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Session 2006 - 07 Publications on the internet General Committee Debates Legal Services Bill [Lords] |
Legal Services Bill [Lords] |
The Committee consisted of the following Members:Hannah
Weston, John Benger, Committee
Clerks
†
attended the Committee
Public Bill CommitteeThursday 21 June 2007(Afternoon)[Sir Nicholas Winterton in the Chair]Legal Services Bill [Lords]Schedule 13Ownership
of licensed
bodies
Amendment
proposed [this day]: No. 212, in
schedule 13, page 197, line 11, at
end insert
‘Licensing rules must
provide that, in determining whether the requirements of sub-paragraph
1 are met, the burden of proof rests on the person who wishes to hold
the restricted interest.’.—[Mr.
Djanogly.]
1
pm
Question
again proposed, That the amendment be
made.
The
Chairman:
Before we adjourned, I understood that
the hon. Member for Huntingdon was about to ask the permission of the
Committee to withdraw his amendment but, sadly, as he cannot be here, I
must put the
question.
Question
put, That the amendment be
made:—
The
Committee divided: Ayes 3, Noes
8.
Division
No.
21
]
AYESNOES
Question
accordingly negatived.
Amendments made: No.
158, in
schedule 13, page 197, line 15, leave
out ‘an interest in’ and insert
‘holding’.
No.
159, in
schedule 13, page 197, line 18, leave
out ‘power’ and insert
‘rights’.
No.
160, in
schedule 13, page 197, line 24, leave
out ‘an interest in’ and insert
‘holding’.
No.
161, in
schedule 13, page 197, line 27, leave
out ‘power’ and insert
‘rights’.
No.
162, in
schedule 13, page 208, line 29, leave
out ‘an interest in shares in a licensed body’ and
insert
‘a shareholding
in a licensed body, or in a parent undertaking of a licensed
body,’.
No.
163, in
schedule 13, page 208, line 31, at
end insert—
‘(aa) a non-authorised person may not have an
entitlement to exercise, or control the exercise of, voting rights in a
licensable body, or a parent undertaking of a licensable body, which
exceeds a limit specified in the rules (“the voting
limit”);’.
No.
164, in
schedule 13, page 208, line 32, leave
out ‘in which non-authorised persons have an interest’
and insert
‘, or a
parent undertaking of a licensed body, held by non-authorised
persons’.
No.
165, in
schedule 13, page 208, line 34, at
end insert—
‘(c) the total
proportion of voting rights in a licensed body, or a parent undertaking
of a licensed body, which non-authorised persons are entitled to
exercise or control the exercise of, may not exceed a limit specified
in the rules.
( ) Rules made
under any paragraph of sub-paragraph (1) in relation to a licensed body
and a parent undertaking may specify different limits in relation to
the licensed body and the parent
undertaking.’.
No.
166, in
schedule 13, page 208, line 35, leave
out from ‘(1)(a)’ to end of line 37 and insert
‘or (aa) may provide that
references in those rules to a person, in relation to a person’s
shareholding or entitlement to exercise or control the exercise of
voting rights, are to—
(a) the
person,
(b) any of the
person’s associates,
or
(c) the person and any of
the person’s associates taken
together.’.
No.
167, in
schedule 13, page 209, line 2, after
‘body’, insert
‘, or a parent undertaking of a
licensed
body,’.
No.
168, in
schedule 13, page 209, line 4, at
end insert
‘or (aa) in relation to
the
body.’.
No.
169, in
schedule 13, page 209, line 5, leave
out from ‘acquires’ to ‘and’ in line 6 and
insert ‘—
(a) a shareholding
in the body which exceeds the share limit,
or
(b) an entitlement to
exercise, or control the exercise of, voting rights in the body which
exceeds the voting limit,
must
notify the body (and, if the body is a parent undertaking of a licensed
body, the licensed
body)’.
No.
170, in
schedule 13, page 209, line 21,
leave out ‘licensed body’ and insert
‘body (and, if the body is a
parent undertaking of a licensed body, the licensed
body)’.
No.
171, in
schedule 13, page 209, line 33,
leave out paragraph
41.
No. 172, in
schedule 13, page 209, line 38,
leave out
‘relevant’.
No.
173, in
schedule 13, page 210, line 2,
leave out ‘interest in shares in any body’ and
insert
‘shareholding in
a body corporate with a share
capital’.
No.
174, in
schedule 13, page 210, line 12,
leave out sub-paragraph (3) and
insert—
‘( ) In
sub-paragraph (1)(b), references to a person’s shareholding are
to be read in accordance with paragraph 3(3) or 4(2) (as the
case may be).’.
No. 175, in
schedule 13, page 210, line 15,
after ‘38(1)(a)’, insert ‘or
(aa)’.
No. 176,
in
schedule 13, page 210, line 16,
leave out from ‘a’ to end of line 17 and insert
‘licensed body if—
(a) the
person’s shareholding in the body, or a parent undertaking of
the body, exceeds the share limit, and the body or parent undertaking
(as the case may be) is a body corporate with a share capital,
or
(b) the person’s
entitlement to exercise or control the exercise of voting rights in the
body, or a parent undertaking of the body, exceeds the voting limit by
virtue of the person holding shares in a body corporate with a share
capital.’.
No.
177, in
schedule 13, page 210, line 18,
leave out from ‘means’ to end of line 19 and
insert—
‘(a) in a case
within sub-paragraph (1)(a), the number of shares by which the
person’s shareholding exceeds the share limit,
and
(b) in a case within
sub-paragraph (1)(b), the number of shares held by the person in excess
of the number of shares the person could hold without the
person’s entitlement to exercise, or control the exercise of,
voting rights exceeding the voting
limit.’.
No.
178, in
schedule 13, page 210, line 20,
leave out sub-paragraph (3) and
insert—
‘( ) References in
this paragraph to a person’s shareholding (or holding of shares)
or entitlement are to be read in accordance with any applicable
licensing rules made under paragraph
38(2).’.
No.
179, in
schedule 13, page 210, line 25,
leave out
‘relevant’.
No.
180, in
schedule 13, page 213, line 20,
at end insert ‘or
(aa).’.
No.
181, in
schedule 13, page 213, line 22,
leave out from ‘where’ to end of line 24 and insert
‘a non-authorised person
acquires—
(a) a shareholding in a
licensed body or parent undertaking of a licensed body which exceeds
the share limit, or
(b) an
entitlement to exercise, or control the exercise of, voting rights in a
licensed body or parent undertaking of a licensed body which exceeds
the voting
limit.’.
No.
182, in
schedule 13, page 213, line 36,
at end insert—
‘( ) If the
share limit or voting limit is breached in relation to a parent
undertaking of a licensed body, references in sub-paragraphs (3) and
(6) to the licensed body include the parent
undertaking.’.
No.
183, in
schedule 13, page 214, line 7,
at end insert—
‘( ) If the
share limit or voting limit is breached in relation to a parent
undertaking of a licensed body, references in sub-paragraphs (1) and
(5) to the licensed body include the parent
undertaking.’.—[Bridget
Prentice.]
Question
proposed, That this schedule, as amended, be the Thirteenth
schedule to the
Bill.
Simon
Hughes (North Southwark and Bermondsey) (LD): I wish to
ask a general question about the operation of the schedule, for which
clause 89 is the trigger clause. The schedule sets out the possibility
of non-authorised people holding interests in licensed bodies and it is
about the activities of non-legal people and professionals in the new
business
structures.
My
question is consumerist, so I hope that it will be attractive to the
Minister. Putting aside the concerns
about this part of the Bill, it is important that the public, as well as
other interested people, know what is happening because of the Bill.
When a person applies for a licence to enable them to work in a
particular way, information on who is involved with or owns a company,
and who has what percentage of the shares or interests and so on, is
crucial. The people who grant licences will have plenty of opportunity
to satisfy themselves about such information: they will ask for and
receive it, they will check and approve it, and ask further questions
about it, in the way that any regulatory or licensing body
would.
Consumers
would be interested in commenting on a prospective application, as with
a planning application. The Minister will know as well as any of us
that when there is a controversial planning application, public
interest might arise because people have been watching a particular
site like hawks. Anyone with an interest knows as soon as a planning
application is submitted to a council and they will be geared up to
make their representations. Interest might also arise from a local
authority-led consultation in which people participate, or simply
because they hear a rumour—often, the interest arises because
there is a rumour that something is about to happen.
Let me take
an example given on Second Reading by the hon. Member for Banbury (Tony
Baldry). He said that Banbury is a town with a couple of solicitors
firms whose work is well regarded and respected. A licence application
for an alternative business structure that could affect provisional
legal services might be made. Let us imagine, for example, that one of
the large insurance companies has an office in Oxford and decides to
provide services around the country, but that it particularly wants to
start in Oxfordshire. The head office could be in Oxford or elsewhere.
I am thinking of a company such as Axa or another large claims company
that does a great deal of work. Such a company would obviously be able
to offer certain services at a low price because of the volume of work
that it does. What is the process by which the public would come to
know who was applying for a licence and about their other interests,
and at what stage?
For my second
example, I shall draw on the evidence given yesterday to the Treasury
Committee about private equity companies, which was widely reported.
Some of the new organisations are not well known by their private
equity name, but are instead known if one discovers what businesses
they run. I discovered yesterday that one such company runs the AA. Who
owns those organisations is relevant to local consumers, citizens
advice bureaux, consumer councils, consumers’ associations, town
or parish councils and all sorts of other people who have an interest
in knowing. If there was a share buy-out of such an organisation, how
would people be brought up to date with the relevant information? My
question is a general one about how the public and those with an
interest would come to know who was really behind an application. There
may be a name on a plate, but people might not know who is behind the
organisation.
Stephen
Hesford (Wirral, West) (Lab): Has the hon. Gentleman been
following the Bill, as we have? What does he imagine the consumer panel
might be for and
might want to involve itself in if it is not a
public consultation on these issues? That might answer his
question.
Simon
Hughes:
Yes, but only as far as a national view of these
things goes. It does not answer my question from an Oxfordshire or a
Banbury perspective unless there is a guarantee that before any such
licence was considered, let alone granted, the local community would be
informed and
consulted.
To
take the controversial examples cited by the hon. Member for Bassetlaw,
someone who had had a bad track record in a particular part of the
country might emerge under a different guise with other partners. How
will local people and local organisations know what is going on? How
will they know who the applicant is and who controls the interest? How
will they be able to make representations before any decision is
made?
The
Parliamentary Under-Secretary of State for Justice (Bridget
Prentice):
I am not sure that I can directly answer the
hon. Gentleman’s question. If sensitive personal information
about private investors were available to individual members of the
public, there would be a danger of breaches of confidentiality or
property rights. As my hon. Friend the Member for Wirral, West
mentioned, there is the consumer panel, which is an innovation. It
would be representative of the
public.
I am not sure that
it would be appropriate to go down the road, either in the Bill or
elsewhere, of granting the public wide access to that kind of
information. Some of this has to be based on normal legislative
practice. We rely on the board and the licensing authorities to be very
thorough in the way that they investigate potential
applicants.
Finally,
the hon. Gentleman prayed in aid the example used by my hon. Friend the
Member for Bassetlaw. As we discussed earlier, the licensing authority
would have the opportunity to investigate someone who tried to pop up
under a different guise. It would not be possible in normal
circumstances to provide that information to the public. On the other
hand, it would be possible for the licensing authority, under its
rules, to make some provision for that. No doubt when the licensing
authorities read the Hansard of these debates they might want to
take that into
consideration.
Simon
Hughes:
That is really unsatisfactory. I am going to go
back to my example. It is not met by the consumer panel point made by
the hon. Member for Wirral, West. In Oxfordshire, to take the vested
interest group first, there is the Oxfordshire branch of the Law
Society. There will then be other Oxfordshire organisations—the
Oxfordshire citizens advice bureau and other bodies such as the
women’s institute, the Townswomen’s Guild, the rotary
club and all the local organisations that have an interest in business
and commerce. There may be a chamber of commerce.
I see nothing in the
Bill—perhaps the Minister can show me that I have missed
something—to providethat where an application is made
for a licence under clause 84, any consultation is necessary with
anyone directly affected in the
area.
1.15
pm
There
is an opportunity for consultation at national level. When a major
application that would fundamentally change the nature of provision is
made, the licensing authority may dutifully perform what is set out in
the Bill, and decide what is to be done under the rules under clause
83, or examine policy documents. I should be grateful, however, if the
Minister told me whether AXA, for example, made an application to
provide the relevant services across Oxfordshire, any provision would
guarantee that the people of Oxfordshire would know what had happened,
or what might happen, before it went ahead. If that is not the case,
the Bill is significantly
defective.
Bridget
Prentice:
I am not sure that I shall be able to satisfy
the hon. Gentleman on this matter. It is not common practice for such
information to be readily available to the public. However, I draw his
attention to clause 87, on registration, under which the register of
licensed bodies must be available. It must contain
“the names and places of business
of all bodies which hold or have held licences granted by the licensing
authority.”
That does
not, of course, include applicants. However, clause 87(3) states
that
“information
contained in the entries in its
register”
must
be
“available for
inspection by any person during office hours and without
payment.”
That does not
go as far as the hon. Gentleman would like. However, regarding the
example that he gave, in granting a licence the authority must take
into account all the regulatory objectives that we have discussed at
length, and I imagine that in so doing it would take into account the
situation in particular communities. It would be for the licensing
authority, if it so wished, to consult on and discuss some of those
issues with those communities. The matter is not explicit in the Bill;
I do not think that that would be appropriate. However, if the
arrangement is to work properly, the licensing authority, which has
duties under clause 87 on the granting of applications and adherence to
regulatory objectives, will protect the consumer. I think that that is
as far as I can go in helping the hon.
Gentleman.
Simon
Hughes:
I hear what the Minister says and I accept that
clause 87 imposes a duty to maintain a register showing who is licensed
and what they have done. That is clearly a different point, and the
Bill is unsatisfactory in that respect.
The Minister has confirmed that
there is a gap in the Bill in the matter of the consumers’
interest—that is her phrase. Consumers will be given a new
system, without necessarily knowing that it is coming down the track,
or knowing anything about the decision. I intend to table an
appropriate amendment to make sure, in the case of any significant
licensing application that would have an impact on the relevant
community, that there is a duty to provide appropriate consultation
with the community before any decision is made. Without that, and
without an opportunity to respond, the system will not be consumer-led.
It will be a market-led system; it will probably be led by the big boys
and girls, rather than the little ones—by those with the
financial clout to come into the market. It might be to the detriment
of the consumer, rather than their benefit, and it would
be brought about while they were kept in ignorance of what was
happening. I am grateful for the Minister’s answers, which
confirm my suspicions about the Bill. I shall certainly return to the
matter on Report.
Question put and agreed
to.
Schedule
13, as amended, agreed
to.
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