Legal Services Act 2007 (c. 29)

(The document as of February, 2008)

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(b) by a direction given under section 32 (Board directions), or

(3) The Board may impose a penalty, in respect of the failure, of such an amount as it considers appropriate, but not exceeding the maximum amount prescribed under subsection (4).

(4) The Board must make rules prescribing the maximum amount of a penalty which may be imposed under this section.

(5) Rules may be made only under subsection (4) with the consent of the Lord Chancellor.

(6) A penalty under this section is payable to the Board.

(7) In sections 38 to 40 references to a "penalty" are to a penalty under this section.

38 Financial penalties: procedure

(1) If the Board proposes to impose a penalty on an approved regulator, it must give notice to the approved regulator--

(a) stating that the Board proposes to impose a penalty and the amount of the penalty proposed to be imposed,

(b) specifying the failure to which the proposed penalty relates,

(c) specifying the other facts which, in the Board's opinion, justify the imposition of a penalty and the amount of the penalty, and

(d) specifying the time (not being earlier than the end of the period of 21 days beginning with the day on which the notice is published under subsection (8)) before which representations with respect to the proposed penalty may be made.

(2) Before imposing a penalty on an approved regulator, the Board must consider any representations which are duly made.

(3) Where the Board proposes to vary the amount of a proposed penalty stated in a notice under subsection (1)(a), the Board must give notice to the approved regulator--

(a) setting out the proposed variation and the reasons for it, and

(b) specifying the time (not being earlier than the end of the period of 21 days beginning with the day on which the notice is published under subsection (8)) before which representations with respect to the proposed variation may be made.

(4) Before varying the proposal, the Board must consider any representations which are duly made.

(5) As soon as practicable after imposing a penalty, the Board must give notice to the approved regulator--

(a) stating that it has imposed a penalty on the approved regulator and its amount,

(b) specifying the failure to which the penalty relates,

(d) specifying a time (not being earlier than the end of the period of 3 months beginning with the day on which the notice is given to the approved regulator), before which the penalty is required to be paid.

(6) The approved regulator may, within the period of 21 days beginning with the day on which it is given the notice under subsection (5), make an application to the Board for it to specify different times by which different portions of the penalty are to be paid.

(7) If an application is made under subsection (6) in relation to a penalty, the penalty is not required to be paid until the application has been determined.

(8) The Board must publish any notice given under this section.

39 Appeals against financial penalties

(1) An approved regulator on whom a penalty is imposed may appeal to the court on one or more of the appeal grounds.

(2) The appeal grounds are--

(a) that the imposition of the penalty was not within the power of the Board under section 37;

(b) that any of the requirements of section 38 have not been complied with in relation to the imposition of the penalty and the interests of the approved regulator have been substantially prejudiced by the non-compliance;

(d) that it was unreasonable of the Board to require the penalty imposed or any portion of it to be paid by the time or times by which it was required to be paid.

(3) An appeal under subsection (1) must be made--

(a) within the period of 3 months beginning with the day on which the notice under section 38(5) is given to the approved regulator in respect of the penalty, or

(b) where the appeal relates to a decision of the Board on an application by the approved regulator under section 38(6), within the period of 3 months beginning with the day on which the approved regulator is notified of the decision.

(4) On any such appeal, where the court considers it appropriate to do so in all the circumstances of the case and is satisfied of one or more of the appeal grounds, the court may--

(a) quash the penalty,

(b) substitute a penalty of such lesser amount as the court considers appropriate, or

(c) in the case of the appeal ground in subsection (2)(d), substitute for any time imposed by the Board a different time or times.

(5) Where the court substitutes a penalty of a lesser amount it may require the payment of interest on the substituted penalty at such rate, and from such time, as it considers just and equitable.

(6) Where the court specifies as a time by which the penalty, or a portion of the penalty, is to be paid a time before the determination of the appeal under this section, it may require the payment of interest on the penalty, or portion, from that time at such rate as it considers just and equitable.

(7) Except as provided by this section, the validity of a penalty is not to be questioned by any legal proceedings whatever.

(8) In this section "the court" means the High Court.

40 Recovery of financial penalties

(1) If the whole or any part of a penalty is not paid by the time by which it is required to be paid, the unpaid balance from time to time carries interest at the rate for the time being specified in section 17 of the Judgments Act 1838 (c. 110).

(2) If an appeal is made under section 39 in relation to a penalty, the penalty is not required to be paid until the appeal has been determined or withdrawn.

(3) If the Board grants an application under subsection (6) of section 38 in relation to a penalty but any portion of the penalty is not paid by the time specified in relation to it by the Board under that subsection, the Board may where it considers it appropriate require so much of the penalty as has not already been paid to be paid immediately.

(4) Where a penalty, or any portion of it, has not been paid by the time when it is required to be paid and--

(a) no appeal relating to the penalty has been made under section 39 during the period within which such an appeal can be made, or

(b) an appeal has been made under that section and determined or withdrawn,

the Board may recover from the approved regulator, as a debt due to the Board, any of the penalty and any interest which has not been paid.

Intervention

41 Intervention directions

(1) The Board may give an approved regulator an intervention direction in relation to any of the approved regulator's regulatory functions if the Board is satisfied--

(a) that an act or omission of an approved regulator (or a series of such acts or omissions) has had, or is likely to have, an adverse impact on one or more of the regulatory objectives, and

(b) that it is appropriate to give the intervention direction in all the circumstances of the case (including in particular the impact of giving the direction on the other regulatory objectives).

(2) An intervention direction, in relation to a regulatory function of an approved regulator, is a direction--

(a) that the regulatory function is to be exercised by the Board or a person nominated by it, and

(b) that the approved regulator must comply with any instructions of the Board or its nominee in relation to the exercise of the function.

(3) The Board may not determine that it is appropriate to give an intervention direction unless it is satisfied that the matter cannot be adequately addressed by the Board exercising the powers available to it under sections 31 to 40.

(4) Part 1 of Schedule 8 makes provision about the procedure which must be complied with before an intervention direction is given and the manner in which such a direction is to be given.

(5) The Board must make rules as to the persons it may nominate for the purposes of subsection (2)(a).

42 Intervention directions: further provision

(1) This section applies where an intervention direction has effect in respect of a function of an approved regulator ("the relevant function").

(2) The approved regulator must give the specified person all such assistance, in connection with the proposed exercise of the relevant function by the specified person in pursuance of the direction, as the approved regulator is reasonably able to give.

(3) On an application by the specified person (or a person appointed by the specified person to act on its behalf) a judge of the High Court, Circuit judge or justice of the peace may issue a warrant authorising that person to--

(a) enter and search the premises of the approved regulator, and

(b) take possession of any written or electronic records found on the premises.

(4) The person so authorised may, for the purpose of the exercise by the specified person of the relevant function, take copies of written or electronic records found on a search carried out by virtue of the warrant.

(5) The judge or justice of the peace may not issue the warrant unless satisfied that its issue is necessary or desirable for the exercise by the specified person of the relevant function.

(6) The Lord Chancellor must make regulations--

(a) specifying further matters which a judge or justice of the peace must be satisfied of, or matters which a judge or justice of the peace must have regard to, before issuing a warrant, and

(b) regulating the exercise of a power conferred by a warrant issued under subsection (3) or by subsection (4) (whether by restricting the circumstances in which a power may be exercised, by specifying conditions to be complied with in the exercise of a power, or otherwise).

(7) Regulations under subsection (6)(b) must in particular make provision as to the circumstances in which written or electronic records of which a person has taken possession by virtue of a warrant issued under subsection (3) may be copied or must be returned.

(8) But the Lord Chancellor may not make regulations under subsection (6) unless--

(a) they are made in accordance with a recommendation made by the Board, or

(b) the Lord Chancellor has consulted the Board about the making of the regulations.

(9) In this section "the specified person" means the Board or, where a person is nominated by it as mentioned in section 41(2), that person.

(10) The Board must make rules as to the persons a specified person may appoint for the purposes of subsection (3).

43 Intervention directions: enforcement

(1) If at any time it appears to the Board that an approved regulator has failed to comply with an obligation imposed on it by, or by virtue of, an intervention direction or section 42(2), the Board may make an application to the High Court under this section.

(2) If, on an application under subsection (1), the High Court decides that the approved regulator has failed to comply with the obligation in question, it may order the approved regulator to take such steps as the High Court directs for securing that the obligation is complied with.

(3) This section is without prejudice to any other powers conferred on the Board by this Part.

44 Revocation of intervention directions

(1) An intervention direction has effect until such time as it is revoked by the Board (whether on the application of the approved regulator or otherwise).

(2) Part 2 of Schedule 8 makes provision about the procedure which must be complied with before an intervention direction is revoked and the manner in which notice of the revocation is to be given.

Cancellation of approval

45 Cancellation of designation as approved regulator

(1) The Lord Chancellor may by order cancel a body's designation as an approved regulator--

(a) in relation to all the reserved legal activities in relation to which it is an approved regulator, or

(b) in relation to one or more, but not all, of those reserved legal activities,

with effect from a date specified in the order.

(2) But the Lord Chancellor may only make an order under subsection (1) in accordance with a recommendation made by the Board under subsection (3) or (5).

(3) The Board must recommend that an order is made cancelling a body's designation as an approved regulator in relation to one or more reserved legal activities, if--

(a) the body applies to the Board for such a recommendation to be made,

(b) the application is made in such form and manner as may be prescribed by rules made by the Board, and is accompanied by the prescribed fee, and

(c) the body publishes a notice giving details of the application in accordance with such requirements as may be specified in rules made by the Board.

(4) In this section "the prescribed fee", in relation to an application, means the fee specified in, or determined in accordance with, rules made by the Board, with the consent of the Lord Chancellor.

(5) The Board may recommend that an order is made cancelling a body's designation as an approved regulator in relation to one or more reserved legal activities if it is satisfied--

(a) that an act or omission of an approved regulator (or a series of such acts or omissions) has had, or is likely to have, an adverse impact on one or more of the regulatory objectives, and

(b) that it is appropriate to cancel the body's designation in relation to the activity or activities in question in all the circumstances of the case (including in particular the impact of cancelling the designation on the other regulatory objectives).

(6) The Board may not determine that it is appropriate to cancel a body's designation in relation to an activity or activities unless it is satisfied that the matter cannot be adequately addressed by the Board exercising the powers available to it under sections 31 to 43.

(7) Schedule 9 makes further provision about the making of recommendations under subsection (5).

(8) If the Lord Chancellor decides not to make an order in response to a recommendation made under subsection (3) or (5), the Lord Chancellor must give the Board notice of the decision and the reasons for it.

(9) The Lord Chancellor must publish a notice given under subsection (8).

(10) The Board may not make a recommendation under subsection (5) in respect of a body's designation as an approved regulator in relation to a reserved legal activity at any time when, by virtue of Part 2 of Schedule 5 (protection of rights during a transitional period), any person is being treated as authorised by the body to carry on that activity.

46 Cancellation of designation: further provision

(1) This section applies where a body ("the former regulator") has its designation in relation to one or more reserved legal activities cancelled by an order under section 45.

(2) The Lord Chancellor may by order make--

(a) such modifications of provisions made by or under any enactment (including this Act or any enactment passed after this Act), prerogative instrument or other instrument or document, and

(b) such transitional or consequential provision,

as the Lord Chancellor considers necessary or expedient in consequence of the cancellation.

(3) The Lord Chancellor may, by order, make transfer arrangements.

(4) "Transfer arrangements" are arrangements in accordance with which each person authorised by the former regulator who consents to the arrangements is, from the time the cancellation takes effect, treated as being authorised to carry on each protected activity by either--

(a) a relevant approved regulator, in relation to the protected activity, who consents to the transfer arrangements, or

(b) the Board acting in its capacity as a relevant approved regulator in relation to the protected activity by virtue of an order made under section 62.

(5) The transfer arrangements--

(a) must make such provision as is necessary to ensure that, where a person is treated under those arrangements as being authorised to carry on a protected activity by the new regulator, that person is subject to the regulatory arrangements of the new regulator;

(b) may make provision requiring amounts held by the former regulator which represent amounts paid to it by way of practising fees by the persons to whom the transfer arrangements apply (or a part of the amounts so held) to be paid to the new regulator and treated as if they were amounts paid by those persons by way of practising fees to the new regulator.

(6) Subsection (5)(a) is subject to any transitional provision which may be made by the transfer arrangements, including provision modifying the regulatory arrangements of the new regulator as they apply to persons to whom the transfer arrangements apply.

(7) The Lord Chancellor may make an order under this section only if--

(a) the Board has made a recommendation in accordance with section 47, and

(b) the order is in the same form as, or in a form which is not materially different from, the draft order annexed to that recommendation.

(8) For the purposes of this section--

(a) a person is "authorised by the former regulator" if immediately before the time the cancellation takes effect the person is authorised by the former regulator (other than by virtue of a licence under Part 5) to carry on an activity which is a reserved legal activity to which the cancellation relates, and

(b) in relation to that person--

(i) the activity which that person is authorised to carry on as mentioned in paragraph (a) is a "protected activity", and

(ii) "the new regulator" means the approved regulator within paragraph (a) or (b) of subsection (4).

(9) In this section "practising fee", in relation to an approved regulator, means a fee payable by a person under the approved regulator's regulatory arrangements in circumstances where the payment of the fee is a condition which must be satisfied for that person to be authorised by the approved regulator to carry on one or more activities which are reserved legal activities.

(10) But for the purposes of this section "practising fee" does not include a fee payable by a licensed body to its licensing authority under licensing rules.

47 The Board's power to recommend orders made under section 46

(1) The Board may recommend to the Lord Chancellor that the Lord Chancellor make an order under section 46 in the form of a draft order prepared by the Board and annexed to the recommendation.

(2) Before making a recommendation under this section, the Board must publish a draft of--

(a) the proposed recommendation, and

(b) the proposed draft order.

(3) The draft must be accompanied by a notice which states that representations about the proposals may be made to the Board within a specified period.

(4) Before making the recommendation, the Board must have regard to any representations duly made.

(5) If the draft order to be annexed to the recommendation differs from the draft published under subsection (2)(b) in a way which in the opinion of the Board is material, the Board must, before making the recommendation, publish the draft order along with a statement detailing the changes made and the reasons for those changes.

48 Cancellation of designation: powers of entry etc

(1) This section applies where a body ("the former regulator") has its designation in relation to one or more reserved legal activities cancelled by an order under section 45.

(2) The Board may request the former regulator to provide assistance to the new regulator and the Board, for the purpose of continuing regulation.

(3) On an application by a person appointed by the Board to act on its behalf, a judge of the High Court, Circuit judge or justice of the peace may issue a warrant authorising that person to--

(a) enter and search the premises of the former regulator, and

(b) take possession of any written or electronic records found on the premises.

(4) A person so authorised may, for the purpose of continuing regulation, take copies of written or electronic records found on a search carried out by virtue of the warrant.

(5) The judge or justice of the peace may not issue the warrant unless satisfied that its issue is necessary or desirable for the purpose of continuing regulation.

(6) The Lord Chancellor must make regulations--

(a) specifying further matters which a judge or justice of the peace must be satisfied of, or matters which a judge or justice of the peace must have regard to, before issuing a warrant, and

(7) Regulations under subsection (6)(b) must in particular make provision as to circumstances in which written or electronic records of which a person has taken possession by virtue of a warrant issued under subsection (3) may be copied or must be returned.

(8) But the Lord Chancellor may not make regulations under subsection (6) unless--

(a) they are made in accordance with a recommendation made by the Board, or

(b) the Lord Chancellor has consulted the Board about the making of the regulations.

(9) The Board must make rules as to the persons it may appoint for the purposes of subsection (3).

(10) For the purposes of this section--

"authorised by the former regulator", "protected activity" and "new regulator" have the same meaning as for the purposes of section 46;
"the purpose of continuing regulation" means the purpose of enabling persons authorised by the former regulator to continue to be authorised and regulated in relation to the protected activity.

Policy statements

49 The Board's policy statements

(1) The Board must prepare and issue a statement of policy with respect to the exercise of its functions under--

(a) section 31 (performance targets and monitoring);

(b) section 32 (directions);

(d) section 37 (financial penalties);

(e) section 41 (intervention directions);

(f) section 45 (cancellation of designation as approved regulator);

(g) section 76 (cancellation of designation as licensing authority by order).

(2) The Board may prepare and issue a statement of policy with respect to any other matter.

(3) In preparing a statement of policy, the Board must have regard to the principle that its principal role is the oversight of approved regulators.

(4) The statement of policy prepared under subsection (1) must--

(a) take account of the desirability of resolving informally matters which arise between the Board and an approved regulator, and

(b) specify how, in exercising the functions mentioned in that subsection, the Board will comply with the requirements of section 3(3) (regulatory activities to be proportionate, consistent and targeted only at cases in which action is needed, etc),

and, in preparing that statement, the Board must have regard to the principle that the Board should not exercise any of those functions by reason of an act or omission of an approved regulator unless the act or omission was unreasonable.

(5) The Board's policy in determining what the amount of a penalty under section 37 should be must include having regard to--

(a) the seriousness of the failure in question, and

(b) the extent to which it was deliberate or reckless.

(6) The Board may at any time alter or replace any statement issued under this section.

(7) If a statement is altered or replaced, the Board must issue the altered or replacement statement.

(8) In exercising or deciding whether to exercise any of its functions, the Board must have regard to any relevant policy statement published under this section.

(9) The Board must publish a statement issued under this section.

(10) The Board may make a reasonable charge for providing a person with a copy of a statement.

50 Policy statements: procedure

(1) Before issuing a statement under section 49, the Board must publish a draft of the proposed statement.

(2) The draft must be accompanied by a notice which states that representations about the proposals may be made to the Board within a specified period.

(3) Before issuing the statement, the Board must have regard to any representations duly made.

(4) If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the Board, material, the Board must publish details of the differences.

(5) The Board may make a reasonable charge for providing a person with a copy of a draft published under subsection (1).

Practising fees

51 Control of practising fees charged by approved regulators

(1) In this section "practising fee", in relation to an approved regulator, means a fee payable by a person under the approved regulator's regulatory arrangements in circumstances where the payment of the fee is a condition which must be satisfied for that person to be authorised by the approved regulator to carry on one or more activities which are reserved legal activities.

(2) An approved regulator may only apply amounts raised by practising fees for one or more of the permitted purposes.

(3) The Board must make rules specifying the permitted purposes.

(4) Those rules must, in particular, provide that the following are permitted purposes--

(a) the regulation, accreditation, education and training of relevant authorised persons and those wishing to become such persons, including--

(i) the maintaining and raising of their professional standards, and

(ii) the giving of practical support, and advice about practice management, in relation to practices carried on by such persons;

(b) the payment of a levy imposed on the approved regulator under section 173;

(d) the provision by relevant authorised persons, and those wishing to become relevant authorised persons, of reserved legal services, immigration advice or immigration services to the public free of charge;

(e) the promotion of the protection by law of human rights and fundamental freedoms;

(f) the promotion of relations between the approved regulator and relevant national or international bodies, governments or the legal professions of other jurisdictions.

(5) A practising fee is payable under the regulatory arrangements of an approved regulator only if the Board has approved the level of the fee.

(6) The Board must make rules containing provision--

(a) about the form and manner in which applications for approval for the purposes of subsection (5) must be made and the material which must accompany such applications;

(b) requiring applicants to have consulted such persons as may be prescribed by the rules in such manner as may be so prescribed before such an application is made;

(c) about the procedures and criteria that will be applied by the Board when determining whether to approve the level of a fee for the purposes of subsection (5).

(7) Rules under subsection (6)(c) must, in particular, contain--

(a) provision requiring the Board, before it determines an application for approval of the level of a fee, to consult such persons as it considers appropriate about the impact of the proposed fee on persons providing non-commercial legal services;

(b) provision about the time limit for the determining of an application.

(8) In this section "relevant authorised persons", in relation to an approved regulator, means persons who are authorised by the approved regulator to carry on activities which are reserved legal activities.

Regulatory conflict

52 Regulatory conflict with approved regulators

(1) The regulatory arrangements of an approved regulator must make such provision as is reasonably practicable to prevent regulatory conflicts.

(2) For the purposes of this section and section 53, a regulatory conflict is a conflict between--

(a) a requirement of the approved regulator's regulatory arrangements, and

(b) a requirement of the regulatory arrangements of another approved regulator.

(3) Subsection (4) applies where a body is authorised by an approved regulator ("the entity regulator") to carry on an activity which is a reserved legal activity.

(4) If a conflict arises between--

(a) a requirement of the regulatory arrangements of the entity regulator, in relation to the body authorised by the entity regulator or an employee or manager of the body ("an entity requirement"), and

(b) a requirement of the regulatory arrangements of another approved regulator in relation to an employee or manager of the body who is authorised by it to carry on a reserved legal activity ("an individual requirement"),

the entity requirement prevails over the individual requirement.

53 Modification of provision made about regulatory conflict

(1) An approved regulator ("the applicant regulator") may make an application under this section if it considers that the regulatory arrangements of another approved regulator ("the conflicting regulator") do not make appropriate provision to prevent a regulatory conflict with the applicant regulator.

(2) An application under this section is an application made to the Board for the Board to exercise its powers under section 32 to direct the conflicting regulator--

(a) to take steps to modify, in such manner as may be specified in the direction, the provision made by its regulatory arrangements to prevent a regulatory conflict with the applicant regulator, or

(b) if its regulatory arrangements do not make any such provision, to make such provision as may be specified in the direction to prevent such a conflict.

(3) An approved regulator must consider any request made by an affected person--

(a) for the approved regulator to reconsider the provision made by its regulatory arrangements to prevent a regulatory conflict with another approved regulator, or

(b) for the approved regulator to make an application under this section.

(4) An "affected person", in relation to an approved regulator, means--

(a) a person authorised by the approved regulator to carry on a reserved legal activity;

(b) an employee or manager of such a person.

(5) Where an application is made under this section, the Board--

(a) must give the applicant regulator and the conflicting regulator an opportunity to make representations, and

(b) may consult any persons it considers appropriate.

(6) The Board must decide whether or not to give a warning notice in response to the application.

(7) The Board must make that decision before the end of the period of 6 months beginning with the day on which the application is received by it.

(8) The Board must give notice of its decision, and the reasons for it, to the applicant regulator and the conflicting regulator.

(9) For the purposes of this section "warning notice" means a notice given under paragraph 2(1) of Schedule 7 (warning of proposed direction under section 32).

54 Regulatory conflict with other regulatory regimes

(1) The regulatory arrangements of an approved regulator must make such provision as is reasonably practicable and, in all the circumstances, appropriate--

(a) to prevent external regulatory conflicts,

(b) to provide for the resolution of any external regulatory conflicts which arise, and

(2) For the purposes of this section, an external regulatory conflict is a conflict between--

(a) a requirement of the regulatory arrangements of the approved regulator, and

(b) a requirement of any regulatory provision made by an external regulatory body.

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