. Gentleman has said and what was said in the other place on the matter. I reiterate the point that my right hon. and noble Friend Baroness Ashton made. She highlighted the fact that the board would have to be satisfied that the apportionment of the levy was in accordance with fair principles before making levy rules. I am still of the strong opinion that that is the right way to go about it, rather than set out in the Bill a prescriptive list of factors as the amendment would.

To set such a list in primary legislation would restrict the board and preclude it from considering factors that might subsequently prove to be equally, or even more, important. I recognise that the list sets out, among other things, what the board should consider, but my concern is that any list would put pressure on the board to consider the matters on it above all else for fear of its decision being reviewed. That would restrict the flexibility that I have constantly said will be an important part of the board’s function.

I understand where the amendments come from and I have great sympathy with the views of the smaller legal organisations that want to ensure that they are not disproportionately burdened by the levy. They say that they do not want a one-size-fits-all approach to the matter, and I agree absolutely and wholeheartedly with them, which is why we need flexibility. The amendments would reduce that flexibility by predetermining some of the factors, which might be to the detriment of some of the smaller organisations that will be subject to the levy. On that basis, I ask the hon. Gentleman to withdraw amendment No. 301.

On amendment No. 302, for the record, I would in general expect money owed in respect of the levy to be paid from practice fee income, but I do not think that it is appropriate for the Bill to state that practice fees are the only source of funds by which debts to the board may be paid. Once again, that would restrict the flexibility of a regulator to meet a debt that might best be dealt with in a way that suits its own financial arrangements. On that basis, I do not support the amendment.

It is quite unusual for legislation to restrict the way in which moneys owed may be recovered. In effect, it would fetter the court’s ability to enforce payment of debts. The standard procedure for recovery of debts should apply, so I ask the hon. Gentleman to withdraw the amendment.

Henry Bellingham (Conservative, North West Norfolk)

The Minister has stressed the point about flexibility. I am glad that we gave the issue another airing—it was discussed in the other place, as she rightly said, but the proposals were rejected. I am glad that we have had another discussion. In the light of what the Minister said, I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 237, in clause 174, page 92, line 14, after ‘means’, insert ‘two-thirds of’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss the following amendments:

No. 238, in clause 174, page 92, line 16, leave out ‘including’ and insert ‘excluding’.

No. 239, in clause 174, page 92, line 17, leave out ‘and’ and insert ‘but including’.

No. 240, in clause 174, page 92, line 26, leave out ‘including’ and insert ‘excluding’.

No. 241, in clause 174, page 92, line 33, leave out ‘means’ and insert ‘excludes’.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The amendments are about the start-up and running costs of the board. They propose dealing with those matters differently so that the Government would meet a third of the running costs of the LSB, and would bear the start-up costs rather than transfer them to the legal profession.

The Joint Committee on the Draft Legal Services Bill supports the amendments. The Government intend that the cost of the regulatory regime, including the LSB—the umbrella organisation—should be borne by the legal profession. The amendment would split the responsibility. No body, and certainly not the Law Society, has argued that the professions should meet the costs of the lower tier of regulation, by which I mean the regulators and the office of legal complaints—that is the current position. The Law Society supports the status quo, as do we.

The supervisory tier is a different matter because its responsibilities are different. To ask the legal profession to meet its costs is not only unreasonable but illogical and inconsistent with other Government policies. Sir David Clementi’s report, to which we have referred often today, said:

“The issue arises as to how the LSB should be paid for. At present a substantial part of the oversight function is paid for by the State: judicial oversight falls to the taxpayer, as does the cost of the oversight function carried out by Government departments. The arguments in favour of the Government contributing to the cost of oversight functions, beyond the fact that it does already, are...that the LSB, in pursuit of its objectives...such as ‘access to justice’, has a wider role in the public interest than the oversight of practitioners in the legal sector”

—the LSB has a duty to the public as well as to the legal profession—and

“that an element of payment by other than the bodies being regulated confirms that the regulator is independent of the regulatee.”

That is an important principle We discussed that earlier in a different context.

Sir David Clementi went on:

“There is an interesting precedent in the proposed funding of the Financial Reporting Council. Its funding is to be split, two thirds falling to the private sector and one third to Government. How the split should be made between the private sector and Government for the LSB would need to be covered in statute and would, therefore, be the subject of Parliamentary scrutiny.”

He pointed out that the Government already meet a third of the cost of the Financial Reporting Council. I understand that they also meet the full cost of the supervisory tier of health care regulation, the Council for Healthcare Regulatory Excellence. They have not given a significant or convincing explanation of why they consider it appropriate for them to meet part of the supervisory tier of regulation in accountancy, but not in legal services.

One function of the Legal Services Board is to consider what additional legal services should come within the regulatory net. That function is currently the Government’s function and does not form part of the regulation of legal services. It is carried out entirely in the public interest rather than in the interest of providers of legal services. It seems therefore particularly unreasonable for the Government to expect those costs to be borne by the legal profession. The Joint Committee considered the issue and concluded that the legal profession should not be expected to finance public policy considerations currently funded in-house by the Government.

At the moment, the Government are saying that they will shift responsibility from the public purse and pass it entirely from the taxpayer collectively to the legal profession exclusively. They currently meet the costs of the legal service ombudsman, whose functions will be absorbed in the Office for Legal Complaints, now to be taken over entirely by the legal profession, and part of the costs of the Legal Services Complaints Commissioner referred to in glowing terms today by the Minister and others, whose post is to be abolished by the Bill.

The Government also meet the costs associated with the legal services consultative panel and the costs of the work in relation to the legal services regulation of the Lord Chancellor and the senior judiciary. A substantive amount of work is funded by the Government. Contributing on a continuing basis towards the cost of regulation would thus maintain the existing position rather than represent a new spending commitment by the Government. We are not asking for more responsibility, but for the status quo to be preserved in essence.

I hope that I can persuade the Minister that, although the Government will always try to reduce their expenditure commitments, the amount spent on such matters as a proportion of their expenditure is extremely small. The sum that goes to the Lord Chancellor’s budget at present relative to the other budgets of state is extremely small. I hope that the Government will agree that there is no absolute requirement to shuffle off that responsibility.

I have referred to the running costs, but I want now to say a word about start-up costs. I am talking particularly in relation to amendment No. 241. Under the present provisions of the Bill, the Government intend that not only the full continuing costs of both tiers of the regulatory system, but the start-up costs, should be borne entirely by the legal profession. Our amendment would change that and require the Government to fund the start-up costs.

Anyone would accept that it is unreasonable for all the start-up costs to be met by the profession. As we have heard from the Minister’s own mouth, the functions of the Legal Services Board are essentially to provide public assurance about the regulatory system rather than do a front-line job. It is even more unreasonable for the transitional costs to be paid by the legal profession, bearing in mind that it has its system in place and that all have said that it has been ameliorated and made more effective. To say, “Hang on, guys, you not only have to pay for what you are doing now and for what you have been doing, but for getting from where you are to where the Government want you to be,” seems unreasonable.

The Joint Committee’s look at the draft Bill, in paragraph 455, said:

“We recommend that the Government give further consideration to funding the start up costs of the new regulatory system. We understand that such assurances have been given in respect of Part 2 of the Compensation Bill which introduces a new regulatory regime for claims management.”

The Committee went on to say, in paragraph 467, that

“if the start-up costs of the new system are to be met through levies and charges on front line regulators, initial costs to the profession will be high and will be met both by practitioners and consumers. This adds weight to the argument that the start up costs of the LSB and OLC should be borne by Government.”

The Government’s only substantive argument so far is the assertion that those being regulated should pay for the regulatory system. However, there is no explanation why, for example, accountancy—a profession of a similar type, often discussed in the Bill in the context of working together—should be regulated and funded in one way, but law should now be regulated differently and should now be funded differently, which is by the practitioners themselves.

There is no incentive in the proposals for Government to make sure that the start-up costs are limited. By definition, if the Government do the job and give the bill to someone else, there is no incentive to keep the bill down. If the Government do the job and know that they have to pay for it, there will be in-house regulatory systems to control the costs. The estimates provided by PricewaterhouseCoopers, discussed in Committee in the last few days, were very high for the transitional process. Government indications are now that start-up costs are going to be even higher. All the more reason for the Government to know that they have a responsibility, which will hopefully add to the pressure to keep the costs down.

My last point is about the precedent across Government. It is not unusual for the start-up costs of regulatory bodies to be met by the Government, whatever is done about the running costs later on. The accountancy Financial Reporting Council, referred to earlier, had the Government meeting the full transitional costs of establishing the new body and a third of the continuing costs. That was the approach that the Government took with the Claims Management Regulator, which we discussed in a Committee like this not many months ago. Before that, the Government took the same approach to the Council for Licensed Conveyancers. There have been several precedents for one type. There is now a change. The Joint Committee did not believe the change was right. Sir David Clementi did not believe the change was right. The Government have really not made their case. I hope that they see the benefit to the taxpayer, to the consumer and to the profession from moving in an agreed way. I hope that the Minister will be helpful and seriously consider this, because at the moment there is severe discontent that all the burden is being put on the professions to pay for a system that, by definition, is a system of the Government’s creation.

Bridget Prentice (Labour, Lewisham East)

During the Report stage in the other place, my right hon. and noble Friend Baroness Ashton set out for their lordships the further work that we have done in updating the financial analysis conducted by PWC in support of the draft Bill. I have written to hon. Members to set out how we have approached that work and provide more detailed figures. Hon. Members should also now have received a copy of the supplement to the regulatory impact assessment, which was published alongside the Bill. That updates the cost figures.

As I explained in that letter, and in the supplement to the RIA, following our work on the revised costs, implementation now stands at £32.1 million and the revised running costs are £4 million for the board and £19.9 million for the OLC. Of those costs, £2.4 million will fall to the Ministry of Justice, so the Government are making a contribution.

It is obviously important that both hon. Members and the legal profession can have some confidence in the figures. I want to emphasise, therefore, that the adjustments that have been made are based on robust and detailed analysis. Baroness Ashton has set out the revised figure for implementation that will now form the basis of the implementation budget for the board and the OLC, when they finally assume management responsibility.

I come now to the principled argument about who should pay. Let me say right from the outset that I do not accept that the Government should contribute more than the £2.4 million that I have already mentioned—either to the establishment costs or to the costs of running the board and the OLC. We all know that the legal services market is thriving, and that there was a turnover of some £22 billion in 2005. The legal professions are in a very privileged position in that they operate in a market where they provide reserved legal services.

I believe absolutely that the increased consumer confidence that will result from a demonstrably independent regulatory and complaints-handling service will benefit the lawyers. The opportunities that the Bill creates for alternative business structures will benefit lawyers as well. So it seems to me entirely right that, as they will be beneficiaries, they should pay.

Another argument has been that the Bill will allow the Government to make considerable savings. I am not at all convinced of that. We will make some savings, but when we do, the savings should be invested in other priority areas where the investment is needed and where other funding sources are unavailable. I am sure that I do not need to mention other aspects within the Ministry of Justice in relation to which hon. Members on both sides would like to see us invest some of that money.

Equally I cannot accept that the Government should contribute because the board plays a public interest role. The legal professional bodies currently raise fees from the members that are not solely intended to pay for regulatory costs and that also fund important public interest activities in which those bodies participate—on human rights and law reform, for example. That approach should continue under the new framework.

The hon. Member for North Southwark and Bermondsey mentioned the arguments on funding arrangements that are in place for other regulatory organisations—in particular, the Financial Reporting Council. I have considered the funding arrangements of other bodies, including the FRC, the Council for Healthcare Regulatory Excellence, the Financial Services Authority, the financial services ombudsman, the pensions regulator, the Office of Communications, and the claims management regulator. I discovered no rigid approach; the Government fund establishments and running costs in some cases but not others.

On the FRC in particular, its accounting, auditing and corporate governance activities are funded by a tripartite arrangement with contributions from the accountancy professions, the business community and Government. Other costs, connected with audit inspections and the investigation and discipline of accountants, are funded entirely by the accountancy professions. The Government provide no funding in relation to actuaries. There are therefore big differences between systems, and the decision must be made on a case-by-case basis. Our starting position is that unless there is a compelling case for public funding there should be no increase in public expenditure, and I do not believe that there is such a case in the present instance.

I know that the legal profession has argued that, if the Government made a contribution, that would incentivise them and us to reduce costs. We are absolutely committed to ensuring value for money in the reforms. That is why the Bill contains the safeguards that it does. The levy rules are subject to extensive consultation requirements, the Lord Chancellor’s consent and parliamentary scrutiny through the negative procedure and, under clause 147(5)(c), the affirmative procedure. All those measures will ensure that the new bodies’ spending will be properly contained. As I said, the revised figures that we have announced will form the implementation budget for the board and the OLC. That is another check on costs.

I am conscious that there is some concern about the impact that the costs involved in establishing the board and the OLC might have on individual practitioners. I reassure Members that the Government are clear that we will not seek to recover those costs in a single year; rather, we will do so on a phased basis, and we share that with the professionals in every discussion about the matter. That will help relieve any potential pressure on the bodies themselves and on their practitioners.

I will continue to work with stakeholders on the details of the process, just as I want the Government to work with them on all other aspects of the Bill’s implementation. Only last Friday, officials held a useful discussion with stakeholders about costs, and it was agreed that further individual meetings with stakeholders will take place to ensure that they are fully sighted on all the issues, methodology and assumptions underpinning our work on cost. That open dialogue is important if we are to retain the confidence of the professional bodies as well as of consumers and others. I am committed to ensuring that we do so. On that basis, I ask the hon. Member for North Southwark and Bermondsey to withdraw his amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

There was quite a lot in the Minister’s reply. I shall pick up on a couple of points, because the issue is substantive and significant for the professionals.

First, the Minister said that the Government will contribute £2.4 million. Can she put on the record why that sum has been plucked out? She gave figures according to the latest assessment that she called robust. Can she put on the record what percentage of the start-up costs she and her Department believe that sum represents? I have been arguing that the payment is the start-up costs and a third of the running costs. It would be helpful to see where we are starting from in this debate, or where we have got to in our difference of views.

Secondly, I should be interested to know whether the Government have any independent support for their position. I have not heard the Minister cite any. If there is any, where does it come from, and will the Government put that on the record? Independent support exists for the position for which I am arguing.

Thirdly, the one point with which the Minister did not deal was the argument that if the profession is to fund all but the £2.4 million, that does not support the proposition that the board is a brand new body, entirely independent of the profession, set up by Government to give that independence. It is inconsistent, because the system will still be funded by the people against whom complaints will be made. In terms of showing the independence of the agency, I do not think that the Government have made the case.

Fourthly, the Minister conceded that savings will be made by Government. She said that they were small. I should be grateful for her best estimate on advice of the smallest and largest band of savings a year in each of the first three years so that we can understand, because we are all interested in the budget of the Ministry of Justice. I am intrigued, as other people watching and listening will be, to know what the expected savings are. It would be helpful to have that on the record.

Lastly, the Minister said, “If we make some savings, there are all these wonderful candidates for other spend.” The one wonderful candidate that the hon. Member for North-West Norfolk and I have argued should get more expenditure is legal aid, but Ministers in the Department are saying that there will be no more expenditure on legal aid. On Sunday, according to my television, the new Labour leader said to the nation that the new Government will listen and will serve the people and bow down in front of them. They should therefore be listening.

If the Minister had said to us that the Government were going to make savings of £1 million, which would be added to the legal aid budget, we would have been tempted, but I have not heard her say that. She has said that there will be some small savings, which the Government will spend somewhere, although she will not tell us where. She tells us that she still does not know whether the Department will get a significant increase in the comprehensive spending review, which has now been delayed until the autumn.

I would be grateful for quick answers. With the agreement of the Committee, I shall not press for a Division now. The Minister dealt with the comparative points to an extent. I want to go away and examine accountancy set-up costs, accountancy running costs and the costs of the Healthcare Commission, which the Minister talked about. There are issues that it would be sensible to consider again. If she can answer the specific questions, we can go into that debate better informed.

Bridget Prentice (Labour, Lewisham East)

I will do my best to answer at least some of the questions that the hon. Gentleman has raised. I will, of course, write to him and to the Committee about any that I do not answer.

The figure of £2.4 million relates to the closure of the Office of the Legal Services Ombudsman and the Office of the Legal Services Complaints Commissioner, plus the Ministry of Justice’s costs associated with the internal running of the programme. That is about 7.5 per cent. of the implementation costs. The hon. Gentleman said that he felt that the independence of the board and the OLC would be compromised, to which I say that both the Financial Services Authority and the Financial Ombudsman Service are entirely funded by the professions that they regulate. I do not think that any of us consider that they lack independence. Despite the fact that the professions will provide the funding, there is no need to believe that the board and the OLC will not be absolutely independent.

On some of the other issues, I will have to write to the hon. Gentleman. I want to ensure that everyone on the Committee is aware of how we see the money being spent. He made a plea for increased spending on legal aid; I had a feeling in my heart of hearts that that would be the first call, should there be any spare money. It is not for me to make those spending commitments on behalf of the Government, but I will try to give him the figures of likely savings to the Ministry of Justice and an idea of how the Department might use them.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful for that response. By way of a postscript, I add that we have today been given the chance to pick up the Criminal Justice and Immigration Bill, which is the first product of the Ministry of Justice—the first Bill born of its womb. I venture to suggest that we might save a lot of money if we did not have yet another Bill with more apparent remedies, just like the past 10 years’ worth of criminal justice Bills. Will the Minister be kind enough to tell us the cost to her Department of implementing that Bill? Some of us would say that that money would be better spent elsewhere. I look forward to as full an answer as possible. I would certainly rather that the Committee has all the information to look at. We will return to the issue on Report, but in the meantime, I beg to ask leave to withdraw the amendment.

Clause 177

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 242, in clause 177, page 94, line 33, at end insert—

‘( ) The duty to comply with regulatory arrangements overrides any obligations which a person may have, including to shareholders (otherwise than under the criminal law), if those obligations are inconsistent with the duty to comply with the regulatory arrangements.’.

I was so excited about the new Criminal Justice and Immigration Bill that I had not caught up with the fact that this amendment would be with us so quickly. It would add for the purpose of clarity a statement that would give priority to the duty to comply with regulatory arrangements. It would be inserted after subsection (1), which sets out the duties of regulated persons.

We are now into part 8; we have made great progress, and we are in the home stretch. This aspect of the Bill is called “Duties of regulated persons”, as is the clause, which starts by saying:

“A person who is a regulated person in relation to an approved regulator has a duty to comply with the regulatory arrangements of the approved regulator”.

The amendment would set out that that statement overrides any other obligations that that person may have,

“including to shareholders (otherwise than under the criminal law), if those obligations are inconsistent with the duty to comply with the regulatory arrangements.”

The Members’ explanatory statement, of which some of us are keen fans, says that the amendment

“is intended to put beyond doubt that for all those within the regulated sector, the duty to comply with regulatory arrangements is paramount”.

The real reason for the amendment is that if the Bill is passed as the Government want it to be, alternative business structures will be set up, organisations with people from different professions will work together, and they will not be governed as the legal profession on its own was governed in the past, simply by its own regulatory objectives.

This debate is like the earlier one about the priority of access to justice and the Legal Services Board. The amendment would ensure that, beyond peradventure, people understood and were in no doubt about the priorities. The Minister may say that the drafting is not perfect, that it is not in the right place or other things. I hope that she will say that subject to the criminal law, there must be an overriding duty of compliance, which the Bill should be absolutely express about for the avoidance of doubt. I await with interest her reply.

Bridget Prentice (Labour, Lewisham East)

Sir Nicholas, I am sure that you are aware that this issue was debated on several occasions in the other place. We made it clear then that the duty of lawyers and their practices to comply with the professional conduct rules and other regulatory arrangements is absolutely essential, which is why we have placed those obligations on a statutory footing and written several supporting safeguards into the Bill. There should be no scope for it to be compromised by other obligations—to shareholders or otherwise.

The Bill already achieves the amendment’s objective. If the lawyer or the licensed body were to breach professional conduct rules, they would be acting inconsistently with clause 177 and breaking the law. Approved regulators would be able to take whatever remedial action was necessary if the breach were serious—for example, allowing client confidentiality to be compromised in order to deliver a better return for shareholders. That would be grounds for revoking a licence and for permanently disqualifying the individual from ever working in an ABS firm again. There is no way that compliance with other obligations could ever provide a defence for that. Directors of that licensed body could not countenance breach of the law in the name of their duties to shareholders. If that were the case, directors could cause their companies to breach regulatory obligations all the time and then defend their actions by saying that they did it in the name of shareholder obligation. That simply is not how company law works.

Directors cannot take decisions that cause breaches of statutory obligations in the name of an obligation to their shareholders. They must abide by their statutory obligations, and their duties to shareholders do not justify any breach of those obligations. There is no conflict, so there is no need for an override provision. We have had detailed discussions on this matter with the FSA and the DTI, both of which confirmed that directors cannot use their duties to shareholders to justify the breach of a statutory obligation. They also confirmed that directors’ duties, including those to promote the success of the company as set out in the Companies Act 2006, presume that directors and their companies will be subject to all kinds of other obligations—statutory, fiduciary and regulatory. Section 172 of the Act co-exists with those duties; it does not conflict with them, so there is no need for an override provision.

I fear that the introduction of an override provision would cast out the principle of co-existence and would effectively state that such clauses are needed to ensure that directors comply with their statutory obligations, which clearly is not right. Such a provision might create negative influences for other duties, which could be damaging and could lead to uncertainty in applying principles that are vital to ensure consumer protection and to comply with legal obligations.

The importance of that principle is not unique to legal services, and I certainly do not want to jeopardise the interests of consumers in other sectors and create uncertainty about the application of company law by incorporating an unnecessary provision. I do not think that an override provision is needed, and accepting it might compromise the position that is set out clearly in the Companies Act. It is well known that directors cannot use their obligations to shareholders to override statutory obligations. I hope that my comments have reassured the hon. Gentleman enough for him to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful to the Minister for her considered reply, and I take seriously what she said about having consulted the DTI and others and that it is their clear view that such protection is not needed. She was very clear, and people will be able to look back through the Hansard records to read what has been said about statutes and statutory protection in certain appropriate circumstances.

Obviously, we are all clear that the criminal law reigns supreme, but I want to clarify one thing. I understand the Minister to have said that obligations that do not of themselves give rise to criminal breach, but are obligations because the regulator has imposed guidance or required certain things, are still overriding obligations as set out in the Bill, and that one cannot pray in aid of shareholders’ interests and set those obligations against each other. Criminal law, of course, comes first, but other obligations are expressly to take precedence over any shareholder obligations, even if they do not have a criminal sanction. I think that that is what the Minister was clearly saying, but I would be grateful if she could clarify it. If that is the case, it might provide the necessary reassurance. I would not want any amendment to be accepted that compromises the achievement of that hierarchy of obligations.

Finally, we are looking at different sorts of firms, maybe run by non-lawyers, such as big insurance or investment companies or private equity firms, which will need to know what the score is. They need to know absolutely that if they come into this business, and if ABSs take off and that part gets through—a lot of discussion still needs to take place between the two Houses—in England and Wales, they must be governed by the same regulatory regime as that which governs law-only professions and which has worked well in that context recently.

Bridget Prentice (Labour, Lewisham East)

I think that I can give the hon. Gentleman that reassurance. Statutory obligations are key. He is right to talk about criminal sanctions at the top of the hierarchy, but any statutory obligations will override any obligation to shareholders. I hope that that gives him that reassurance. He is quite right to say that those who might own some of those firms in the future must be very clear that that is the case absolutely. Hopefully, this debate will have gone some way to making that clear to them.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful. I hope that when the Bill is passed, as I am sure that it will be in some form, and when anyone applies to set up an ABS, if permitted—some of us are still unhappy about that, but we will continue that debate elsewhere—they will get a copy of the “Minister says ‘obey!’” rule which could be sent gratis. On that basis, I beg to ask leave to withdraw the amendment.

Nicholas Winterton (Conservative, Macclesfield)

I hope that people feel watered, fed and refreshed for the final straight of this match.

Schedule 16

Bridget Prentice (Labour, Lewisham East)

I beg to move amendment No. 44, in schedule 16, page 229, line 17, at end insert—

‘After section 1A insert—

“1B Restriction on practice as sole solicitor

(1) Rules under section 31 (rules as to professional practice etc) must provide that a solicitor may not practise as a sole solicitor unless he has in force—

(a) a practising certificate, and

(b) an endorsement of that certificate by the Society authorising him to practise as a sole solicitor (a “sole solicitor endorsement”).

(2) The rules may provide that, for the purposes of the rules and this Act, a solicitor is not to be regarded as practising as a sole solicitor in such circumstances as may be prescribed by the rules.

(3) The rules must prescribe the circumstances in which a solicitor may be regarded by the Society as suitable to be authorised to practise as a sole solicitor.”’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to take Government amendments Nos. 45 to 68, Nos. 79 to 81, Nos. 83 to 92, Nos. 95 to 100 and amendment No. 106.

Bridget Prentice (Labour, Lewisham East)

The list of amendments is daunting, but they have been drafted in response to amendments tabled in the other place on behalf of the Law Society. They create new powers over sole practitioners similar to existing powers over regulated recognised bodies. They require solicitors who want to run a sole practice to apply for endorsement to do so and to be subject to specific regulatory requirements. They also ensure effective powers over sole solicitors’ employees.

The purpose of the amendments is to provide the Law Society with enhanced powers to regulate sole practitioners and their employees. They bring many of the Law Society’s powers in relation to sole practitioner firms into line with its powers over partnerships and LLPs, and sole practitioner firms are often as large and as complex as recognised bodies. Overall, the amendments will ensure that all legal services practices are regulated according to the same principles. The consumers of such services will receive the same level of regulatory protection, regardless of whether they obtain legal services from a sole solicitor or a recognised body.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

These are good proposals.

Henry Bellingham (Conservative, North West Norfolk)

I beg to move amendment No. 299, in schedule 16, page 231, line 22, leave out from ‘if’ to end of line 27 and insert

‘he has been required by rules made under section 35(1) to provide an accountant’s report and has failed to provide such a report within the time period prescribed under those rules,’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss the following amendments: No. 305, in schedule 16, page 232, line 41, leave out sub-paragraph (5).

No. 306, in schedule 16, page 233, line 18, at end insert—

‘(12) The decision of the High Court on an appeal under subsection (6) or (9) shall be final.’.

No. 307, in schedule 16, page 233, line 22, at end insert—

‘( ) in subsection (2) for “six” substitute “9”,

( ) in subsection (4) for “six” substitute “9”,’.

No. 308, in schedule 16, page 238, line 28, at end insert—

‘(3) The rules may make different provision for different categories of solicitors and for different circumstances.’.

No. 309, in schedule 16, page 248, line 39, at end insert—

‘(2) After that section insert—

“44F Power for Society to rebuke and reprimand

(1) Where the Society has investigated whether there has been professional misconduct by a solicitor, or whether a solicitor has failed to comply with any requirement imposed by or by virtue of this Act or any rules made by the Society, and the Society is satisfied that there was professional misconduct on the part of the solicitor, or that the solicitor did fail to comply with such a requirement or rule, but the Society is not satisfied that it is in the public interest to make a complaint against the solicitor to the Tribunal, the Society may rebuke or reprimand the solicitor and, unless it considers that it is not in the public interest to do so, may make public both the fact that the solicitor has been rebuked or reprimanded and a summary of the misconduct or failure concerned.

(2) The Society may make rules providing for rights of appeal to the Tribunal against rebukes or reprimands made by the Society where they are made, or proposed to be made, public or in such other circumstances as the Society may prescribe.

(3) Rules made under subsection (2) may also make provision about the procedure and practice to be followed in relation to—

(a) investigations as to whether there has been professional misconduct by a solicitor, or whether a solicitor has failed to comply with any requirement imposed by or by virtue of this Act or any rules made by the Council;

(b) the making of rebukes and reprimands; and

(c) the making public of rebukes and reprimands under subsection (1).’.

No. 320, in schedule 16, page 252, line 44, leave out paragraph 59 and insert—

‘59 In section 69 (action to recover solicitor’s costs)—

(a) in subsection (1) for “taxed” substitute “assessed”,

(b) for subsection (2) substitute—

“(2) The requirements referred to in subsection (1) are that the bill—

(a) must be signed—

(i) by the solicitor, or on his behalf by any employee authorised by the solicitor to do so;

(ii) if the costs are due to a firm, by one of the partners of that firm, either in his own name or in the name of the firm, or on his behalf by any employee authorised by any partner to do so; or

(iii) be enclosed in, or accompanied by, a letter which is so signed and refers to the bill;

(b) must be delivered to the party to be charged with the bill, either—

(i) personally;

(ii) by being sent to him by post to, or left for him at, his place of business, dwelling-house, or last known place of abode;

(iii) (subject to subsection (2A)) where he has provided an e-mail address to the solicitor for that purpose, by being sent to him by e-mail to that address (and, if he required that any attachment to an e-mail be in any particular electronic format, in accordance with that requirement); or

(iv) (subject to subsection (2A)) where he has provided a fax number to the solicitor for that purpose, by being sent to him by fax to that number; and

where a bill is proved to have been delivered in compliance with those requirements, it shall not be necessary in the first instance for the solictor to prove the contents of the bill and it shall be presumed, until the contrary is shown, to be a bill bona fide complying with this Act.

(2A) Sub-paragraph (iii) or (iv) of subsection (2)(b) does not apply if the party to be charged with the bill has indicated to the solicitor, before the bill is sent, that he is not willing to accept delivery of a bill sent by the method in question.

(2B) A bill which is sent by fax or e-mail is to be treated as having been delivered the working day after the day on which it was sent (unless the contrary is proved) and in this subsection “working day” means a day which is not a Saturday, Sunday, Bank Holiday or other public holiday,” and

(c) after subsection (3) insert—

“(3A) In subsection (2)(a) where a signature is required, an electronic signature incorporated into the document shall satisfy this requirement and an electronic signature is as much of anything in electronic form as

(a) is incorprated into or otherwise logically associated with any electronic communication or electronic data; and

(b) purports to be so incorporated or associated for the purpose of being used in establishing the authenticity of the communication or data, the integrity of the communication or data, or both.”’.

No. 310, in schedule 16, page 257, line 33, leave out paragraph (a) and insert—

‘(a) for sub-paragraph (1)(a) substitute—

“(a) the Society has reason to suspect dishonesty on the part of a solicitor;”.

(aa) after that sub-paragraph insert—

“(aa) the Society has reason to suspect dishonesty on the part of—

(i) an employee of a solicitor, or

(ii) the personal representatives of a deceased solicitor,

in connection with that solicitor’s practice or in connection with any trust of which that solicitor is or formerly was a trustee;”,’.

No. 311, in schedule 16, page 258, line 8, at end insert—

‘(iii) after “practice” insert “or has failed or is failing properly to attend to his practice”,’.

No. 312, in schedule 16, page 262, line 18, at end insert—

‘( ) in paragraph (d) omit “such”.’.

No. 313, in schedule 16, page 262, line 35, at end insert—

‘(ca) for recognition to be made subject to such conditions as the Council at any time sees fit to impose in such circumstances as are specified in the rules;

(cb) for the Society to require, in such circumstances as may be specified in the rules, recognised bodies to satisfy the Society as to their continuing suitability to be recognised under this section;’.

No. 314, in schedule 16, page 263, line 20, at end insert—

‘( ) Rules made by the Council under subsection (1) and (2) may make different provision for different categories of person or body and for different circumstances.’.

No. 315, in schedule 16, page 264, line 16, at end insert

‘and, if any such person is a body corporate, it also includes a manager of that body corporate’.

No. 316, in schedule 16, page 264, line 21, at end insert—

‘“solicitor business” means a business consisting of or including solicitor services;’.

No. 317, in schedule 16, page 267, line 35, at end insert—

‘“body” includes an individual who is carrying on a business as a sole principal;’.

No. 318, in schedule 16, page 279, line 7, leave out sub-paragraph (3) and insert—

‘(3) For sub-paragraph (2)(c) substitute—

“(c) a relevant insolvency event occurs in relation to a recognised body;

(ca) the Society has reason to suspect dishonesty on the part of any manager of a recognised body; or”.’.

No. 319, in schedule 16, page 281, line 14, leave out from ‘partnership’ to ‘and’ in line 15 and insert—

‘or the business of a sole principal, to a former manager of the body (within the meaning of Schedule 2 to the Administration of Justice Act 1985),’.

Henry Bellingham (Conservative, North West Norfolk)

Schedule 16 rewrites the Solicitors Act 1974. It contains a great deal, including measures about practising certificates and the registration of holders. The issues include fees payable for practising certificates, measures about the roll or register as evidence and unqualified persons acting as solicitors. In fact, the schedule is a complete rewrite of the 1974 Act. When it comes to such large schedules, we have to take the Government at their word and give them the benefit of the doubt. We must also consult outside organisations, which is exactly what we have done.

The Government have responded satisfactorily to all the probing amendments tabled in the other place. Sarah Rivers of the Solicitors Regulation Authority has said:

“The SRA is broadly pleased with the substantial number of amendments that have been made to modernise our regulatory powers throughout the course of the Legal Services Bill’s passage in Parliament. We are especially grateful to the Conservative Front Bench, in tabling these technical amendments, for their help to achieve this.”

The SRA is particularly grateful to Lord Kingsland and Lord Hunt. There is only one outstanding issue. I am grateful that the Government have listened, because these are very technical and complicated amendments. As I have mentioned, we are effectively rewriting an earlier piece of legislation—I would not recommend doing that on a regular basis. We could almost have had a completely new solicitors Bill, but the Government decided to do it a different way by virtue of this schedule.

Amendment No. 307 seeks to provide for a longer period in which a solicitor can be suspended pending referral to the Solicitors Disciplinary Tribunal. The Government have made it clear that there are problems with the amendment. It is the only amendment that we have tabled that the Government have not been able to act on positively. Will the Minister tell us why that is?

This is really a congratulatory effort on my part. I would like to thank the Minister for listening to organisations such as the Law Society, the SRA and other bodies, which have had a constructive and imaginative input into the debate. As a consequence, we have a better and more effective schedule.

Having said that I was only going to talk for four minutes, I have now spoken for three minutes and 45 seconds. I will sit down, but once again, I want to thank the Minister and her team for listening very carefully and responding in a positive and helpful way—I wish that Ministers would do that the whole time. Fortunately, they do it from time to time, and when they do, we must congratulate and thank them.

Bridget Prentice (Labour, Lewisham East)

I would like to reassure the hon. Gentleman about amendment No. 307. We felt that it was not appropriate to extend the suspension from 12 to 18 months. Obviously, the SRA needs to be equipped to protect consumers from solicitors who have been convicted of fraud or serious crime. The amendment, however, might have had the undesirable effect of reducing incentives for the Law Society and the tribunal to deal with disciplinary cases swiftly. The SRA accepts that our concerns about long delays are important, and it has asked that the amendment is not pressed.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

As the hon. Member for North-West Norfolk has said, this group and later groups of amendments concern the substantive law that governs the professions. The Law Society has promoted some of the changes, which the Minister picked up on. Have other people who might have an interest been consulted? We must be satisfied that there is broader confirmation that the Government are going in the right direction and that there are not any objections. I have understood the main objections, but I do not pretend to have my head round every single implication of all the changes to all the other Acts.

The Department has consulted people other than just the Law Society; it is satisfied this group of amendments and the other groups contain nothing that will cause anybody difficulty; and the amendments are all improvements to put the relevant houses in good order.

Henry Bellingham (Conservative, North West Norfolk)

I am grateful to the Minister for what she has explained to the Committee. I am satisfied about that one outstanding amendment, and I beg to ask leave to withdraw the amendment.

Bridget Prentice (Labour, Lewisham East)

I beg to move amendment No. 69, in schedule 16, page 245, line 38, after ‘purpose’, insert ‘—

(a) ’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to take the following Government amendments Nos. 70 to 77,

Governmentamendment No. 78, in schedule 16, page 248, line 39, at end insert—

‘After that section insert—

44D Disciplinary powers of the Society

(1) This section applies where the Society is satisfied—

(a) that a solicitor or an employee of a solicitor has failed to comply with a requirement imposed by or by virtue of this Act or any rules made by the Society, or

(b) that there has been professional misconduct by a solicitor.

(2) The Society may do one or both of the following—

(a) give the person a written rebuke;

(b) direct the person to pay a penalty not exceeding £2,000.

(3) The Society may publish details of any action it has taken under subsection (2)(a) or (b), if it considers it to be in the public interest to do so.

(4) Where the Society takes action against a person under subsection (2)(b), or decides to publish under subsection (3) details of any action taken under subsection (2)(a) or (b), it must notify the person in writing that it has done so.

(5) A penalty imposed under subsection (2)(b) does not become payable until—

(a) the end of the period during which an appeal against the decision to impose the penalty, or the amount of the penalty, may be made under section 44E, or

(b) if such an appeal is made, such time as it is determined or withdrawn.

(6) The Society may not publish under subsection (3) details of any action under subsection (2)(a) or (b)—

(a) during the period within which an appeal against—

(i) the decision to take the action,

(ii) in the case of action under subsection (2)(b), the amount of the penalty, or

(iii) the decision to publish the details,

may be made under section 44E, or

(b) if such an appeal has been made, until such time as it is determined or withdrawn.

(7) The Society must make rules—

(a) prescribing the circumstances in which the Society may decide to take action under subsection (2)(a) or (b);

(b) about the practice and procedure to be followed by the Society in relation to such action;

(c) governing the publication under subsection (3) of details of action taken under subsection (2)(a) or (b);

and the Society may make such other rules in connection with the exercise of its powers under this section as it considers appropriate.

(8) Before making rules under subsection (7), the Society must consult the Tribunal.

(9) A penalty payable under this section may be recovered as a debt due to the Society, and is to be forfeited to Her Majesty.

(10) The Lord Chancellor may, by order, amend paragraph (b) of subsection (2) so as to substitute for the amount for the time being specified in that paragraph such other amount as may be specified in the order.

(11) Before making an order under subsection (10), the Lord Chancellor must consult the Society.

(12) An order under subsection (10) is to be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(13) This section is without prejudice to any power conferred on the Society or any other person to make an application or complaint to the Tribunal.

44E Appeals against disciplinary action under section 44D

(1) A person may appeal against—

(a) a decision by the Society to rebuke that person under section 44D(2)(a) if a decision is also made to publish details of the rebuke;

(b) a decision by the Society to impose a penalty on that person under section 44D(2)(b) or the amount of that penalty;

(c) a decision by the Society to publish under section 44D(3) details of any action taken against that person under section 44D(2)(a) or (b).

(2) Subsections (9)(b), (10)(a) and (b), (11) and (12) of section 46 (Tribunal rules about procedure for hearings etc) apply in relation to appeals under this section as they apply in relation to applications or complaints, except that subsection (11) of that section is to be read as if for “the applicant” to “application)” there were substituted “any party to the appeal”.

(3) Rules under section 46(9)(b) may, in particular, make provision about the period during which an appeal under this section may be made.

(4) On an appeal under this section, the Tribunal has power to make such order as it thinks fit, and such an order may in particular—

(a) affirm the decision of the Society;

(b) revoke the decision of the Society;

(c) in the case of a penalty imposed under section 44D(2)(b), vary the amount of the penalty;

(d) in the case of a solicitor, contain provision for any of the matters mentioned in paragraphs (a) to (d) of section 47(2);

(e) in the case of an employee of a solicitor, contain provision for any of the matters mentioned in section 47(2E);

(f) make such provision as the Tribunal thinks fit as to payment of costs.

(5) Where by virtue of subsection (4)(e) an order contains provision for any of the matters mentioned in section 47(2E)(c), section 47(2F) and (2G) apply as if the order had been made under section 47(2E)(c).

(6) An appeal from the Tribunal shall lie to the High Court, at the instance of the Society or the person in respect of whom the order of the Tribunal was made.

(7) The High Court shall have power to make such order on an appeal under this section as it may think fit.

(8) Any decision of the High Court on an appeal under this section shall be final.

(9) This section is without prejudice to any power conferred on the Tribunal in connection with an application or complaint made to it.”’.

No. (a), in line 12, leave out lines 12 to 14 and insert—

‘(3) The Society may publish details of any action it has taken under subsection (2)(a) or (b), unless it considers that it is not in the public interest to do so.’.

No. (b), in line 81, at end insert—

‘( ) vary the decision of the Society;’.

Government amendment No. 82

Government amendment No. 93

Governmentamendment No. 94, in schedule 16, page 273, line 38, at end insert—

‘After that paragraph insert—

Bridget Prentice (Labour, Lewisham East)

Again, I hope to speak briefly to the amendments, which are technical. They would provide the scope of the Law Society’s powers, so that they were properly applied to the correct persons. The power to rebuke and to fine is an important one, and the approved regulators must be able to take appropriate action against those whom they regulate. The powers in the amendments would allow the society to act quickly and effectively when its rules are breached and when there is a finding of professional misconduct against a solicitor.

The intention is that more minor rule breaches and professional misconduct would be dealt with by the Law Society, while the solicitors disciplinary tribunal would determine the more serious cases. The SDT would have an unlimited power to fine, but the maximum penalty for the Law Society would be £2,000.

Henry Bellingham (Conservative, North West Norfolk)

The Conservatives support the amendments. They are spot on and we thank the Minister for tabling them. [ Interruption. ] I was put off by that noise, Sir Nicholas, but I said that we support the amendments.

Nicholas Winterton (Conservative, Macclesfield)

My attention was also diverted; I trust that the instrument has now been switched off. I do not know whose it was—

Tobias Ellwood (Conservative, Bournemouth East)

I request an inquest.

Nicholas Winterton (Conservative, Macclesfield)

After the Committee is over.

John Mann (Labour, Bassetlaw)

I presume, Sir Nicholas, that it is in order to move amendments (a) and (b)?

Nicholas Winterton (Conservative, Macclesfield)

It is in order to speak to them; if you wish to move them formally, that will come later.

John Mann (Labour, Bassetlaw)

I shall speak to them separately, as they are quite different.

Amendment (a) would make a technical change to Government amendment No. 78. It would change the obligation to publish from one that would need a positive step to be taken to an obligation to consider that it would not be in the public interest to publish. It is a subtle but important change and would result in an automatic presumption that things would be put in the public domain rather than it having to be proven in each case. It would assist good working to ensure that, unless there was good reason not to do so, everything would be put in the public domain. I am sure that the Minister will be fully convinced by the logic of my argument.

Amendment (b) would allow the variation by a tribunal of decisions of the Law Society. That is important, because if the tribunal has to decide yea or nay—all or nothing—there would be more danger of a clever solicitor making a defence that was partially convincing. There would thus be more likelihood of the tribunal saying no, even on a technicality, because it would have no option. In such instances, the tribunal ought to be able to make a halfway determination. It strikes me that the balance would otherwise always be with the clever or technical argument, which could dominate tribunal decisions, whereas allowing a variation would mean that the tribunal could determine whatever it chose, based on all the facts.

Bridget Prentice (Labour, Lewisham East)

I imagine that we agree that there ought to be transparency in the Law Society’s decision making process. In many circumstances, it will clearly be in the public interest to publish once a fine or rebuke has been issued. However, I am not sure that it should be the default position for disciplinary action of that type to be published automatically. As it happens, I am not convinced that amendment (a) would achieve automatic publication unless it was not in the public interest, because it states that the Law Society “may” publish.

Given the intention behind my hon. Friend’s amendment, I shall explain our view. We believe that due consideration should be given in each case. However, it is more appropriate and probably more proportionate to take action as set out in Government amendments Nos. 78 and 94, in which it is anticipated that the Law Society would at the time of the determination consider whether or not it was in the public interest to publish. That leads to the idea that it may not necessarily be appropriate to publish determinations.

My hon. Friend’s other amendment would allow the tribunal to

“vary the decision of the Society”.

I entirely agree with that position, but Government amendments Nos. 78 and 94 already provide the tribunal with a large number of powers, which can be exercised on appeal. They amount to the ability to vary or replace every aspect of a decision that has been appealed. That includes the power to vary the penalty and to make such an order as it sees fit. That gives the tribunal the scope to

“vary the decision of the society”

that my hon. Friend seeks.

Government amendment No. 94 also contains a range of powers that is sufficient to consider an appeal, including the power to vary the amount of the penalty. I hope that those amendments, which give the tribunal wide scope, cover the proper concerns that my hon. Friend raised. I therefore ask him not to press his amendments to a vote.

Bridget Prentice (Labour, Lewisham East)

I beg to move amendment No. 101, in schedule 16, page 281, line 18, after ‘etc)’, insert ‘—

(a) for sub-paragraph (1) substitute—

“(1) Where a recognised body acts as such for a client, any communication, document, material or information is privileged from disclosure in like manner as if the recognised body had at all material times been a solicitor acting for the client.”, and

(b) ’.

Nicholas Winterton (Conservative, Macclesfield)

With this, it will be convenient to discuss Government amendments Nos. 102, 18 to 27, 103 to 105 and 107.

Bridget Prentice (Labour, Lewisham East)

The amendments ensure that the provisions in the Bill and in five other statutory provisions are consistent with the common law on legal professional privilege. The Bill already provides that the clients of ABS firms should have the same degree of LPP protection as the clients of any other type of legal service provider. That was set out in what used to be subsections (3) to (7) of clause 182.

However, both the Bar Council and the Law Society raised the possibility that certain terms in that provision might not reflect fully the current state of the common law of LPP. The wording reflected similar wording used in other statutory provisions that ensure LPP protection for clients of certain legal services providers, such as recognised bodies and licensed conveyancers. We have looked carefully at that and have decided to modify what is now clause 191, as well as the other relevant provisions.

The amendments essentially do two things. First, they remove the reference to legal proceedings in the relevant provisions, because the law provides clients with LPP protection in certain circumstances outside of legal proceedings. Secondly, they expand the reference to communication, because again the law provides clients with LPP protection in certain circumstances, regarding not only communications but documents, material or other information.

Therefore the amendments ensure LPP protection for the clients of ABS firms, so that firms do not operate at a competitive disadvantage compared with other types of provider. They essentially modify five earlier provisions about LPP. Those provisions ensure protection for the clients of other legal service providers, licensed conveyancers, bodies recognised by the Council for Licensed Conveyancers, bodies recognised by the Law Society, patent attorneys, trade mark attorneys and certain authorised practitioners under the Courts and Legal Services Act 1990.

Together the amendments ensure that clients of all of those providers have the LPP protection equivalent to the clients of solicitors. That means that both types of clients are equally protected, no matter where they go for legal services, and no type of provider will get a competitive advantage over other providers as a result.

The hon. Member for North Southwark and Bermondsey asked about consultation. We have consulted not only the legal professions but the consumer organisations, too. I express particular thanks to both the Bar Council and the Law Society. I suspect that most people would say that that would be an unusual thing for me to do, but in this instance they have been extremely helpful. The Bar Council even went so far as to provide opinion from a legal expert on the subject, which was shared with us, and that opinion informed our reconsideration of the amendments. The Law Society has also provided valuable input. It is a good example of how a co-operative approach can achieve the desired result, for which I am grateful to them all.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Thank you, as always, Sir Nicholas, for conducting what is not the most easy stage of our proceedings in such an extremely professional manner.

Everyone will be reassured by what the Minister said in response to my general point about the amendments. People will be reassured that the Minister has the confidence of both key professional bodies and others who were consulted, who all signed up and came to an agreement. Changing the small print can sometimes conceal a multitude of unexpected consequences, but if all those brains and interests have come together to say that the proposal is wonderful, who are we to presume otherwise?

Bridget Prentice (Labour, Lewisham East)

I beg to move amendment No. 324, in schedule 16, page 281, line 40, leave out ‘and’ and insert—

‘( ) in that subsection for “officers” substitute “managers”, and’.

Nicholas Winterton (Conservative, Macclesfield)

With this it will be convenient to discuss Government amendment No. 325.

Bridget Prentice (Labour, Lewisham East)

These amendments are even more straightforward than the previous ones. They replace references in the Courts and Legal Services Act 1990 to “officers” of recognised bodies with “managers” of recognised bodies, ensuring consistency with previous amendments to the Administration of Justice Act 1985. The hon. Member for North Southwark and Bermondsey will be pleased that at least the terminology used in relation to Law Society regulated practices is consistent in those two Acts.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

On a point of order, Sir Nicholas. I want to ask one or two brief questions about clauses 182, 192, 194, 195 and 198, to which there are no amendments. I hope that that is helpful to the Committee.

The rest of the debate is in Hansard.