Legal Services Act 2007 (c. 29)

(The document as of February, 2008)

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

(3) For this purpose "external regulatory body" 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 rules (whether statutory or non-statutory) by those persons.

(4) Regulatory arrangements made for the purposes of subsection (1)(b) may, with the consent of the Board, provide for the Board to exercise functions in connection with the resolution of conflicts.

Information

55 Provision of information to the Board

(1) The Board may, by notice, require an approved regulator--

(a) to provide any information, or information of a description, specified in the notice, or

(b) to produce documents, or documents of a description, specified in the notice.

(2) A notice under subsection (1)--

(a) may specify the manner and form in which any information is to be provided;

(b) must specify the period within which any information is to be provided or document is to be produced;

(c) may require any information to be provided, or document to be produced, to the Board or to a person specified in the notice.

(3) The Board may, by notice, require a person representing the approved regulator to attend at a time and place specified in the notice to provide an explanation of any information provided or document produced under this section.

(4) The Board may pay to any person such reasonable costs as may be incurred by that person in connection with--

(a) the provision of any information, or the production of any document, by that person pursuant to a notice under subsection (1), or

(b) that person's compliance with a requirement imposed under subsection (3).

(5) The Board, or a person specified under subsection (2)(c), may take copies of or extracts from a document produced pursuant to a notice under subsection (1).

(6) For the purposes of this section and section 56, references to an approved regulator include a body which was, but is no longer, an approved regulator.

56 Enforcement of notices under section 55

(1) Where an approved regulator is unable to comply with a notice given to it under section 55(1), it must give the Board a notice to that effect stating the reasons why it cannot comply.

(2) If an approved regulator refuses, or otherwise fails, to comply with a notice under section 55(1), the Board may apply to the High Court for an order requiring the approved regulator to comply with the notice or with such directions for the like purpose as may be contained in the order.

(3) This section applies in relation to a person to whom a notice is given under section 55(3) as it applies in relation to an approved regulator to whom a notice is given under section 55(1).

Competition

57 Reports by the OFT

(1) If the OFT is of the opinion that the regulatory arrangements of an approved regulator (or any part of them) prevent, restrict or distort competition within the market for reserved legal services to any significant extent, or are likely to do so, the OFT may prepare a report to that effect.

(2) A report under subsection (1)--

(a) must state what, in the OFT's opinion, is the effect, or likely effect, on competition of the regulatory arrangements or part of them to which the report relates, and

(b) may contain recommendations as to the action which the Board should take for the purpose of ensuring that the regulatory arrangements of the approved regulator do not prevent, restrict or distort competition.

(3) Where the OFT makes a report under subsection (1), it must--

(a) give a copy of the report to the Board, the Consumer Panel and the approved regulator, and

(b) publish the report.

(4) Before publishing a report under subsection (3)(b), the OFT must, so far as practicable, exclude any matter which relates to the private affairs of a particular individual the publication of which, in the opinion of the OFT, would or might seriously and prejudicially affect the interests of that individual.

(5) The OFT may exercise any of the powers conferred on it by section 174(3) to (5) of the Enterprise Act 2002 (c. 40) (investigation powers) for the purpose of assisting it in exercising its functions under this section.

(6) For the purposes of the law of defamation, absolute privilege attaches to any report of the OFT under this section.

58 The Board's response to OFT report

(1) This section applies where a report is made by the OFT under section 57 in respect of an approved regulator.

(2) The Board must allow the approved regulator a period of 28 days beginning with the day on which the copy of the report is given to the approved regulator under section 57, or such longer period as the Board may specify in a particular case, to make representations to the Board about the OFT's report.

(3) The Consumer Panel may give the Board such advice as the Consumer Panel thinks fit regarding the OFT's report.

(4) Having considered any representations made under subsection (2) and any advice given under subsection (3), the Board must notify the OFT of the action (if any) it proposes to take in response to the report.

59 Referral of report by the Lord Chancellor to the Competition Commission

(1) This section applies where the OFT is satisfied that the Board has failed to give full and proper consideration to a report made by the OFT, in respect of an approved regulator, under section 57.

(2) The OFT may give a copy of its report to the Lord Chancellor.

(3) The OFT must notify the Board and the approved regulator if it gives a copy of its report to the Lord Chancellor.

(4) On receiving a report under subsection (2), the Lord Chancellor must--

(a) give the Competition Commission a copy of the report, and

(b) seek its advice on what action (if any) should be taken by the Lord Chancellor under section 61.

60 Duties of the Competition Commission

(1) Where the Lord Chancellor seeks the advice of the Competition Commission under section 59, the Commission must investigate the matter.

(2) The Commission must then make its own report on the matter unless it considers that, as a result of any change of circumstances, no useful purpose would be served by a report.

(3) If the Commission decides in accordance with subsection (2) not to make a report, it must make a statement setting out the change of circumstances which resulted in that decision.

(4) The Commission must comply with subsection (2) or (3) within the period of 3 months beginning with the day on which it receives a copy of the OFT's report under section 59(4)(a).

(5) A report made under this section must state the Commission's conclusion as to whether any of the matters which is the subject of the report has or is likely to have the effect of preventing, restricting or distorting competition within the market for reserved legal services to a significant extent.

(6) A report under this section stating the Commission's conclusion that there is, or is likely to be, such an effect must also--

(a) state whether or not the Commission considers that that effect is justified, and

(b) if it states that the Commission considers that it is not justified, state its conclusion as to what action, if any, ought to be taken by the Board.

(7) When determining under subsection (6)(b) any action to be taken by the Board, the Commission must ensure--

(a) that the action stated is action which the Board has power to take, and

(b) so far as reasonably possible, that the action stated is compatible with the functions conferred, and obligations imposed, on the Board by or under this Act.

(8) A report under this section must contain such an account of the Commission's reasons for its conclusions as is expedient, in the opinion of the Commission, for facilitating proper understanding of them.

(9) Sections 109 to 115 of the Enterprise Act 2002 (c. 40) (investigation powers) apply in relation to an investigation under this section as they apply in relation to an investigation made on a reference made to the Commission under Part 3 of that Act (mergers), but as if--

(a) in section 110(4) of that Act, the reference to the publication of the report of the Commission on the reference concerned were a reference to the Commission making a report under subsection (2) or a statement under subsection (3), and

(b) in section 111(5)(b)(ii) of that Act the day referred to were the day on which the Commission makes that report or statement.

(10) If the Commission makes a report or a statement under this section it must--

(a) give a copy to the Lord Chancellor, the Board, the Consumer Panel and the approved regulator to which the OFT's report relates, and

(b) publish the report or statement.

61 Lord Chancellor's power to give directions

(1) The Lord Chancellor may direct the Board to take such action as the Lord Chancellor considers appropriate in connection with any matter raised in a report made by the OFT under section 57.

(2) Before giving a direction under subsection (1), the Lord Chancellor must consider any report from the Competition Commission under section 60 on that matter.

(3) When exercising the power to give a direction under subsection (1), the Lord Chancellor must ensure--

(a) that the action stated is action which the Board has power to take, and

(b) so far as reasonably possible, that the action stated in any direction is compatible with the functions conferred, and obligations imposed, on the Board by or under this Act.

(4) The Lord Chancellor must publish a direction given under this section.

The Board as approved regulator

62 The Board as an approved regulator

(1) The Lord Chancellor may by order--

(a) designate the Board as an approved regulator in relation to one or more reserved legal activities;

(b) modify the functions of the Board, and make such other provision relating to those functions as the Lord Chancellor considers necessary or expedient, with a view to enabling the Board to discharge its functions as an approved regulator effectively and efficiently;

(2) But the Lord Chancellor may make an order under subsection (1) only if--

(a) the Board has made a recommendation in accordance with section 66, 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.

(3) If the Lord Chancellor decides not to make an order pursuant to a recommendation made under section 66, the Lord Chancellor must--

(a) give the Board a notice stating the reasons for that decision, and

(b) publish the notice.

(4) In discharging its functions as an approved regulator the Board must take such steps as are necessary to ensure an appropriate financial and organisational separation between the activities of the Board that relate to the carrying out of those functions and the other activities of the Board.

(5) An order under this section may make such modifications of provision made by or under any enactment (including this Act or any Act passed after this Act) as the Lord Chancellor considers necessary or expedient.

63 The Board's designation under section 62(1)(a)

(1) This section applies in relation to an order under section 62(1)(a) (an order designating the Board as an approved regulator).

(2) Subject to subsection (3), the order may designate the Board as an approved regulator in relation to a reserved legal activity only where--

(a) a body's designation as an approved regulator in relation to the activity is cancelled under section 45, or

(b) the activity becomes a reserved legal activity by virtue of an order under section 24.

(3) Subsection (2) does not prevent the order having effect in advance of an event within paragraph (a) or (b) of that subsection for the purpose of enabling the Board to authorise persons to carry on activities which constitute the reserved legal activity in question with effect from the occurrence of the event.

(4) The order must ensure that the Board, acting as an approved regulator, may make regulatory arrangements or modify its regulatory arrangements only with the approval of the Board (acting otherwise than in its capacity as an approved regulator or as a licensing authority under Part 5).

64 Modification of the Board's functions under section 62(1)(b)

(1) This section applies in relation to an order under section 62(1)(b) (an order modifying the functions of the Board).

(2) The order may include (among other things) provision conferring on the Board powers to do any of the following--

(a) to authorise (otherwise than by the grant of a licence under Part 5) persons or any category of persons (whether corporate or unincorporate) to carry on one or more activities which are reserved legal activities in relation to which the Board is designated as an approved regulator;

(b) to make qualification regulations;

(c) to make provision as to the educational, training and other requirements to be met by regulated persons who are not relevant authorised persons;

(d) to make practice rules and conduct rules;

(e) to make disciplinary arrangements in relation to regulated persons (including discipline rules);

(f) to make rules requiring the payment of fees specified in or determined in accordance with the rules;

(g) to make indemnification arrangements;

(h) to make compensation arrangements;

(i) to make rules as to the treatment of money (including money held in trust) which is received, held or dealt with for clients, or other persons, by regulated persons, and as to the keeping by such persons of accounts in respect of such money;

(j) to take steps for the purpose of ascertaining whether or not the provisions of rules or regulations made, or any code or guidance issued, by the Board in its capacity as an approved regulator are being complied with, and to make rules requiring relevant authorised persons to produce documents and provide information for that purpose;

(k) to delegate any of the functions exercisable by the Board in its capacity as an approved regulator to such persons as it considers appropriate;

(l) to make regulations or rules providing for appeals to the High Court or another body against decisions made by the Board in its capacity as an approved regulator (including regulations or rules providing for a decision on such an appeal to be final and for orders as to payment of costs).

(3) The order may--

(a) provide for any provision of Schedule 14 (licensing authority's powers of intervention)--

(i) to apply in relation to the Board (in its capacity as an approved regulator) and regulated persons as it applies in relation to a licensing authority and licensed bodies (or managers or employees of such bodies), or

(ii) to so apply with such modifications as are prescribed by the order, or

(b) make provision, in relation to the Board (in that capacity) and regulated persons, corresponding to any of the provisions made, in relation to licensing authorities and licensed bodies (or managers or employees of such bodies), by that Schedule.

(4) For the purposes of giving effect to indemnification arrangements and compensation arrangements, the order may authorise the Board to make rules--

(a) authorising or requiring the Board to establish and maintain a fund or funds;

(b) authorising or requiring the Board to take out and maintain insurance with authorised insurers;

(c) requiring relevant authorised persons or relevant authorised persons of any specific description to take out and maintain insurance with authorised insurers.

(5) In this section--

"authorised insurer" means a person within any of the following paragraphs--
(a)
a person who has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to effect or carry out contracts of insurance of a relevant class;
(b)
an EEA firm (within the meaning of that Act) of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of a relevant class;
(c)
a person who does not fall within paragraph (a) or (b) and who may lawfully effect or carry out contracts of insurance of a relevant class in a member State other than the United Kingdom;
"regulated person" has the meaning given by section 21;
"relevant authorised person" means a person authorised by the Board (other than by the grant of a licence under Part 5) to carry on one or more activities which are reserved legal activities.

(6) For the purposes of this section--

(a) a contract of insurance is of a relevant class if it insures against a risk arising from accident, credit, legal expenses, general liability to third parties, sickness, suretyship or miscellaneous financial loss, and

(b) the definition of "authorised insurer" in subsection (5) must be read with section 22 of the Financial Services and Markets Act 2000, and any relevant order under that section, and with Schedule 2 to that Act.

65 Cancellation of the Board's designation under section 62(1)(c)

(1) This section applies in relation to an order under section 62(1)(c) (cancellation of Board's designation as an approved regulator).

(2) Where such an order is made, section 46 (other than subsection (4)(b)) and section 47 (transfer arrangements etc on cancellation of approved regulator's designation) apply in relation to the Board and relevant authorised persons as they apply to an approved regulator whose designation is cancelled under section 45 and persons authorised by that approved regulator to carry on activities which are reserved legal activities.

(3) In this section "relevant authorised persons" has the same meaning as in section 64.

66 The Board's power to recommend orders made under section 62

(1) The Board may recommend to the Lord Chancellor that the Lord Chancellor make an order under section 62 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 give each of the persons listed in subsection (3) a notice containing--

(a) a copy of the proposed recommendation,

(b) a copy of the proposed draft order, and

(3) Those persons are--

(a) the Lord Chancellor,

(b) the OFT,

(d) the Lord Chief Justice, and

(e) such other persons as the Board considers it reasonable to consult regarding the proposals.

(4) The Board must publish a notice given under subsection (2).

(5) Before making the recommendation, the Board must have regard to any representations duly made (whether by persons within subsection (3) or otherwise).

(6) If the draft order to be annexed to the recommendation differs from the draft contained in the notice under subsection (2) in a way which is, in the opinion of the Board, 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.

67 Effect of the Board's designation as an approved regulator

(1) The powers of the Board under sections 31 to 51 and 55 (regulatory powers in respect of approved regulators) are not exercisable by it in relation to the Board in its capacity as an approved regulator.

(2) In section 53 references to an approved regulator do not include the Board in its capacity as an approved regulator.

(3) Sections 57 to 61 (reports by OFT etc) do not apply in relation to the Board in its capacity as an approved regulator.

68 Regulatory conflict and the Board as approved regulator

(1) An approved regulator may make a request under subsection (4) if it considers that the regulatory arrangements of the Board (in its capacity as an approved regulator) do not make appropriate provision to prevent a conflict between--

(a) a requirement of those regulatory arrangements, and

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

(2) An affected person in relation to an approved regulator may request the approved regulator to exercise its powers under subsection (1).

(3) An affected person in relation to the Board may make a request under subsection (4) if the person considers that the regulatory arrangements of the Board (in its capacity as an approved regulator) do not make appropriate provision to prevent a conflict between--

(a) a requirement of those regulatory arrangements, and

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

(4) The request is a request made to the Board (in its capacity as an approved regulator) that it reconsider the provision made by its regulatory arrangements to prevent a regulatory conflict with the conflicting regulator.

(5) An affected person in relation to the Board may make an application under subsection (6) if the person considers that the regulatory arrangements of an approved regulator do not make appropriate provision to prevent a conflict between--

(a) a requirement of those regulatory arrangements, and

(b) a requirement of the regulatory arrangements of the Board (in its capacity as an approved regulator).

(6) The application is an application to the Board for it to exercise its powers under section 32 to direct the approved 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 Board (in its capacity as an approved 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.

(7) An affected person in relation to an approved regulator (other than the Board) may make a request under subsection (8) if the person considers that the regulatory arrangements of the approved regulator do not make appropriate provision to prevent a conflict between--

(a) a requirement of those regulatory arrangements, and

(b) a requirement of the regulatory arrangements of the Board (in its capacity as an approved regulator).

(8) The request is a request to the approved regulator that it reconsider the provision made by its regulatory arrangements to prevent a regulatory conflict with the Board.

(9) The Board (in its capacity as an approved regulator) and any other approved regulator must consider any request made to it under this section.

(10) Subsections (5) to (8) of section 53 apply in relation to an application under subsection (6) as they apply in relation to an application under that section, except that--

(a) references to the applicant regulator are to be read as references to the person who made the application, and

(b) references to the conflicting regulator are to be construed in accordance with this section.

(11) In this section--

"affected person" in relation to the Board or any other approved regulator, means--
(a)
any person authorised by the body to carry on a reserved legal activity, or
(b)
an employee or manager of such a person;
"conflicting regulator" means--
(a)
in a case within subsection (1), the approved regulator making the request, and
(b)
in a case within subsection (3) or (5), the approved regulator whose regulatory arrangements are considered to conflict with those of the Board.

Functions of approved regulators etc

69 Modification of the functions of approved regulators etc

(1) The Lord Chancellor may by order modify, or make other provision relating to, the functions of an approved regulator or any other body (other than the Board).

(2) The Lord Chancellor may make an order under subsection (1) only if--

(a) the Board has made a recommendation under this section,

(b) a draft order was annexed to the recommendation, and

(3) The Board may make a recommendation under this section only with a view to an order being made which enables the body to which it relates to do one or more of the following--

(a) to become designated by an order under Part 2 of Schedule 4 as an approved regulator, or designated by an order under Part 1 of Schedule 10 as a licensing authority, in relation to one or more reserved legal activities;

(b) to authorise persons or any category of persons (whether corporate or unincorporate) to carry on one or more activities which are reserved legal activities in relation to which the body is (at the time the authorisation has effect) designated as an approved regulator, or to make regulatory arrangements;

(c) to carry out its role as an approved regulator (including its role, if any, as a licensing authority) more effectively or efficiently;

(d) to become a qualifying regulator under Part 1 of Schedule 18;

(e) if it is a designated qualifying regulator under section 86A of the Immigration and Asylum Act 1999 (c. 33), to authorise persons to provide any additional advice or services the provision of which amounts to the provision of immigration advice or immigration services.

(4) Subsections (2) (other than paragraph (a)), (3) and (4) of section 64 apply in relation to an order under this section as they apply in relation to an order under section 62(1)(b) in relation to the Board.

(5) An order under this section also may make provision in relation to--

(a) the provision of immigration advice or immigration services, and

(b) persons authorised to provide such advice and services by the body to which the order relates,

corresponding to the provision which may be made by virtue of section 64(2) to (4) in relation to reserved legal activities and persons authorised to carry on those activities.

(6) An order under this section may modify provisions made by or under any enactment (including this Act or any Act passed after this Act), prerogative instrument or other instrument or document.

(7) Any provision made by an order under this section may be expressed to be conditional upon--

(a) the body to which the order relates being designated by an order under Part 2 of Schedule 4 as an approved regulator, or by an order under Part 1 of Schedule 10 as a licensing authority, in relation to one or more reserved legal activities specified in the proposed draft order, or

(b) the body to which the order relates becoming a designated qualifying regulator under section 86A of the Immigration and Asylum Act 1999 (c. 33).

(8) The powers to make an order conferred by this section are without prejudice to any powers (statutory or non-statutory) which an approved regulator or other body may have apart from this section.

70 Procedural requirements relating to recommendations under section 69

(1) A recommendation may be made under section 69 only with the consent of the approved regulator or other body to which the recommendation relates.

(2) Before making a recommendation under that 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 is, in the opinion of the Board, 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.

Part 5 Alternative business structures

Introductory

71 Carrying on of activities by licensed bodies

(1) The provisions of this Part have effect for the purpose of regulating the carrying on of reserved legal activities and other activities by licensed bodies.

(2) In this Act "licensed body" means a body which holds a licence in force under this Part.

72 "Licensable body"

(1) A body ("B") is a licensable body if a non-authorised person--

(a) is a manager of B, or

(b) has an interest in B.

(2) A body ("B") is also a licensable body if--

(a) another body ("A") is a manager of B, or has an interest in B, and

(b) non-authorised persons are entitled to exercise, or control the exercise of, at least 10% of the voting rights in A.

(3) For the purposes of this Act, a person has an interest in a body if--

(a) the person holds shares in the body, or

(b) the person is entitled to exercise, or control the exercise of, voting rights in the body.

(4) A body may be licensable by virtue of both subsection (1) and subsection (2).

(5) For the purposes of this Act, a non-authorised person has an indirect interest in a licensable body if the body is licensable by virtue of subsection (2) and the non-authorised person is entitled to exercise, or control the exercise of, voting rights in A.

(6) In this Act "shares" means--

(a) in relation to a body with a share capital, allotted shares (within the meaning of the Companies Acts);

(b) in relation to a body with capital but no share capital, rights to share in the capital of the body;

(i) conferring any right to share in the profits, or liability to contribute to the losses, of the body, or

(ii) giving rise to an obligation to contribute to the debts or expenses of the body in the event of a winding up;

and references to the holding of shares, or to a shareholding, are to be construed accordingly.

Licensing authorities

73 Licensing authorities and relevant licensing authorities

(1) In this Act "licensing authority" means--

(a) the Board, or

(b) an approved regulator which is designated as a licensing authority under Part 1 of Schedule 10 and whose licensing rules are approved for the purposes of this Act.

(2) For the purposes of this Act--

(a) the Board is a licensing authority in relation to all reserved legal activities, and

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