Committee stage in the Lords
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The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Baroness Ashton of Upholland)Labour- Quote
- My Lords, on behalf of my noble and learned friend Lord Falconer of Thoroton, I beg to move that the House do now again resolve itself into Committee on this Bill. Moved accordingly, and, on Question, Motion agreed to. House in Committee accordingly. [The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Thomas of Walliswood) in the Chair.] Schedule 15 [The Office for Legal Complaints]: [Amendment No. 111 had been withdrawn from the Marshalled List.]
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Lord Lyell of MarkyateConservative- Quote
- I strongly support my noble friend Lord Kingsland in these amendments, particularly in the second amendment, which relates to the removal of the chairman of the board. Removal of somebody in a responsible position where independence is an essential part of their role is a very serious step, and it would be deeply unfortunate if it were thought to be being exercised by the Executive. It is therefore extremely wise to require the Lord Chief Justice’s approval. It should not cause problems for any Government, unless they have reached some constitutional crisis of proportions which we hope we never see. Consequently, I hope that the Minister will look kindly on that amendment.
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Lord Campbell of AllowayConservative- Quote
- The amendments are very important. For the reasons that have been given by my noble friend and my noble and learned friend, I support the amendment in the hope that it will be favourably received by the Government as a matter of general principle.
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- Baroness Ashton of UphollandLabour
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- I am grateful to the noble Lord, Lord Kingsland, for giving me the opportunity to talk about the role of the OLC. As he said, the amendments are similar to those in respect of the Legal Services Board which we debated on the first day of Committee. Let us be clear that the OLC is a completely different organisation from the LSB. First, it is subordinate to the Legal Services Board; the Legal Services Board approves its budget and its rules. Secondly, it will not be involved in the regulation of the legal profession, so concerns about its independence are different from those which were expressed in respect of the Legal Services Board. The role of the members of the Office for Legal Complaints will be to make rules about how the complaints scheme will work; to appoint the chief ombudsman and any assistant ombudsman; generally to run and manage the organisation in which the ombudsman and caseworkers will work, including managing the budget that has been agreed with the Legal Services Board; and to prepare the annual report on its performance of those functions. Looking at the two amendments in that context, at the moment we have set the size of the Office for Legal Complaints at between six and eight members plus the chairman. Paragraph 4 of Schedule 15 sets out a list of nine areas of which we consider it desirable for members of the OLC between them to have knowledge or experience—the handling of complaints, the provision of legal services, legal education and legal training, consumer affairs, civil or criminal proceedings and the working of the courts, the maintenance of the professional standards of persons who provide legal services, non-commercial legal services, the differing needs of consumers, and the provision of claims management services. While we hope that the members of the OLC will have this knowledge and experience between them once it is set up, that may not always be the case. We want to create a system with enough flexibility. For example, if there were six candidates with good experience of the first five attributes set out in paragraph 4, but with little experience of the last four, the LSB might want to appoint further people to fill those skills gaps. Unless there was some way of making the Office for Legal Complaints bigger, that could not happen. On the other hand, we do not want the OLC to become so large that it is unnecessarily bureaucratic or costly. We are trying to balance the interests of both the consumer and the profession. The Secretary of State, who is accountable to Parliament, is best placed to do that and that is why that power exists under Schedule 15. On Amendment No. 113, I have explained the differences between the OLC and the LSB, and those differences are also important in respect of this amendment. Under paragraph 8(2) of Schedule 15, members of the OLC, including the chairman, cannot be removed unless they have failed without reasonable excuse to discharge the functions of the Office for Legal Complaints for a continuous period of six months, have been convicted of an offence, are an undischarged bankrupt, or are otherwise unfit to hold the office or unable to discharge its functions. Members of the OLC are appointed by the LSB and can be removed by the LSB only if those conditions are met. The requirement that the Secretary of State, who is accountable to Parliament, consents to the removal of the chairman does not affect the independence of the OLC in carrying out its duties. Instead, it acts as a check on precipitate or unreasonable removal of the chairman by the Legal Services Board. That is a different proposition from that which the noble Lord, Lord Kingsland, and the noble and learned Lord, Lord Lyell, are concerned about.
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- Lord Campbell of AllowayConservative
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- That in no way grapples with the fundamental point being made by my noble friend and my noble and learned friend. The fact that the OLC is subservient to the board is neither here nor there, other than to advance their argument, and it does not detract from it.
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- Baroness Ashton of UphollandLabour
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- I disagree with the noble Lord and I am sorry about that. If you have a non-departmental public body chaired by a lay person with a specific function, and if it is responsible to a board that has been set up and specific criteria are laid out under which people can be removed—they can be removed under those criteria because it is important that there is a check on that—the question is whether that should be the responsibility of the Lord Chief Justice, as the amendment suggests. I do not believe that that would be an appropriate role for him; he has very important functions but I do not think that they should include overseeing whether the Legal Services Board removes a lay chair of a non-departmental public body. I do think that the Secretary of State, who is accountable to Parliament, should have the opportunity to confirm that the Legal Services Board has acted properly within the legislation that has been laid down by Parliament. That is an appropriate way forward.
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- Lord Lyell of MarkyateConservative
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- Can the noble Baroness clarify this matter? Before the chairman can be removed, some grave default has to be shown against him. In that unhappy situation, which one hopes would never arise—and I am not suggesting that it would do so under this Government, but it could in the future—whereby a chairman was being removed because he had not complied with the current wishes of the Government of the day, would the decision that he had gravely defaulted, presumably made by the board, be subject to judicial review?
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- Baroness Ashton of UphollandLabour
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- I do not believe that it is, but I will confirm that with the noble and learned Lord shortly. Oh! I apologise; the information I was getting by nods and shakes of the head was inaccurate. The decision is subject to judicial review. I can confirm that for the purposes of our deliberations. Let us be clear: the Legal Services Board is set up under this legislation. It is a separate body. It determines the work of the Office for Legal Complaints. The legislation determines the only circumstances—which we expect never to arise, as the noble and learned Lord said—under which someone could be removed. Were they to be removed, the Secretary of State would have to confirm that, and be accountable to Parliament for having so done. I understand noble Lords’ concerns about the Legal Services Board, but this feels to me an appropriate role for the Secretary of State. On the first day of Committee, I agreed to a number of amendments which transfer responsibility for exercise of the regulation functions from the Secretary of State to the Lord Chancellor. Noble Lords will know, by reason of the Lord Chancellor’s oath of office and the Constitutional Reform Act 2005, that there are a range of unique duties and responsibilities not shared by other Ministers. Included in those are, “the need for the public interest in regard to matters relating to the judiciary or otherwise to the administration of justice to be properly represented in decisions affecting those matters”. The Lord Chancellor must be qualified by experience in law or Parliament, and has a duty to respect the rule of law. We have therefore ensured that the proposed arrangements are independent but properly accountable to Parliament. That is where the accountability should lie. That is with the greatest respect to the role of the Lord Chief Justice, I hasten to add.
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- Lord Campbell of AllowayConservative
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- If it is not the Lord Chief Justice, it could be the Lord Chancellor. If we had a Minister of Justice, it could be the Minister of Justice. What is wrong is that the matter should be dealt with by the Secretary of State intervening in this affair. That is the fundamental objection. There has not been a very convincing argument why the Bill should stand in its present form.
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- Baroness Ashton of UphollandLabour
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- The Lord Chancellor, as it would be, is not intervening in the decision, except if the Legal Services Board considered that the chairman had breached their responsibilities in the precise ways laid out by the legislation. Before the Legal Services Board can remove that individual, it must go back to the Secretary of State and have that confirmed. At that point, the accountability comes into Parliament. We are talking about a lay person in a non-departmental public body operating in relation to an independent board. This is based on other models that noble Lords will be more familiar with than I am. The Legal Services Board must follow the legislation and the Secretary of State—or Lord Chancellor, as it will be—confirms that that has happened appropriately. It cannot dismiss the chairman; all it can do is say that they have not behaved properly within the legislation or accept the decision that has been made.
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- Lord Lyell of MarkyateConservative
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- Could the noble Baroness clarify something? She refers in one sentence to the Secretary of State and in the next to the Lord Chancellor. Is it going to be the Lord Chancellor or the Secretary of State? I would prefer the Lord Chancellor.
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- Baroness Ashton of UphollandLabour
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- I can do nothing other than agree with the noble and learned Lord: it should be the Lord Chancellor.
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- Baroness Ashton of UphollandLabour
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- I am sorry that the noble Lord does not agree with me. I want to make one point about a matter that puzzles me. One of the threads of our deliberations in Committee over the past few days—it feels longer—has been to ensure that there is the right level of accountability. Noble Lords, particularly those with professional experience within the legal world, have been concerned about issues such as public interest and making sure that no funny business can go on. One issue that I have been interested in in this Bill—as the noble Lord knows, it is not my policy area, so in a sense I look at it in a slightly fresh way—involves providing the opportunity for Parliament to hold to account independent bodies. The traditional way, which has worked through generations of different Governments, has been that the Secretary of State and the Lord Chancellor—I agree that it should involve the Lord Chancellor—are able to be held to account. If there was a feeling that the Legal Services Board had acted inappropriately for whatever reason—we do not expect that and I know that noble Lords do not do so—the Secretary of State would have to have agreed that and would be accountable to Parliament, a Select Committee or whatever for that decision. To remove that is in a sense to move away from what I understood to be one of the threads underlying the Bill.
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- Lord Lyell of MarkyateConservative
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- The noble Baroness makes a good point about accountability to Parliament; I am always banging on about it myself. It is very important. Might not the answer here be to add the consent of the Lord Chief Justice to that of the Lord Chancellor? That way, the Lord Chancellor would be accounting on a very strong wicket.
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- Baroness Ashton of UphollandLabour
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- Not surprisingly, I disagree with that; I do so because the Lord Chief Justice has many functions and plays an incredibly important role. He has a particularly important role in relation to the judiciary. This involves a layperson being appointed on a non-departmental public body, and accountability should be through the Government to Parliament.
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- Baroness Ashton of UphollandLabour
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- No, I disagree with that. We are relying on legislation that sets out how independent bodies will operate in conjunction with each other. Noble Lords would wish us to set that out as firmly as we can, recognising the advantages in primary and secondary legislation of the flexibility that we need. We sought to do that by clarifying the circumstances in which it operates. However, we want to add that if something as critical as the removal of the chairman were to occur, it is important that there should be an accountability process and that the Secretary of State or the Lord Chancellor should play that role. I do not think that there is anything contradictory in this. This is about independence but it is also about accountability on an area of policy that is, as noble Lords have made very clear over the past few days in Committee, of critical importance in our recognising the roles played by the professional legal services. That is what we have sought to do.
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Lord WhittyLabour- Quote
- had given notice of his intention to move Amendment No. 114A:
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Lord Maclennan of RogartLiberal Democrat- Quote
- moved Amendment No. 115A:
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- Baroness Ashton of UphollandLabour
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- As the noble Lord, Lord Maclennan, said, we have touched previously on location, and I shall try to tackle that first. When we were considering the location, there were a number of factors to take into account. Criticisms have been levied at the current organisation—I shall not reiterate them—but that does not mean, as I know noble Lords accept, that everyone in the organisation is not able to do a good and viable job responsibly. It will be three years before the OLC comes into being, during which complaints will still need to be dealt with. We have to think about ensuring that we retain staff whom we wish to see transferred across under existing TUPE rules and also that we think through appropriately value for money, the skills and experience that we will need, the commitment to TUPE, and the presumption against London as a location, following the Lyons review. If you put all those factors into the mix, in our view you end up saying that it is appropriate that the new organisation should be able to build on the skills of some, if not all, of the people currently involved. It will be a different structure, and we believe that it will certainly be a different culture due to the way in which it is being set up. None the less, there will be people who are fully able to do a good job, and we have therefore indicated that it would be appropriate to enable them to move across to the new organisation. We do not want difficulties for the Law Society, which there would be if over the three years people bled away and got new jobs because they were not prepared to relocate perhaps hundreds of miles away. That would create a very difficult set of circumstances over the next three years. That does not mean that we are recreating an organisation which, in general, people feel has not been able to do the job as well as it might, but it does recognise that lots of people within that organisation probably do a very good job and that they need to have the opportunity to work within the new structure. That is the business case that we have evolved. So we said that the new office would not be in Leamington Spa, where the current arrangements are but that it would be in the West Midlands. Thus the staff who currently work there know that there are potential jobs for them. The new structure will be different. We do not know how many people will be able to transfer across in the way that TUPE allows but we certainly do not want to rule out any opportunities for people. I think that that is absolutely the right approach. However, as noble Lords made clear to me in Committee, it will be very important that it feels like a new organisation, not least for the good people who are going to work in it, and that it will be able to carry the confidence of the professions, the public and consumers. That is what we seek to achieve, and why it will be set up in this way. On the specific issues the noble Lord raised, he will know that, particularly as regards his first amendment about locations, we have put in a sunset clause after five years. We think that that is right and proper because the circumstances will change. We have therefore enabled the provision to disappear after five years. So it is not for ever and that appropriately tackles the problems I have identified as important. Paragraph 22 of Schedule 15 provides that any borrowing the OLC might do would need to have authorisation from the Legal Services Board and, through it, the consent of the Lord Chancellor. It enables a provision to exist in legislation that if the circumstances arise—currently unforeseen—the OLC would not be able to borrow any money without the agreement of the Legal Services Board and the Lord Chancellor. We have done that for reasons similar to those I have already given; not least because if it were to do that, there would be concerns in the context of how it is funded—a matter which I know we will discuss, no doubt at great length, later. But it is important to have those safeguards in place. So there is one safeguard with the sunset clause; there is another with the safeguards built into it which would enable that action to happen, should that be necessary. I hope that the noble Lord, Lord Maclennan, will understand our rationale in thinking that there is a very good business case for the location of the OLC so that the current work can continue, there will be the opportunity for skilled people to move across to it, and it is recognised that this needs to be a new organisation.
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- Lord Maclennan of RogartLiberal Democrat
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- I am grateful to the noble Baroness for explaining what lies behind this slightly, on the face of it, odd provision. It is a transitional arrangement written into the Bill, but of course there will be a price to be paid. I understand what she says about the rights and interests of those currently employed in the Law Society’s consumer complaints service, but they are taken care of in the law. The noble Baroness referred to TUPE. The main concern that this gives rise to is the perception that the Government are making less of a change than had been heralded by making such a remarkable provision in primary legislation to ensure that the location of the OLC does not lie in its hands for a number of years to come, and that it will be where it has been determined in the manner that the Minister described. However, she has elucidated the thinking, and it is a matter of judgment whether that perception vitiates the wider purpose of the Bill and the wider purpose of seeking to strengthen not only the appearance of independence, but also the actuality. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendments Nos. 116 and 117 had been withdrawn from the Marshalled List.] Schedule 15 agreed to. Clauses 112 to 117 agreed to. Clause 118 [Performance targets and monitoring]:
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- Lord WhittyLabour
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- moved Amendment No. 117ZA:
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- Lord Campbell of AllowayConservative
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- I oppose the amendment for the reason that it has been in effect opposed already. It brings into play the issue that we discussed of whether the board should have an initiative role to investigate on its own when no complaint and no cause for investigation have been submitted to it. Inevitably, for that reason, I oppose the amendment.
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- Lord Maclennan of RogartLiberal Democrat
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- I am grateful to the noble Lord, Lord Whitty, for trailing the amendments standing in my name and that of my noble friend Lord Thomas of Gresford. He is right in describing their purpose, which is not to empower the Legal Services Board to initiate new investigations but, rather, to give it a power that already exists in the hands of the Legal Services Complaints Commissioner, for which no provision is made in the Bill. It is the power to intervene if the OLC is failing to meet the purposes for which it has been established and to consider strategically what is being done by the OLC. If the OLC is not seen to be handling complaints effectively and efficiently, some such power is required. My amendments spell out how those powers might be exercisable. It is important, and I understood it to be an underlying purpose of the Bill, that the whole system of legal complaints should be subject to independent scrutiny and review. If the operational decisions by the Office for Legal Complaints are not giving rise to the satisfaction that it is hoped that they will elicit, the system ought to provide a remedy. That is the purpose of the three amendments that I have tabled.
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Lord Neill of BladenCrossbench- Quote
- In considering the amendment moved by the noble Lord, Lord Whitty, on its own, my only concern in this area is whether there is any suggestion that there might be intervention in a particular ongoing complaint that is being adjudicated. In other words, could the OLC be told what decision it is to arrive at, or is this all intended to operate ex post? You have a decision, maybe half a dozen decisions, and then there is public concern, or a number of people are concerned, about the way in which the OLC has been doing its job. Intervention in current decisions would be completely undesirable as it would completely destroy the independent stature of the OLC. I cannot believe that that is intended.
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- Baroness Ashton of UphollandLabour
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- We have had an interesting debate and I shall reflect on the specific points made by the noble Lord, Lord Kingsland, on Clauses 111 to 118. I start by responding to the wonderfully numbered Amendment No. 117ZA—the numbering of these amendments becomes more extraordinary by the day—tabled by my noble friend. We think that the LSB already has the tools to assess whether the OLC is performing effectively and I agree with the noble Lords, Lord Neill and Lord Kingsland, that the issue is about systemic processes rather than individual complaints. The amendment is very widely drawn. Clause 153 provides that the LSB is able to direct the OLC to modify its rules. We have already talked about removing the chairman or members, but if the OLC should fail in its duties, under Clause 153 the board is able to direct it to make changes. For the reasons already outlined, we do not want the board to reopen or intervene in the determination of individual cases. The ombudsmen are independent and we do not want to see any interference in their decisions, which would be the unfortunate result of this amendment. We think that we have captured what noble Lords are seeking in Clause 153. Systemic issues will be dealt with by the LSB, but we would not want to see individual cases being reopened. I hope that my noble friend will feel able happily to withdraw his amendment if I am right in assuming that he agrees with the noble Lord, Lord Campbell of Alloway, and others that this is an issue where the systemic approach is fine, but it is not for individual cases. I turn to the group of amendments spoken to by the noble Lord, Lord Maclennan of Rogart. We are setting up a very different kind of relationship between the OLC and the LSB from that which exists currently for the LSO or the LSCC in terms of their relationships with the approved regulators. We have already talked about the role of the LSB in terms of appointing the members of the OLC and, of course, removing them if they fail to perform adequately. Simply to transfer across what we have currently got in the system would be to fail to acknowledge that we are creating a new system. We will not be in the position of having legal professional bodies involved in the handling of complaints in the same way. This will be a completely separate organisation led by ombudsmen who, as I have indicated, will be independent. So we do not accept that there is a need to replicate what we had before, because this is different. For that reason, we would not accept these amendments. The noble Lord, Lord Kingsland, considered the role of Clauses 111 to 118. As I understand it, the annual report provides an opportunity for Parliament to look at what the OLC is doing. I presume noble Lords would like that to be the case. However, the noble Lord said that we could have a situation in which the Secretary of State and the Legal Services Board were in different places, which might in itself be quite interesting. I understand that both will receive copies of the report and that the Secretary of State would lay it before Parliament. That is a normal route for putting things before noble Lords and the other place. In the policy areas in which I have been involved, that is ordinary practice. I do not think that there is any potential for conflict. It is important that we are given the opportunity to see these reports and to consider how things are working, not only in the light of what noble Lords have said but also because we want to secure, along with professional confidence, public and consumer confidence in the system. I am not sure that I accept fully the proposal that we do not need these clauses. While I hasten to add that I am always keen to make Bills shorter, it is important to set out in the Bill precisely what we are asking the Office for Legal Complaints to do. There is a tension between wanting to be as clear as possible in the Bill and allowing for the flexibility that is always desirable beyond it. So while I am happy to look at these again, I think that they give a general sense of what the OLC is being required to do in work that it undertakes. I am also pleased that noble Lords will be able to look at an annual report from it.
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- Baroness Ashton of UphollandLabour
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- I am perfectly happy to say that I am easily confused, as the noble Lord, Lord Kingsland, knows well, and I apologise for not quite understanding what he meant. I am happy to look at that, as one issue has been to make sure that the OLC—I would probably not go as far as saying that is a creature of the other body, but it certainly has responsibilities to it—is aware of its responsibilities as an NDPB and is functioning properly. These clauses are, in part, designed to achieve that and we therefore felt that it was important to look at the OLC as an entity. However, the noble Lord makes a good point and, if I might, I will talk to my colleagues about it.
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- Lord Maclennan of RogartLiberal Democrat
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- I am grateful to the Minister for her reply, but I confess that I am not wholly satisfied that she has addressed the point with sufficient force to convince me that this series of amendments is misdirected. She seems to recognise that, in the relationship between the OLC and the board, there ought to be some capability to intervene if the OLC is systemically not delivering what it is expected to do. Yet, in order to ensure that that is possible, the Minister is relying on a quite limited power in Clause 153, which allows the board to, “direct the OLC to … modify its scheme rules”, or to, “make a specified modification to its scheme rules”. However, the fault that gives rise to concern may have nothing to do with the scheme rules. It may be an operational matter not directly related to them, so an amendment to the framework within which the OLC operates might actually be futile. Under Clauses 111 to 118, it is clear that the Office for Legal Complaints has wide powers that are not necessarily contained within the scheme rules. These powers are set out most widely in Clause 116, which allows the OLC to, “do anything calculated”— it does not state whether it is a subjective or objective calculation— “to facilitate, or incidental or conducive to, the carrying out of any of its functions”. If I were satisfied that the Bill provided for interventions of the kind that I have suggested could be necessary to rectify the continuing dissatisfaction felt and perceived by the board with the performance of the OLC, I would be greatly reassured and would consider again whether these amendments are apposite. But the Minister relied simply on one clause, which by no means covers the situation.
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- Baroness Ashton of UphollandLabour
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- The noble Lord is right: I should have referred also to Clauses 117 and 118. When he reflects on what I have said, will he be kind enough to put together Clauses 117, 118 and 153? These clauses provide that the board may require the OLC to prepare reports in respect of any specified matter; that the board may set and monitor performance targets; that directions can impose conditions with which the performance targets must conform; that the board must publish any target set or direction given by it under the clause so that the OLC knows what it has to do; and that the board may take such steps as it regards as appropriate to monitor the extent to which targets are being met. The noble Lord is right to say that I relied far too much on one clause, but I hope that he will feel that we have captured what he is after in the context of all of these clauses.
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- Lord Maclennan of RogartLiberal Democrat
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- I am reassured to the extent that the Minister is anxious to ensure that the powers that I suggest the board should have ought to be in the Bill. However, I am by no means certain that the performance target requirements deal with the issue either. Performance targets are very often concerned with percentages, costs and many other things that are not necessarily directly to do with a pattern of consumer dissatisfaction. It is those concerns that I am seeking to address. I am not unresponsive to what the Minister said—I have no doubt that she has this in mind—but the question of who deals with a failing OLC needs to be answered comprehensively. There are certain instrumentalities for dealing with certain shortcomings, but they are not sufficiently comprehensive. I hope that the Minister will look again at this matter and consider whether it is possible to meet these concerns by importing something into the Bill.
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- Baroness Ashton of UphollandLabour
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- Of course. I hope that the noble Lord will discuss with me our interpretation of what we believe we have captured within the Bill to see whether that addresses his concerns. I believe that there is very little between us in what we are seeking to achieve.
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- Lord WhittyLabour
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- I shall not pursue the amendment because, if it is capable of the interpretations of the noble Lords, Lord Neill of Bladen and Lord Campbell of Alloway, it is drafted far too widely. I am certainly not suggesting that the board should interfere in ongoing investigations by the OLC. However, like the noble Lord, Lord Maclennan, I am still slightly uneasy and I would be grateful if the Minister would either pursue the matter further or write to us. We are dealing here with the history of the previous system of complaints handling under the Law Society. I do not want to reopen old controversies, but that system has not been widely regarded as being up to scratch for the task. In a relatively recent change, we gave certain powers to the Office of the Legal Services Complaints Commissioner. The Minister has referred us to several clauses, but I am slightly anxious that they do not add up to the same powers that the commissioner had under the previous system, particularly on initiating investigation; rather, they largely relate to sanctions, or to requirements for the OLC to report upwards to the board. They do not actually give the LSB the powers to initiate investigations of systemic failings or individual cases. They do not seem to meet that. I would be grateful, in withdrawing this amendment, if my noble friend could indicate that she would be prepared to give this a little further thought and, if necessary, write to me and other noble Lords.
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- Baroness Ashton of UphollandLabour
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- I will give anything further thought, as my noble friend would expect. The only comment I would make is that the powers may not look the same because this is a different system, and the role that my noble friend describes would not be the same. We think that we have captured what my noble friend is seeking, which is the opportunity for the Legal Services Board to be sure, in a systemic way, that clear areas of concern can be dealt with. We think that the combination of monitoring, targets, requiring reports and, at the end of the day, being able to remove people is a good one, and will tackle that issue. Of course I will look further at it, though, to ensure that we have captured that. I think that there is nothing between the two of us on this matter, except to say that the Government are not recreating the system as it stands because the position of this body is not equivalent to that of the current body.
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- Lord WhittyLabour
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- I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendments Nos. 117A to 118C had been withdrawn from the Marshalled List.] Clause 118 agreed to. [Amendments Nos. 118D to 118F not moved.] Clauses 119 to 121 agreed to. Clause 122 [Jurisdiction of the ombudsman scheme]:
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- Lord WhittyLabour
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- My Amendment No. 119A is in this group. Unlike the noble Lord’s amendment, it would not extend mandatory jurisdiction to other areas but would allow for a voluntary extension. The Bill makes the majority of legal activities reserved activities but there are legal and quasi-legal activities which are not reserved, usually for good reason. The full regulation of the legislation would probably inhibit competition regarding will-writing, for example, and the effects would be detrimental to the consumer. However, it means that non-reserved activities are not allowably covered by the ombudsman system. The amendment would allow non-reserved legal service providers to come within the jurisdiction of the ombudsman on a voluntary basis. The model I am thinking of is the financial services sector. Financial services which are not legislatively required to come under the regulatory or ombudsman service can voluntarily, through their own trade association or individual firms, opt to become part of the ombudsman service as a reassurance to the consumers of those services. Normally, a trade association would apply to bring its membership in bulk into the system, but an individual firm could enter. In either case, the conditions would be that voluntary subscription to the ombudsman service would entail acceptance of the terms of the redress rules, compensation limits, information-gathering powers, and so on. The amendment would extend consumer protection into unregulated areas without subjecting those activities to the full burden of regulation operated by the LSB. It would have the other advantage of preventing a new regulatory maze confusing the consumer. If parts of the unregulated sector an entirely different system of redress and dispute resolution chose it would be a recipe for confusion and inconsistency. Legal service providers would also benefit because it would lend their services added credibility and status. Displaying the ombudsman logo on their premises and paperwork will enable providers to differentiate themselves from their perhaps less scrupulous rivals who decide, on whatever basis, not to join the ombudsman scheme. I commend the amendment; it would increase consumer protection and the ability to differentiate with regard to the good performers in the non-reserved sector of legal and quasi-legal services.
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- Baroness Ashton of UphollandLabour
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- I am grateful to noble Lords for raising these issues. It might seem obvious to the noble Lord, Lord Kingsland, that there should be a requirement that the jurisdiction of the Office for Legal Complaints be limited to complaints about legal activities. In general, I accept and expect that complaints will relate to acts and omissions in carrying out legal activities, but I want to resist putting this in the Bill, and I shall explain why. A respondent to a complaint must be someone capable of being complained about under the scheme. That means that at the time the act or omission to which the complaint relates occurred they must have been an authorised person in relation to an activity which is a reserved legal activity. It does not matter under the Bill whether the act or omission in question relates to a reserved legal activity—advocacy, litigation, licensed conveyancing, and so on—or some other legal activity or service that the respondent was providing. That is partly because we have taken the view that what matters is that the person is authorised; therefore, as their client, the complainant should be capable of complaining about any aspect of the service provided. It is also because in the world of alternative business structures, firms will be providing packages of services, and a complaint may therefore wholly or partly relate to other non-legal services. We do not want those complaints to be excluded simply because the activity was not wholly or partly a legal activity or service. In those circumstances, an ombudsman will need to judge whether the complaint is best dealt with under the OLC scheme or another scheme. Where a complaint is purely about financial advice, for example, the ombudsman may decide, with the consent of the complainant, that it would be more appropriate to pass it on to the Financial Ombudsman Service under the scheme rules in Clause 130(3)(b). But where the complaint contains aspects covered by different jurisdictions, the OLC might want to consider the complaint and provide redress in the round. It is better to leave the jurisdiction as open as possible, albeit with the safeguards that we have put in Clauses 123 to 125, so that the ombudsman can take into account all the factors. We would not want to see a genuine complaint excluded because the aspect being complained about was not quality of legal service, but simply quality of service; for example, the legal advice was fine but the lawyer was rude or condescending or whatever reasons might be given.
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- Baroness Ashton of UphollandLabour
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- My preference is to leave to the OLC the issue of whether to allow complaints to be continued when the original complainant has died. Of course, there will be some very clear-cut cases in which it would appear very unfair for a case to fall just before redress is rewarded because a complainant has died, but there may be other cases in which we have a less clear-cut situation. In general the scheme is designed for the clients of the lawyer in question, not for families or third parties. There are only a handful of places in which we are clear that we have strict requirements on the OLC to make rules, and we would rather leave this because we believe that there could be circumstances in which it might not be appropriate to do so. The critical point that the noble Lord was making falls under Amendment No. 123, with the question of redress and making sure that rights are preserved. Absolutely. When a person gains the right to continue a complaint under rules under Clause 129(4), he will step into the shoes of the original complainant, so any redress will be rewarded as it would have been to the original complainant. I am assured that that is captured in the Bill, but I will look at the provision again, as I absolutely agree with the noble Lord that if someone is allowed to move in to the complainant’s shoes the redress should continue as expected.
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- Baroness Ashton of UphollandLabour
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- I was not disagreeing with the noble Lord. There will definitely be circumstances where it is absolutely right that that should continue. The question is whether “may” should be changed to “must” and what the implications are of doing so. I will look at the matter again, but there will be circumstances where what is needed is an apology. That is all that I am concerned about. I will check that the noble Lord and I are in the same place in this respect.
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- Baroness Ashton of UphollandLabour
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- I shall attempt to be similarly telegraphic. I agree with the noble Lord completely in his Amendment No. 128. If I might, I will take it away to make sure that we have captured it by the next stage. I agree that there should be no uncertainty in this area. If I have not quite captured that in the Bill, I agree that we should do so. Therefore, I would like to take the matter away for consideration. I understand what the noble Lord is seeking to achieve in his Amendments Nos. 131 and 132, but we make it clear that safeguards are in place to monitor what functions the ombudsman can delegate. I say “delegate” and not “transfer”, because it is a fundamental difference. The Bill allows the ombudsman to delegate only in relation to making an investigation in consideration of a complaint. They cannot delegate their function to a member of staff in respect of determining a complaint. That is a fundamental and critical difference. We hope that the staff appointed by the OLC will be the first port of call for complaints. We want it to investigate and, we hope, to resolve complaints, where possible by mediation. That would be the best possible outcome. We hope that the delegation of the functions that I have described will help to facilitate the speedy and—dare I say?—inexpensive resolution of consumer complaints. I am not sure that much would be gained by requiring those functions to be specified in the scheme rules. The OLC and the chief ombudsman will ultimately be responsible for all of the actions of the caseworkers. They will oversee the exercise of the functions and, if those functions are not being exercised appropriately, they will not be delegated. As I have already indicated, there is no question that those functions are not being transferred to enable the frontline staff to deal with the issues that I have identified and the OLC and the chief ombudsman will not be able to delegate the determination of a complaint to any member of staff.
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- Baroness Ashton of UphollandLabour
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- I can see why the noble Lord would be concerned. My understanding is that it was partly to make clear that we were not delegating determination and to make clear in this part of the Bill what the responsibilities would be and how they would work. That is about confidence as much as anything; it is about people being able clearly to see on the face of the legislation what can and cannot be done. This is not a transfer of responsibility; this is appropriate delegation to caseworkers, but they cannot determine the case.
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- Lord WhittyLabour
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- moved Amendment No. 130A:
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- Lord Maclennan of RogartLiberal Democrat
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- I rise briefly to support the concerns of the noble Lord, Lord Whitty, and to encourage the Minister to respond positively. There is a legitimate anxiety that threats of costs can, for lay people, end their natural inclination and proper exercise of their rights. If that took place in clandestine circumstances without provision being openly discussed or made clear, that risk might be augmented by unscrupulous behaviour. If this amendment is not precisely the way to deal with the problem, it still needs to be dealt with and, perhaps, an up-front provision for openness on costs might be another approach. However, I am broadly in support of what the noble Lord, Lord Whitty, said.
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Baroness D'SouzaCrossbench- Quote
- I have not contributed to the Bill, but I do so now in support of the amendment tabled by the noble Lord, Lord Whitty. I want in particular to underline the need for the widest possible protection for the consumer—or in this case the complainant. I underline what has already been said so eloquently that without this amendment, the complainant may well be a worse position than under existing arrangements. Additionally, an unscrupulous lawyer could not be challenged or criticised for such unfair discouragement if he or she proffered it to his or her client.
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Baroness Butler-SlossCrossbench- Quote
- Perhaps I may look at the other side of the situation. I totally understand what lies behind the amendment proposed by the noble Lord, Lord Whitty, but, if the Committee were to approve it, it is important that the second part of what he said should be taken into account also. There are unscrupulous lawyers, but there are also unscrupulous complainants. It is important that the concept lying behind the clause is recognised and, at the very least, if people put forward utterly unreasonable complaints, the ombudsman should have a power to deal with them. There may be a need to strengthen subsections (1) and (2), by using either the word “vexatious” or a similar word. However, not giving the ombudsman any power to deal with an utterly unreasonable complainant who has, no doubt, caused the lawyer to spend a lot of money, when that lawyer has been reasonable in dealing with that litigant, would be going to the other extreme. Consequently, one should balance the importance of protecting the consumer with protection against the unreasonable complaint.
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Baroness Howe of IdlicoteCrossbench- Quote
- I add my voice to those of my two noble friends and support the amendment of the noble Lord, Lord Whitty. He made both points very well and they have been reinforced. Clearly, vexatious litigants must be dissuaded, but the consumer is very important here.
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- Lord Neill of BladenCrossbench
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- I agree with the view of the noble and learned Baroness, Lady Butler-Sloss. If I follow the argument correctly, the premise for the making of an award of costs against a complainant would be that the ombudsman had formed an opinion, under either subsections (1) or (2), that the complainant had acted improperly or unreasonably in relation to the complaint, or had been responsible for an unreasonable delay. That is culpable conduct. There is a provision in the financial services legislation in more or less the same terms, although I am not aware of any case in which an award has been made. However, it is a residual power intended to deal with the sort of complainants I referred to when speaking to the amendment tabled by the noble Lord, Lord Kingsland, on the previous occasion. I said that there was such a thing as an unreasonable complainant. I do not view this as an unreasonable provision. It need not act as a deterrent to any complainant who comes forward with a case because if they take advice, they will be told, as I have said, “You will not get an order made against you unless you have behaved in this unreasonable manner. So you need have no fear”.
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- Baroness Ashton of UphollandLabour
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- I had written “listen” on my speaking notes. I absolutely understand that my noble friend is trying to deal with the possibility that a genuine complainant could be deterred because they felt that their complaint was not very worthy or terribly important, and that would lead them into a situation where they would have to pay costs. On the other hand, the Financial Ombudsman Service told us that it has never used the provision, as the noble Lord, Neill of Bladen, said, but that it regards it as important. It has said that it is about balance. It hopes that by making sure people understand the circumstances in which the provision could be used, it will deter those who would otherwise come forward. The Financial Ombudsman Service is very clear that it is not going to use the provision in circumstances where it is obvious that the person was genuine in what they were doing—even if the complaint failed. This goes beyond what we do in the Bill. It is about how we make sure that we explain it to those involved. There may be unscrupulous behaviour on all sides or none. It is possible that somebody could be put off from making a claim because somebody says that they will have to pay. The critical thing is how we deal with it. I have listened carefully. In a sense, the debate has gone exactly as I expected. My inclination is that we probably need to keep the balance, but make sure that we are not running the risk of people failing to make genuine complaints. However, that goes beyond what we want in the Bill.
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- Lord WhittyLabour
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- I am not quite as encouraged as I was hoping to be by the noble Baroness’s response and her self-injunction to listen. I certainly accept that the amendment as it stands is not sufficiently balanced. I accept that the specific reference to vexatious appeals is needed. On the other hand, I think that we have enough anecdotal evidence to know the degree of threat under the present system—which is not entirely valid because costs cannot be awarded in some of those cases. This clause refers to, for example, a person being responsible for unreasonable delay. An ordinary, relatively vulnerable client will often hesitate for a long time before taking action, not unreasonably expecting the lawyer at some time to take their complaint seriously. The question of unreasonable delay is a little loose. We can meet the balanced approach, but the area for costs to be awarded needs to be a bit narrower than is provided here.
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- Baroness Ashton of UphollandLabour
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- I can say to my noble friend that I am happy to look at the language. I sense from your Lordships that although the balance is probably appropriate, my noble friend is right to say that we need to check that we have not set the provision so wide as to deter people from making genuine complaints, as described by my noble friend. I am sure that the noble Lord, Lord Maclennan, would agree with that. We will look at the language, but keep the principle—if I can put it like that.
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- Lord Neill of BladenCrossbench
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- With regard to the language, I think that the financial services provision does not have identical language about a contribution to the costs of dealing with the complaint. I think that the order can be made in favour of the other party if there has been unreasonable conduct. As this is rather special, will the Minister look at that and compare the two texts?
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- Baroness Ashton of UphollandLabour
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- I will certainly do that. I have the other relevant text here, which is to be found in Section 230. We have tried to model the provision on that, but I will take the noble Lord’s advice.
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- Lord WhittyLabour
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- In the light of my noble friend’s latest remarks, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 130 agreed to. Clause 131 [Delegation of an ombudsman's functions]: [Amendments Nos. 131 and 132 not moved.] Clause 131 agreed to. Clause 132 agreed to. Clause 133 [Charges payable by respondents]:
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- Baroness Butler-SlossCrossbench
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- I have 35 years’ experience as a family judge and 15 years’ experience as barrister before it, much of it in family proceedings. 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. 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. In that, I respectfully echo what was said by the noble Lord, Lord Kingsland. For this House to pass such a clause would seem to represent an opportunity for those with unjustified complaints to continue to make them in a new scheme as they had under the old schemes.
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- Lord Lyell of MarkyateConservative
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- I strongly support the amendment and wholly agree with my noble friend Lord Kingsland and the noble and learned Baroness. This spreads, in my experience, to the criminal law. In a sense, this is a complete reversal of where we were 30 or 40 years ago, when we were too far pitched the other way. You could not sue a barrister, except in very limited circumstances, and you had very little redress. In her speech on the previous amendment, the Minister emphasised the importance of fairness. The Chamber was seeking to be fair to complainants and not to have unfair threats hanging over them. It must be important to be fair to both sides. People’s animus and sense of dissatisfaction carries on whether this involves just the Family Division, as the noble and learned Baroness so eloquently said, or all other fields of legal dispute. Many people will never let the subject go; they make complaints that they believe to be well founded but an independent adjudicator—the ombudsman—may not agree and the complaint would not be upheld. It is a strain for any barrister or solicitor who is faced with that problem to have to deal with it in any event, but to have to do so knowing that costs are being run up against you in a wholly unfounded case will be seen by every member of the public and every Member of this House to be deeply unfair, I should have thought. I very much hope that the Minister will reflect on that.
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- Lord Neill of BladenCrossbench
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- I agree with the three previous speakers. In effect, this is a punishment for being an innocent defendant. It is a totally untenable proposition. You have your property confiscated and are ordered to pay charges because someone has brought an unfounded complaint against you. As a legal proposition that seems to be absolutely impossible. I am very surprised that there are no Human Rights Act implications in relation to property; there may well be—perhaps that could be looked at. We have the usual certificate that this Bill is entirely in accordance with the Human Rights Act, but I find it very odd that your property can be removed for you being innocent and defending yourself.
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- Lord Maclennan of RogartLiberal Democrat
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- I agree with all those who have spoken. We on these Benches feel that the clause is most unsatisfactory. It is clear from subsection (2) that the presumption is that charges will be made. The presumption should be that the charges will not be made in the circumstances described by the noble Lord, Lord Kingsland. It is not satisfactory to have to rely on rules that may be set out under the scheme to embody the concerns that have been expressed in this debate. This major, clear and broad principle needs to be asserted firmly in the Bill.
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- Baroness Ashton of UphollandLabour
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- I shall try to explain how we believe the system would work. I trust that that will provide comfort if not complete satisfaction to noble Lords. Under the new system, every lawyer will pay something towards running the OLC through the general levy. It is right that they should; it is a new body. Yes, this involves increasing consumer confidence—every practitioner has a genuine interest in that regardless of whether they themselves received complaints. We believe that the existence of the OLC should ensure that clients have greater peace of mind and that there will be benefits from increasing consumer confidence for those involved in the legal profession. That is an important part of what we are seeking to do. I completely accept—this was said to me by the chairman of the Bar—that there are issues with, for example, junior barristers in criminal cases. The noble and learned Baroness indicated that there are also very emotive issues in family cases. People may feel aggrieved on the criminal or the family side with the outcome that is set and may wish to complain because they believe—they may well do so wrongly—that they have not been given the best possible advice and support from the legal profession. That is why we put flexibility in the Bill—to ensure that we design a fair system. One expects that most of the complaints that get as far as the OLC will have some merit; otherwise they should have been provided for in-house and resolved. I can certainly envisage circumstances, as indicated by noble Lords, in which a vexatious complainant simply does not accept the efforts that the legal profession—the lawyer—has gone to in an attempt to resolve the complaint and wants either a second opinion from the OLC or otherwise wishes to pursue it. Where a complaint is frivolous or vexatious, an ombudsman would have the power to dismiss it, without consideration of its merits, under Clause 130(3)(a); that is an important element in the Bill. We also recognise that the system of case fees, if not sufficiently sensitive, might unfairly penalise particular areas of legal work or create a potential disincentive to act on behalf of certain clients. Noble Lords did not mention that this evening but I am sure that it is at the back of their minds. We acknowledge this issue. Again, this is why Clause 133 has been drafted to allow the OLC the flexibility to reduce or waive the charge in particular cases, to set different charges for different stages of proceedings and to provide for charges to be refunded in certain circumstances. Taken together, this gives the OLC considerable flexibility to develop a set of rules that operate in an equitable manner. That is the objective. We hope that the system is capable of avoiding disincentives but there is also the question of incentives. That goes back to the previous amendment about ensuring that the power you have can incentivise. We want complaints to be resolved wherever possible in the first instance through legal firms’ procedures. If the OLC were free of charge to respondents, except where the complaint was upheld, we would be reducing the incentive to try to resolve the complaint in-house because it could simply be batted off to the OLC to be dealt with. That cannot be in anyone’s interests: the cost of the OLC would inevitably rise, and that cost would be passed back to all practitioners through the levy, making the costs higher for those who never receive a complaint; we should not forget them in this arrangement. There is an issue of incentive. There are other difficulties with limiting the application of the case fee to complaints that are upheld. First, I do not want the OLC to be open to the criticism that it has a financial interest in upholding complaints and that ombudsmen are not acting fairly and impartially. That takes us to the European Convention on Human Rights. That may sound far-fetched but it is a criticism to which the OLC might be open and, as noble Lords know, perception is very important. The incentive should be for OLC staff to try to conciliate cases and achieve an outcome that parties can agree to as early in the process as possible. A formal determination by an ombudsman is at the end of that process. We believe that the system that we have set up is the right one. The rules are subject to the consultation procedure in Clause 195. They will be developed taking account of the views of the profession. I remind noble Lords that we have already accepted Amendment No. 38 in the name of the noble Lord, Lord Kingsland, which required that Clause 10 will apply mutatis mutandis to representations by proposed regulators, whether in the regulatory or representative capacities. That consultation will have more force as a consequence of my acceptance of that principle. We recognise the points that have been made but believe that to change the Bill in the proposed way would provide the wrong incentives and disincentives and could open the OLC to the perception that it was behaving inappropriately. I hope that I have persuaded noble Lords that we understand the issues but believe that we can capture this in the Bill as it stands.
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- Baroness Butler-SlossCrossbench
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- Is the Minister actually saying to us that she is leaving to the OLC the power to charge an utterly innocent respondent from what will be an unfounded accusation? That seems to be the bottom line of what she has just said.
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- Baroness Ashton of UphollandLabour
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- On the basis of what I have already said about the acceptance of Amendment No. 38 and the force of the consultation with the professional bodies, I am leaving the OLC to set out how it proposes to operate. I have also made it perfectly clear that the framing of the legislation recognises the genuine concerns of either vexatious complaints or an understanding that there will be different circumstances in which different charges should be made. I am not prepared to accept a position where only if a complaint is upheld would one have to pay, for the reasons that I have already given. We believe that that combination of finance—the general levy combined with what has been proposed for complaints that reach the OLC—is right. Very importantly, it does not seek to do other than understand and accept that the reason we need this flexibility is precisely because we want the OLC to be able to say, “In these circumstances we completely waive the charge, refund it, or set it at a much lower level”. It is precisely to do that; that is very important. As I have indicated, if the only way in which the body could get the additional income was to find against a respondent, it would then be open to the charge—I do not suggest that it would do it—that it was in its interests to find against people, and we do not want to be in that position.
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- Lord Lyell of MarkyateConservative
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- I have enormous respect for the noble Baroness. She always thinks and applies her mind very carefully, but I seriously believe that she is quite wrong on this and that she will find she is muddled when she looks at what she has said. However, she has said one thing that is completely right and which should be her lodestar. She said that the objective is that the scheme should be operated in an equitable manner. That is absolutely right. Therefore, to be equitable, it must follow that if a complaint is made against someone which turns out to be unfounded, it would be totally unfair for that person then to be charged the cost of that complaint having been made. Before the noble Baroness intervenes—I can anticipate what she might say—I ask her to reflect on this. She started talking about frivolous and vexatious complaints and the opportunity of the OLC to refund costs, and so on, in certain circumstances. I believe we need to have firmly on the face of the Bill the obligation to do what is fair. I believe that what my noble friend has put forward in his amendments does that in a perfectly straightforward way. Perhaps the noble Baroness wishes to go away and think about other ways of making it perfectly clear that the OLC must be fair. I hope that she will agree that it would be almost impossible to devise a circumstance in which someone had had a complaint made against them which had proved to be unfounded yet it was fair to charge them for that, unless something in their conduct had been unreasonable and had brought the complaint on them. That particular wrinkle might be properly dealt with in rules, but the principle must be set out on the face of the Bill. At the moment it is not and I sincerely believe that the noble Baroness is not quite on the right lines at present.
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- Baroness Ashton of UphollandLabour
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- I am grateful to the noble and learned Lord for being so gallant in the way in which he puts his comments about me not being on the right lines. I think I am, of course, as he will appreciate. Fairness means fairness to all the legal professions that pay towards this, and it means fairness to those who make complaints. I want a situation in which complaints never reach the OLC because they are dealt with properly in-house. If a complaint reaches the OLC, in some circumstances—and only in some circumstances—that may reflect a failure of lawyers to deal with it properly in-house. When other members of the legal profession would have dealt with it properly, I do not see why they should not bear some responsibility, even if the claim is unfounded, for the fact that it reached the OLC at all. I also want to incentivise them to ensure that they resolve matters in-house. I have tried to indicate that if the system is always free at the OLC, unfounded complaints will be sent up to the OLC. I am perfectly willing, as the noble and learned Lord would expect me to be, to look at whether I can capture fairness on the face of the Bill. However, my definition of fairness will be to include all those involved in the process, including those against whom a complaint is never made. I do not disagree with the concerns of the noble and learned Lord that when a complaint is not upheld, people should not incur huge costs, but the ambition is that if complaints get to the OLC, in a sense that means that they have not been dealt with properly in-house, as should be the case wherever possible.
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- Lord Maclennan of RogartLiberal Democrat
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- I find the reply of the noble Baroness almost more disturbing than her initial remarks. She seems to be saying that because the case gets to the OLC, the person who was complained against was in some way responsible. Frankly, that cannot be right. It is wrong to seek to finance or to sustain, or partially sustain, a body of this kind by contributions from people against whom charges have been brought which have not been found to be substantiated. If there is some administrative problem, that is certainly not a cause for levying a charge against an individual. I am bound to say that nothing that the Minister has said so far in the debate gives one any cause for satisfaction that this problem has even been recognised by the draftsman of the Bill. It may not be appropriate to divide the Committee—I do not know the intentions of the noble Lord, Lord Kingsland—but I am bound to say that we shall certainly wish to return to this matter, no doubt following wider consultations. This is such an important issue of principle that the idea that it can be sorted out by schemes that will be drafted by this body and which are not clearly part of the law is a wholly unsatisfactory way of dealing with this.
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- Lord Neill of BladenCrossbench
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- I too was deeply disturbed by the explanation of the noble Baroness. At least twice she spoke of matters getting to the OLC because they had not been dealt with properly in-house. A lot of us say we ought to cash that language. What does “has not been dealt with properly in-house” mean? That would include not caving in and being blackmailed. She shakes her head and looks surprised. On the face of the Bill there is no language at all about this being something that would apply only in circumstances where there was no proper settlement at an earlier stage. That takes one to another line of inquiry, without prejudice—letters, discussions, telephone calls—while this matter is being processed. One is dragged into the whole of that if one goes down that route. I respectfully suggest to her that this really needs to be rethought right from the beginning.
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- Baroness Ashton of UphollandLabour
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- That was not my surprised face; that was my disagreement face. When I talked about the in-house resolution, I was replying to a point made by the noble and learned Lord, Lord Lyell, about fairness. I was very clear in my choice of language and I acknowledged that there could be circumstances in which complaints could have been dealt with in-house but that the procedures in-house were simply not adequate. That was the point that I was trying to make. I was trying to say that fairness is a concept that must incorporate all those involved in the system, whether they have a complaint made against them or not. The consequences of the proposals will have implications for all those people. There will be people who quite understandably will have done their very best to try to solve matters but cannot, and it is completely reasonable that the OLC needs to think about the circumstances that apply to them—precisely the people mentioned by, I think, the noble Lord, Lord Kingsland, such as junior members of the criminal Bar. That issue was raised with me by the Bar Council and, as I indicated to the noble and learned Baroness, Lady Butler-Sloss, in the context of family cases. I do not disagree with the issues raised by noble Lords. I was not seeking to suggest that, just because you cannot resolve a matter in-house, somehow you are guilty of something—far from it. I was simply saying that “fairness” is a concept that incorporates everyone involved in the process. I am perfectly happy to look at how we can capture that. I did not want to give the impression that “fairness” meant only one thing; rather, I was saying that we would have to deal with the question of what it means for everyone involved. The noble Lord, Lord Maclennan, is clearly shaking his head, so I have not satisfied him at all. I am very clear about the principle behind what we are seeking to do here. We cannot capture all this in the Bill because, on the basis of what I have already said about Amendment No. 38, the professions, in conjunction with the OLC, need to be able to be consulted about the circumstances that worry them. The circumstances that noble Lords have indicated are ones that I have heard before, and I am sure that there are others that other members of the legal profession would wish to be taken into account. They would also want to be clear about the circumstances in which charges were waived and so on, so that everyone was clear about the position. That is the right way to proceed in this matter.
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- Lord Lyell of MarkyateConservative
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- I hope that the Committee will forgive me for coming back again; I shall try to be brief. I ask the noble Baroness to look at the situation in employment law, where there is a very well honed path. In employment law, there is no rule that if someone takes an employer to a tribunal and the employer is found to have been right, the employer then has to pay the costs, which is the equivalent of what the noble Baroness suggests. In employment law, there are frequently very sensible settlements at different stages in cases of alleged unfair dismissals and so on. That will happen in any event—I hope that I still have the noble Baroness’s ear—when the proper principles are applied. Those of us on this side of the Chamber are simply arguing that the proper, normal, just and fair principles should apply. The noble Baroness is an experienced Minister and she has a hint of steel within her, but one has to watch for the word “stubborn” as well—something that I have sometimes been accused of. I think that she is off-beam on this matter and I hope that she will continue to reflect on it.
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- Baroness Ashton of UphollandLabour
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- I was not failing to listen to the noble and learned Lord; I was simply welcoming the noble Lord, Lord Thomas of Gresford, who has now joined us for the rest of our deliberations. I wanted to say hello to him and I apologise, but I was listening. I am not being stubborn. I have said that I will look at the issue of fairness and I have tried to indicate the approach that I will take. Of course, I will discuss this with my colleagues who have policy responsibilities, some of whom may take an even steelier view. I have listened to noble Lords and have tried to indicate the approach that we will take. I hope that we can all reflect on that between now and Report and I will have a discussion to see whether I can say more in the Bill that might, at least in part, address the concerns raised.
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- Baroness Ashton of UphollandLabour
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- I am beginning to work out very easily where a vote is coming on Report. I do not think that there are a million miles between us on this. I did not really pick up the point made by the noble Lord, Lord Maclennan of Rogart, and I apologise for that. The point that I was trying to make to the noble and learned Lord, Lord Lyell, was that you could not have something absolute whereby there were never circumstances of any kind in which this could apply. In the Bill, we have tried to create opportunities to waive, reduce or change and so on. I am perfectly happy to see whether there is a kind of upside-down approach that says, “Well, in general you’d want to do this, unless”. The problem with the word “unless” is that one has to try to list the circumstances that might apply. But I shall be happy to look at that, and I am not so foolish or unsupple as to know that my ambition is always to find a way through with legislation, rather than end up with something on which I am voted down. So, with further apologies to the noble Lord, Lord Maclennan, I say again that I will look at the matter. I have no idea whether it is workable in terms of legislation or in terms of those with policy responsibility, but I was trying to make the point that fairness is important.
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- Lord Neill of BladenCrossbench
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- Perhaps I may add a word to this debate. I was interested to hear of the noble Lord’s visit to Scotland to find a precedent. This is in the financial ombudsman’s scheme already. The rules made by the ombudsman, with the approval of the FSA, have exactly this language. Rule 3.8.1(1), as no doubt the noble Baroness knows, says: “In considering what is fair and reasonable in all the circumstances of the case, the Ombudsman will take into account the relevant law, regulations, regulators’ rules and guidance and standards”, codes of practice and so on, and, “good industry practice”. So there is an English precedent for this. The only thing I thought that I might point out is that it has been construed to not mean exactly what you might think it means. To “take into account” means just that—he takes it into account, but is not bound by it. There is a decision, which the noble Baroness no doubt has been briefed on, in which a High Court judge here held that the overriding principle is that the ombudsman must decide what is fair and reasonable and that, if he thinks that the law does not produce that fair solution, what is fair and reasonable takes precedence. I thought that that might be of some interest.
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- Baroness Ashton of UphollandLabour
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- I am grateful to the noble Lord, Lord Kingsland, for raising this issue. There is nothing difficult with the proposition; it is simply a question of whether we set it out in the Bill. Within the ombudsman scheme, we have tried to make sure that the Bill operates in a way that gives us the flexibility that we need. That means that much of the detail about how a determination is made should be left, as we have indicated, to the scheme rules rather than being provided for in the Bill. Rules made by the OLC are subject to the consent of the LSB before they can take effect—that is in Clause 152. We believe that we have safeguards in place to ensure that schemes work and, importantly, operate fairly. So our preference is to leave the matter to be dealt with in rules rather than tying the ombudsman to a list of factors that are either not long enough or too long. The noble Lord, Lord Kingsland, rightly said that the suggested wording is similar to that used in the Legal Profession and Legal Aid (Scotland) Act 2007. But of course there may be factors that the OLC might wish to add or take away from those proposed by the noble Lord. It is probably worth bearing in mind the differences between the ombudsman scheme envisaged by the Bill and the Legal Services Complaints Commission under the Scottish legislation. For example, Ministers do not appoint the ombudsmen who will deal with day-to-day complaints handling, and there is a clear distinction between the OLC and the ombudsmen. We think that it is better to get the OLC and the LSB to decide what factors an ombudsman should take into account when deciding what is fair and reasonable. This is the model of the Financial Services and Markets Act 2000, as the noble Lord, Lord Neill of Bladen, said, which set up the Financial Ombudsman Service. Section 228 of that Act provides for the ombudsman’s determination to be made according to what the ombudsman considers, “fair and reasonable in all the circumstances”, but it leaves any further guidance to the rules, which is what we have sought to do here. The rules provide for the ombudsman to have regard to a list of matters rather similar to those in the noble Lord’s amendment. The model has worked well for the Financial Ombudsman Service and I believe that it will work well for the ombudsman service that we are providing for here. I am convinced that we should not entrench them in the Bill but follow the suggested model in order to achieve in a slightly different way what the noble Lord wants.
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- Baroness Ashton of UphollandLabour
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- I am grateful to the noble Lord. He seeks to give an additional back-up power of direction. Where a respondent has failed to take action under Clause 134(2)(d) or (e) the ombudsman has the power to engage another lawyer to take action. We expect—and I am sure that the noble Lord would agree—full compliance in the vast majority of cases in any event. That is certainly the experience of other ombudsman schemes. Failure to comply would be a disciplinary matter. We have provided enforcement powers so that determinations can be enforced by court order, if necessary, under Clause 138. If I leave that aside, of course it is possible to envisage a situation where the relationship between the lawyer and client has broken down to such an extent that if an ombudsman orders the respondent to redo some work, the respondent may not feel prepared to do it. That would be likely to result in enforcement action and therefore to come to the attention of the relevant approved regulator, so the respondent would have a strong incentive to avoid that. If I leave that likelihood to one side, an ombudsman would want to consider how to make a direction to avoid an outcome that could result in such action being necessary. I think that that is an important point as well. If it is clear that the relationship between the lawyer and client has broken down, the most sensible course of action might well be to award any compensation as appropriate and perhaps to direct that fees be refunded in respect of the work that had not been carried out properly. The complainant would then be in a position to engage another lawyer to do the work. In those sorts of cases that might be the most appropriate solution. In other circumstances where the error could be rectified by the lawyer who first did the work, and there is no evidence of a terribly difficult situation, an ombudsman might very well make a direction under Clause 134(2)(d). But the ombudsman could, in making that direction, also give the respondent a choice. That might be that the respondent either rectify the error or engage someone else to do the work, or secure the rectification of the error by paying the complainant to get another lawyer to do the work. The point I want to make by all that is that there is flexibility in the drafting of Clause 134(2)(d) and (e) to provide for the situation alluded to here. In short, ombudsmen are required to act in compliance with the regulatory objectives. That requires them to make determinations appropriate to the circumstances of the complaints, which they have the flexibility to do. To that extent, the amendment is unnecessary.
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- Baroness Ashton of UphollandLabour
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- Perhaps I can explain a bit further. We must have flexibility in the remedies and I agree that there will be circumstances in which instructing another lawyer to take on the work would be better, for all sorts of reasons. The question is: who engages that other lawyer and who is responsible? The difficulty is that if the OLC engages the other lawyer, it has responsibility for what then happens, which takes it into a different role. I want to avoid that. The flexibility to enable other lawyers to participate is right and proper, but that is in the legislation. I am not spurning the proposal; I am merely saying that the OLC should not have that responsibility itself.
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- Baroness Ashton of UphollandLabour
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- I am not disputing the role that the OLC has to play. We want the OLC to be clear that if the situation requires that someone else must do the work, that should happen. The difference between us is about who then makes the decision on employing the other lawyer. We believe that the complainant should take the responsibility and have the right to say, “I would rather have the money back and employ another lawyer whom I will find”, than have the OLC say, “We, on your behalf, will engage another lawyer whom you do not know or have a say in and we will take responsibility for ensuring that the work is done”. That is different. Yes, the OLC must have control of the process and ensure that it is done, but the question is: if another lawyer is to be engaged, where does that engagement come from? We think that it should be the complainant. The lawyer who is seeking to sort it out might recommend someone to the complainant.
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- Baroness Ashton of UphollandLabour
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- I hope that that would never arise. We envisage that the OLC would say that the obvious solution to the question was for another lawyer to take on the case, and would instruct the lawyer who had failed the complainant to pay the costs of employing another lawyer. Ultimately, the difficulty with what the noble Lord proposes could be that the OLC takes responsibility for finding and hiring another lawyer on behalf of the complainant. Then what? What happens if that goes wrong? What happens if the complainant is dissatisfied or decides that he wants to pursue it? With whom does he pursue the fact that the OLC has brought in another lawyer? The circumstances with which we are trying to deal suggest that either the original lawyer must sort it out and do it properly—there is a whole range of things that he could do—or that another lawyer is engaged. Either the lawyer who has failed must be responsible for working on that or the complainant must be able to find another lawyer and the cost be found. We would change the nature of the OLC if it had to find another lawyer and tell the complainant, “We have found you the right lawyer. Go and get on with it”. If it then goes wrong, to whom does the complainant complain about the OLC?
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- Lord WhittyLabour
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- My amendment in this group accepts some of the arguments of the noble Lord, Lord Kingsland, and would go substantially further by putting the limit at £50,000. Earlier, we were subject to all sorts of cross-references to the financial services sector and its ombudsman. The limit there is £100,000, so I am being relatively modest on possible redress in relation to legal services. There are, of course, arguments about the nature of the firms that operate in this area, and their cost. The key issues are: what is the likely detriment to the consumer in this area that requires a redress on the one hand; and at what level do we have to pitch the maximum potential figure in order to effectively deter such behaviour by others? Of course, for any maximum, even the current maximum, it is unlikely that in many cases the ombudsman would actually award that figure—that would apply whether the noble Lord’s figure is accepted or my figure is accepted. However, we have to bear in mind the fact that, for a large proportion of complainants who complain about lawyers, the complaint relates to a property transaction. For those individuals, a property transaction is by far the biggest financial transaction that they make in their lives. A mistake or negligence on the part of a lawyer in buying or selling a family home, for example, could easily amount to a £50,000 loss to the individual. That is, after all, only about one-sixth of the average price of a house these days. I think, therefore, that £50,000 is not an unreasonable maximum. I hope that it would be very rare for that maximum to need to be awarded, but it is not an unreasonable figure. It would also be a significant deterrent to haphazard dealings in what are—let us face it—regarded in many solicitors’ offices as pretty mundane transactions for conveyancing and other property matters. In these cases, it is quite often a pretty mundane mistake of negligence, which has the effect of causing a significant cost to the client. So I think that the figure of £50,000 is justifiable. I certainly would support the second amendment of the noble Lord, Lord Kingsland, which would build into the Bill a review of whatever final figure we end up with, because such maxima can very rapidly become out of date.
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- Baroness D'SouzaCrossbench
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- I support both amendments, although I would like to up the figure to £100,000. The important point that has been made is that there must be some rationale for it. Certainly, there has been discussion on linking the maximum award to that which is awarded by the financial ombudsman scheme. As I understand it, that figure was agreed by the bodies prior to merger and was apparently arrived at because it was based on the price of an average house. If that were to be translated and used as a rationale in this case, the figure would be a great deal higher than the maximum amount currently under discussion. From the record of the financial ombudsman’s awards, the other important point is that it is rare for anything above a few hundred to be awarded—the maximum is awarded extremely rarely. So perhaps that should be taken into account as well. I think that an unrealistically low limit would deter a would-be complainant who might have an excellent case but who, frankly, would be unwilling to pursue it because the recompense would be too low, possibly too low even to cover the time and cost of registering and pursuing a complaint. Finally, I believe that the Bill should give the OLC sufficient powers to ensure the implementation of any awards that are eventually agreed on.
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Lord Thomas of GresfordLiberal Democrat- Quote
- One has to keep a sense of proportion about all this. If significant and serious loss is caused by the negligence of a solicitor, the proper remedy is to sue in the courts. This sort of compensation is limited to inconvenience or distress caused to the complainant as a result of matters connected with the complaint. The sum of £50,000 would never be awarded in the courts of this country for inconvenience or distress. The most frequent type of award made is for the inconvenience and distress caused by the loss of a holiday. These are all fairly limited sums. The sum of £20,000 is certainly the maximum that has ever been awarded for that sort of distress and inconvenience, so I think that we have to keep a sense of proportion and a limitation on the powers of the ombudsman.
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- Baroness Ashton of UphollandLabour
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- I am grateful to noble Lords for raising this important issue. I have a lot of sympathy with what the noble Lord, Lord Thomas of Gresford, has just said. Indeed, he is absolutely right: if significant redress were needed, one would go to the courts, and it would be right and proper to do so. This scheme is not trying to prevent anybody from doing that—far from it. Of course, people do not accept the determination before they do so, but they have the right to go to court; if there were significant financial loss of the kind that noble Lords have described, that would be exactly the right way to approach it. The key point is that the £20,000 limit is higher than the highest redress level currently operating in the legal services sector. I understand that at the Law Society the level is £15,000. We must also put this in the context of the average award. The Law Society’s average award is £450 and the Bar Council’s is £428—those are based on 2004-05 figures, which are the last figures that I have. We have made provision in the legislation to alter that limit if it seems appropriate. This will need to be used relatively regularly if only to take into account the effects of inflation. We have not put specific time limits on it, because we want to make it flexible enough to enable organisations to say that they think that it should be reviewed to take account either of what has happened or, as I indicated, of inflation. We also want to make sure that the new system beds down and to keep that sense of proportion that the noble Lord, Lord Thomas of Gresford, has referred to. As I indicated, if the ombudsmen are regularly hitting the upper limit, they can recommend that the limit be increased, after, of course, they have done the consultation. It is probably worth explaining, as the noble Lord, Lord Thomas of Gresford, did, what we are describing here, which is the damages element within the £20,000. If the complainant has expenses for bringing the complaint—they have had to travel to a hearing, or they had expenses of copying documents and so on—those expenses can be additionally given back. If there are fees to be paid back because of what has happened, they could be paid back quite separately to the £20,000 limit, in terms of what would be available as damages. It is not the end of the process in terms of the overarching figure; there are other things that people can claim. Having looked across the current position, we think that we have got this about right. There is, as I have indicated, the opportunity to review the figure when the organisations feel that it is necessary to do so: the OLC, the LSB and the Consumer Advisory Panel will be able to make recommendations at any time to alter it. Obviously, there will be powers under the Bill to publish and consult on the recommendations and so forth. On that basis, I hope that the noble Lords will not press their amendments.
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- Lord WhittyLabour
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- Before we finish on this amendment, I would like to correct the noble Lord, Lord Thomas of Gresford. This is not just about inconvenience and distress; it is a way of resolving other issues. Clause 134(2)(c) states that the respondent must, “pay compensation to the complainant of such an amount as is specified in the direction in respect of any loss which has been suffered … or any inconvenience or distress”. It therefore could be related to a financial loss of the order that I have described.
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- Lord Thomas of GresfordLiberal Democrat
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- I have not overlooked that, but it is important that we do not introduce a parallel scheme for the recovery of damages for loss. The courts are there to fulfil that function and it is right that, where there are significant losses, a case should be determined by a judge on proper evidence. This is surely for minor losses, including expenses and so on, and not for great financial loss arising out of, for example, a property transaction that has gone wrong. It is important to remember that the ombudsman has wider powers to make an award simply on his determination of what is fair and reasonable. As I understand it, the suggestion that the ombudsman should not even have regard to what the law states has just been dismissed by the noble Baroness. We have to be careful to keep the ombudsman within a proper framework and not to have a parallel jurisdiction.
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- Lord Neill of BladenCrossbench
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- My problem with what the noble Lord, Lord Thomas of Gresford, has just said is that we then introduce a stark differentiation between the two schemes. The FOS scheme goes up to £100,000 and it is quite admittedly an alternative and parallel system to that of the courts. Why has it been put in place? It is because of the horrific nature of the costs in civil litigation. If you lose an action that lasts for two or three days and you have to pay the costs of both sides, the minimum you are thinking about is £50,000. The costs are enormous. As has been explained in connection with the financial services scheme, the whole point is that it really is a substitute system. For my part, I do not see why there should not be an equivalent in relation to legal complaints.
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- Lord Thomas of GresfordLiberal Democrat
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- My Lords, the observations of the noble Lord, Lord Kingsland, in support of this amendment really make the point I was seeking to make in relation to the last amendment. This is not a suitable parallel procedure to access to justice through the courts. As the Bill is drafted, it is a very one-sided scheme in which the determination of the ombudsman can only be accepted by the complainant because the respondent has no redress, and the costs will fall on the respondent whatever happens. The decision of the ombudsman is what in his opinion is fair and reasonable, and we are going to have a chief ombudsman rather than lots of “injuns” who are ombudsmen as well, so it goes back entirely to the length of the Lord Chancellor’s foot and away from the concept of justice. That is all right when we are dealing with small complaints, hurt feelings and so on but if there is anything serious where, for example, insurance companies would get involved in litigation—as would be the case where negligence claims were brought—then we have a high standard of justice. Yet under this scheme as drafted, the Act is really designed for small matters.
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- Lord WhittyLabour
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- I must vehemently oppose this amendment. The last two groups have seriously underlined a philosophical difference between the Opposition Front Benches and what I understood to be the original consumer-protection focus of the Bill. The whole point of ombudsman systems in other sectors is to have a disputes resolution process that avoids going through the full paraphernalia of the court. The amendments debated recently seem to suggest that we must, as far as possible, try to shove all these disputes back into the court system, but that is to the clear detriment of the consumer. The logic of the point from the noble Lord, Lord Thomas of Gresford, is that the bigger the complaint then the more difficult we want to make it for the consumer to pursue it through alternative, more informal forms of dispute resolution. That is not a tenable position. Other amendments have been tabled here relating to the possibility of having an independent review process. I am not sure what I feel about that, but it is certainly more in keeping with the ombudsman approach than one saying that the automatic form of appeal is to go to the High Court. I add that, looking at the precise detail of this amendment, it is only the respondent who has the right to appeal to the High Court—or so it reads at the moment—so all talk of fairness is eliminated for me. Clearly, we cannot exclude the possibility of judicial review; that exists in all such processes. Yet to make it clear, frankly, to lawyers that there is another almost automatic ability to appeal to the High Court, if the case goes against you, seems to get to the spirit of providing an easier method of consumer redress than presently exists.
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- Baroness Butler-SlossCrossbench
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- If we are not to have recourse to the High Court other than by judicial review, it makes it the more important to leave the figure at £20,000 and not to make it any greater.
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- Lord Thomas of GresfordLiberal Democrat
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- I support that. I have no objection to an ombudsman scheme at all, so long as it does not deal with large sums of money or put one party or another at considerable disadvantage. The purpose of the ombudsman scheme is to right wrongs that have been committed by lawyers, and if they are serious wrongs then they should be dealt with seriously. If it is a totally one-sided forum, as the ombudsman scheme is, and if the ombudsman’s determination is—as I have already said—on the basis of what he thinks fair and reasonable, and only the complainant can accept it, then it must be kept small and not allowed to extend beyond its proper bounds. I am not against an ombudsman scheme, providing it is within limited bounds.
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- Lord Lyell of MarkyateConservative
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- I support my noble friend Lord Kingsland in raising an amendment that explores an important point. This is really a question of whether you get the full supervision—and, if necessary, correction—of the High Court or the valuable but incomplete supervision that comes from judicial review. The noble Lord, Lord Whitty, need not worry that everything will get pushed off to the High Court. The number of cases that would be appealed by a lawyer found liable by the ombudsman, be he barrister or solicitor, would be few and far between. As tribunals can go seriously wrong there is a possibility that, as my noble friend said, they can sweep over from the individual complaint—on, let us say, competence, which may have caused some financial loss—to a disciplinary matter. Consequently, it can affect somebody’s very livelihood and their right to practise. There is a strong case for saying that we ought to consider carefully whether there should be no right of appeal, and in that spirit I support my noble friend’s amendment.
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- Baroness Ashton of UphollandLabour
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- As noble Lords know, we looked at these issues before and after the Joint Committee on this Bill produced its report, and we have reconsidered them in the light of the recent Joint Committee on Human Rights report. I should perhaps indicate to your Lordships that I am responsible for human rights in any event; therefore I am concerned to ensure that we address these issues whenever they are raised by that Joint Committee. The Joint Committee on the Bill concluded that there should be an internal appeals mechanism. In our reply to it, we said that we thought the OLC would operate an internal review mechanism but that we did not want to set that out in the legislation. We envisage a form of internal review modelled on that of the Financial Ombudsman Service, reflecting best practice that has been agreed with the British and Irish Ombudsman Association. That is the best way to approach that review. On compatibility with the European Convention on Human Rights, we need to distinguish between the OLC and the ombudsman scheme. The OLC will not determine complaints but will be the independent, non-governmental body responsible for the appointment of the chief ombudsman and assistant ombudsmen who are responsible for making determinations. In Clause 119(8), the Bill explicitly requires the chief and assistant ombudsmen to be appointed, “on such terms and conditions”, as are “consistent with ensuring” their “independence”. Provided that the ombudsmen are independent and impartial, and the scheme’s procedure for handling complaints complies with the rights guaranteed by Article 6.1, then the article does not require a right of appeal. The provisions in Part 6 are based on those that established the Financial Ombudsman Service, which remain unchallenged on that point. I am therefore satisfied that Part 6 is compliant with Article 6. I can confirm to the noble Lord, Lord Kingsland, that judicial review is available in the circumstances that he would expect, and that an ombudsman’s findings would not be binding in subsequent disciplinary cases. We do not believe that that is what Clause 137(11) does; that is certainly not our intention. On that basis, I hope that he will be able to withdraw the amendment.
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Baroness CrawleyLabour- Quote
- I beg to move that the House be resumed. In doing so, I suggest that the Committee stage begin again not before 8.40 pm. Moved accordingly, and, on Question, Motion agreed to. House resumed.
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