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Amendments 51 to 72 bring the provisions relating to a category 1 regulator’s exercise of its regulatory functions by an independent regulatory committee established and maintained by the regulator, in line with the equivalent provisions in the Solicitors (Scotland) Act 1980, which apply to the Law Society’s committees. The amendments reflect engagement with the Law Society.

Taken together, the effect of amendments 51, 52 and 53 is to require rather than allow the regulatory committee to determine its composition, governance arrangements and priorities in accordance with the bill. Amendment 54 ensures that a regulatory committee can continue to delegate its functions.

Amendment 64 allows sub-committees to delegate any of their functions to an individual, such as a member of staff. Delegation to a sub-committee, or onwards to an individual, is subject to some exceptions relating to the regulatory committee’s function of making regulatory rules and decisions around complaints.

Amendment 56 introduces a requirement on a regulatory committee to maintain and publish a document setting out its composition, governance arrangements, regulatory functions and procedures and any arrangements for the delegation of functions.

Amendments 57 and 58 limit the consultation requirement on the regulatory committee to consult the governing body of the regulator to only those cases where the committee is making a “material” change to its governance arrangements, rather than a less significant change to either its structure or governance arrangements.

Amendments 60 to 63 make changes to the rules and requirements relating to the composition, membership and procedure of regulatory committees, with amendment 59 making a minor technical change to clarify the meaning of section 53(3).

Amendment 65 removes the requirement to include in the annual report a summary of decisions to pay out professional indemnity insurance, to reflect concerns raised by the Law Society that it is the insurance provider and not necessarily the regulator that has access to that information.

Amendments 66, 67 and 69 increase the range of material that must be included in a category 1 regulator’s annual report to include information about the number of complaints and regulatory waivers. Amendment 68 is consequential on the transfer of the powers from the Scottish ministers to the Lord President under section 20, to take specified measures in relation to a category 1 regulator.

Following engagement with legal stakeholders, amendment 70 removes the requirement on a category 1 regulator or its regulatory committee to consult the Lord President when preparing an annual report. Instead, amendment 71 will require the regulator to send a copy of the report to the Lord President as well as publishing it.

Amendment 73 is clarificatory and makes minor changes to the interpretation provision in section 13(7), setting out how conduct and regulatory complaints are to be construed, and clarifying that a regulator’s “reporting year” means a 12-month period that coincides with the regulator’s financial year.

Section 14 of the bill requires a category 1 regulator to establish and maintain a compensation fund. It also gives the Scottish ministers the power, by regulations, to make further provision in connection with the fund or the fund rules. Reflecting engagement with legal stakeholders, amendment 74 will restrict the exercise of that ministerial power to cases where the Lord President, a category 1 regulator or the consumer panel has requested them to use it. The amendment specifies the information that must be included with such a request and sets out who must be consulted before such a request is made and when the Lord President’s agreement must be secured, as well as what information must be given to the Lord President when seeking their agreement.

Amendment 75 makes regulations that are made under the ministerial power subject to the affirmative procedure. It aligns with schedule 1, paragraph 6, which inserts section 43A, in respect of the Law Society of Scotland’s guarantee fund, into the Solicitors (Scotland) Act 1980. That is a delegated power that is subject to the affirmative procedure.

Section 16 requires a category 2 regulator to prepare and publish online an annual report on the exercise of its regulatory functions. The section also specifies the information that the report must include. Amendments 76 and 77 require additional information to be included in the report.

Amendment 78 makes a consequential change to section 16(2)(g) to reflect that amendment 112 changes section 20 of the bill to allow the Lord President rather than Scottish ministers to take specified measures in relation to the performance of a category 1 or category 2 regulator. Under section 16, the annual report must include details of the steps that are taken by the regulator to comply with any such specified measures.

Amendment 79 exempts the Faculty of Advocates as a regulator from the requirement to include a statement in the report that indicates whether it considers it has been assigned to the correct category in line with the adjustments to section 8.

Amendment 80 requires a category 2 regulator to consult the consumer panel when it is preparing an annual report in order to ensure that consumer interests are considered.

Amendment 81, which was included following engagement with stakeholders, makes it a requirement for a category 2 regulator to send a copy of its annual report to the Lord President in addition to publishing it.

Amendment 82 clarifies that a “conduct complaint” is to be construed in accordance with part 1 of the Legal Profession and Legal Aid (Scotland) Act 2007 in respect of a category 2 regulator annual report.

Amendment 83 changes the definition of a “reporting year” to mean, in relation to a category 2 regulator, a 12-month period that coincides with the regulator’s financial year.

The other amendments in the group expand on the information that a regulator must hold about members in its register, as required under section 17 of the bill. They also widen the definition of “professional liability” in the bill to bring it more in line with the definition in the Solicitors (Scotland) Act 1980.

Amendments 84 to 88 and amendment 90 expand the information that is required to be held by regulators on the mandatory register about its members. In order to provide further transparency about the outcome of disciplinary action, that includes information about the business address, any sanction resulting from disciplinary action, suspension and what is required after a period of suspension has been lifted. Those amendments were included following engagement with stakeholders.

Amendment 89 allows the regulator to decide what additional information the register may contain, as it considers appropriate.

Amendments 91 and 92 widen the definition of “professional liability” as set out in section 18(7) on professional indemnity insurance to include former legal services providers and cover other services, in addition to legal services, which form part of the professional practice of the solicitors or qualifying individuals within the legal business that provides the legal services. The definition draws on some elements of the definition in the 1980 act.

I move amendment 51 and ask members to support the other amendments in the group.

Amendment 51 agreed to.

Amendments 53, 52 and 54 to 58 moved—[Siobhian Brown]—and agreed to.

Section 9, as amended, agreed to.

Section 10—Regulatory committee: composition and membership

Amendments 59 to 62 moved—[Siobhian Brown]—and agreed to.

Section 10, as amended, agreed to.

Section 11—Regulatory committee: lay and legal members

Amendment 63 moved—[Siobhian Brown]—and agreed to.

Section 11, as amended, agreed to.

Section 12—Regulatory committee: convener, sub-committees and minutes

Amendment 64 moved—[Siobhian Brown]—and agreed to.

Section 12, as amended, agreed to.

Section 13—Annual reports of category 1 regulators

Amendments 65 and 66 moved—[Siobhian Brown]—and agreed to.

Section 20 currently allows Scottish ministers to intervene in the event of concerns being raised that a regulator is failing to exercise their regulatory functions in a way that is compatible with the regulatory objectives, and to take certain specified measures. Amendments 112 to 116 and 118 to 120 have the effect of transferring that power from the Scottish ministers to the Lord President. Although the regulation-making power allowing the Scottish ministers to specify intervention measures that may be taken other than those already provided for is retained in section 20(6), amendment 122 ensures that both the Lord President and other stakeholders have a greater role in the process. That amendment provides that the Scottish ministers can exercise the regulation-making power only at the request of the Lord President, who must, before making such a request, consult regulators, the consumer panel and other persons considered appropriate, as well as adhering to certain publication requirements. Those provisions will ensure an appropriate level of stakeholder involvement in the exercise of the delegated power.

The amendments to section 20 have been welcomed by both the Law Society and the senior judiciary in their recent correspondence to the committee. The amendments alter the sanctions available, with amendment 117 removing the ability to impose a financial penalty from the measures available to the Lord President.

Amendments 68, 121, 146, 310 and 311 make consequential changes to provisions in the bill. Amendment 123 makes a small technical change.

Section 19, together with section 20, provides an important mechanism so that there is a process for review of regulatory performance if concerns are raised about a regulator not upholding the regulatory objectives, with a process allowing specified intervention measures to be taken following such a review.

Amendments 93 and 94 reflect the change of powers to the Lord President that have already been discussed.

Amendments 95 to 99, 101 and 106 to 111 make further changes to alter the bodies that may seek a review of the performance of a legal services regulator, the criteria for a review, the process for conducting a review and the types of things that a performance review can include.

Amendment 99 makes a technical change to clarify that a regulator must provide information about performance when requested to do so by the Lord President in connection with a performance review or a decision as to whether to conduct such a review. Amendment 100 requires that information to be provided within 28, rather than 21, days.

Amendments 102 and 104 insert new provisions into the bill to impose duties on persons other than the relevant regulator in relation to information that they hold relating to the performance of that regulator. That will ensure that the Lord President has all the necessary information available when conducting a review.

Amendment 105 allows the Lord President, when a regulator has failed to provide the information within 28 days, to add such a failure to the existing review. However, the regulator must be given an opportunity to respond to the Lord President’s proposal.

Amendment 103 requires the Lord President to consult such bodies as are considered appropriate in conducting a review of performance.

Amendment 109 requires the Lord President to also send a copy of the report to the relevant regulator and to any requesting body, and amendment 110 requires the Lord President to inform a body that has requested a review of any decision not to conduct such a review.

Amendments 98, 101, 106, 107, 108 and 111 make consequential changes.

Amendment 459 inserts new section 86A into the bill. The new section allows the Lord President to make rules in connection with the exercise of their functions under part 1 or 2 of the bill. Before making rules, the Lord President must consult the consumer panel and each category 1 and category 2 regulator.?

The Lord President is required to publish the rules, once finalised. That transparency provides a check on the exercise of the Lord President’s power.?

I will move on to discuss technical amendments that reflect the substantive changes that have been made to sections 19 and 20 in relation to powers being with the Lord President.

Amendment 147 enables the Lord President to direct a new regulator, or any regulator that acquired rights for its members to provide legal services—other than rights to conduct litigation and rights of audience—under the 1990 act, to change its regulatory scheme in the manner directed by the Lord President. In other cases, the amendment provides that the Lord President can ask Scottish ministers to make regulations to make provision to change the regulatory functions or the way in which those functions are exercised.

Amendments 148 to 152 are consequential or technical amendments, as are amendments 156 to 178, with the exception of amendment 169.

Amendment 169 requires the Lord President, when proposing to remove all the regulatory functions of either an accredited regulator or of a body that has acquired rights for its members to conduct litigation and has acquired rights of audience, to give notice of that intention to authorised providers and to consult them.

I move amendment 68 and ask members to support the other amendments in the group.

Amendment 68 agreed to.

Amendments 69 to 73 moved—[Siobhian Brown]—and agreed to.

Section 13, as amended, agreed to.

Section 14—Compensation funds

Amendments 74 and 75 moved—[Siobhian Brown]—and agreed to.

Section 14, as amended, agreed to.

Section 15 agreed to.

Section 16—Annual reports of category 2 regulators

Amendment 76 moved—[Siobhian Brown]—and agreed to.

There has been a lot of engagement with the Lord President regarding waivers, so we would have to engage further with him if we were going to change anything, going forward. I suggest to Mr O’Kane that, as we move to stage 3, I would be happy to look at how we can strengthen the provision to make him feel more comfortable.

Amendment 179 agreed to.

Amendments 180 to 188 moved—[Siobhian Brown]—and agreed to.

Amendment 543 not moved.

Section 21, as amended, agreed to.

Section 22—Powers to amend or revoke directions

Amendments 189 and 190 moved—[Siobhian Brown]—and agreed to.

Amendment 544 not moved.

Section 22, as amended, agreed to.

Section 23—Reports on directions

Amendment 191 moved—[Siobhian Brown]—and agreed to.

Section 24—Register of directions

Amendments 192 to 199 moved—[Siobhian Brown]—and agreed to.

Amendment 545 not moved.

Section 24, as amended, agreed to.

Section 25—Right to provide legal services

Amendments 455 and 456 amend respectively the new offences of taking or using the title of lawyer, or of pretending to be a regulated legal services provider. The amendments will increase public protection with regard to the term “lawyer”, as false use of the term will now be an offence without also having to commit intent to deceive. Likewise, a person can no longer falsely advertise that they are regulated.

Public polling by the Government and the Law Society has shown support for the title of lawyer being given the same protection as solicitor. That was considered important in order to protect the consumer, who might not understand the distinction between the two when seeking legal services from a regulated professional.

The committee has also heard anecdotal evidence of solicitors being struck off and subsequently providing unregulated legal services to the public under the title of lawyer. We view that there is a public protection concern in such cases.

Amendment 457 makes changes to section 84 to make it an offence for a person who is not a member of the Faculty of Advocates to, without reasonable excuse, take or use a name, title, addition or description implying that the person is a member of the faculty. Currently, a person commits an offence only if the person pretending to be an advocate does so with intent to deceive, and the amendment means that there is no longer any need to prove intent to deceive for the offence to be committed.

Amendment 250 widens the offence of pretending to exercise acquired rights to include any false claim of authorisation without a reasonable excuse, not just those made with the intent to deceive.

Amendment 458 alters the power for the Scottish ministers to make regulations to amend section 32 of the 1980 act to make provision for, or in connection with, its being an offence for an unqualified person to draw or prepare certain documents or provide certain other legal services.

Instead of being able themselves to initiate the regulation-making power, Scottish ministers will be able to exercise such a power only following a request to do so from the Lord President, a regulator or the consumer panel. Prior to making a request, the requesting body must consult the bodies in the list other than itself and secure agreement with the Lord President. The amendment seeks to add an approval mechanism for the Lord President before the Scottish ministers can seek to make regulations in that area.

I move amendment 250 in my name and I ask that members support all amendments in the group.

Yes, after engagement, we decided that amendment 40 is the right way forward.

Amendment 1 agreed to.

Amendments 2 to 4 moved—[Siobhian Brown]—and agreed to.

Section 1, as amended, agreed to.

Section 2—Regulatory objectives

Amendments 38 and 39 moved—[Siobhian Brown]—and agreed to.

Section 2, as amended, agreed to.

Section 3—Application of the regulatory objectives

Amendments 40 to 42 moved—[Siobhian Brown]—and agreed to.

Section 3, as amended, agreed to.

Section 4 agreed to.

Section 5—Power to amend the regulatory objectives and professional principles

Amendment 43 moved—[Siobhian Brown]—and agreed to.

Section 6—Meaning of “legal services” and “legal services provider”

Amendments 44 and 45 moved—[Siobhian Brown]—and agreed to.

Section 6, as amended, agreed to.

Section 7—Meaning of regulatory functions

Amendment 46 moved—[Siobhian Brown]—and agreed to.

Section 7, as amended, agreed to.

Section 8—Regulatory categories

Good morning. I will make a few remarks before we turn to amendment 1. We have an extraordinarily large number of amendments before us, so I intend to keep my remarks as short as possible to provide the committee with the information that members need while ensuring that we can proceed in a timely manner to deal with them all. I am happy to answer any questions that members have.

I also want to thank all those who have engaged with the bill and supported the development of the amendments that I have lodged. I want to take the opportunity to note the constructive engagement that I have had, in considering all the amendments, with the Lord President and the senior judiciary, the Law Society of Scotland, the Faculty of Advocates, the Scottish Legal Complaints Commission, the consumer panel of the Scottish Legal Complaints Commission and the bodies that are represented on it.

Draft amendments were shared with the senior judiciary, and I have reflected carefully on their comments. I note the comments of the Lord President in his letter to the committee on 23 December, in which he notes:

“Our significant ... concerns have been addressed”

and that

“the senior judiciary are broadly content with the amendments lodged”.

I also welcome the comments of the Law Society in its letter to the committee on 10 January, in which it shares that view. I hope that the committee and stakeholders are reassured by those comments and that they can support the amendments.

I acknowledge that the bill has attracted differing views from stakeholders; we have had to balance those differing views as we aim to modernise the regulatory system. If the amendments that are proposed at stage 2 are agreed, the bill will achieve the right balance, by delivering the priorities of the stakeholders and a modern, more flexible regulatory system.

I turn to amendments 2 and 43. The Law Society of Scotland, the Faculty of Advocates and the senior judiciary raised concerns at stage 1 about the provision in the bill that conferred powers on the Scottish ministers. The Scottish Government absolutely recognises the importance of an independent legal profession and is committed to upholding that independence. The intention has been that the bill would protect the independence of the legal profession while introducing greater transparency and accountability with regard to the profession’s duty to work in the public interest.

I wrote to the committee in September 2023 to say that I would lodge amendments to remove the references to the Scottish ministers that caused concern, and I confirmed that again in my response to the stage 1 report. Amendments 2 and 43 are the first of a number of amendments that remove that provision, and the committee has been provided with a list that highlights those amendments. As this is the same change throughout the whole bill, I will not repeat the reasoning in each group.

Amendment 43 will remove section 5 of the bill, which would have conferred a delegated power on the Scottish ministers to amend the objectives of legal services regulation and the professional principles to which persons providing legal services should adhere. Amendment 2 is consequential to that change.

Amendment 3 makes a change to section 1, removing the reference to the ministerial powers in sections 19 and 20. It is consequential on amendments to those sections that have the effect of transferring the powers under those sections from the Scottish ministers to the Lord President.

Amendments 1, 4, 38 to 41 and 46 are technical amendments to clarify the language in places in part 1 of the bill. Amendment 42 adds the Scottish Solicitors Discipline Tribunal to the list in section 3(5) of named regulatory authorities to which the regulatory objectives apply. Following discussion with Scottish Mediation, amendments 44 and 45 clarify the meaning of the term “legal services” to ensure that the definition does not include alternative dispute resolution activities.

I ask members to support the amendments in this group.

I move amendment 1.

Amendment 236 is linked to amendments in group 8 that remove the role of Scottish ministers from the process of acquiring and exercising the right to provide legal services. The amendment removes the involvement of the Scottish ministers in respect of any application enabled under section 31 by an accredited regulator to surrender its acquired rights. Amendments 238, 239, 242, 243 and 244 are consequential. Applications are to be made to the Lord President alone.

Amendment 240 inserts new subsection (2A) into section 30, making particular provision where an application is to surrender all of the regulator’s acquired rights. The consultation undertaken by the regulatory body under subsection (1A) must seek the views of the body’s authorised providers about whether a majority of those providers would like another regulator to authorise them to exercise and regulate their rights or to form a body and to submit an application under section 25 to seek accreditation to authorise them to exercise and regulate their acquired rights.

Amendment 245 provides that the direction-making power under section 30 is exercisable by the Lord President acting alone, rather than together with the Scottish ministers. Amendments 246 and 247 provide that those directions can be varied or revoked by the Lord President.

Amendment 248 makes changes to the conditions and process of granting an application to surrender some or all of the acquired rights, placing publication and notification requirements on the Lord President

Amendment 249 provides that, where all a regulator’s rights are to be surrendered, the Lord President’s notice may provide that the notice takes effect either when the regulator’s legal services providers are authorised by a new regulator or when the providers form a new body and that body becomes an authorised regulator.

Section 34, on revocation of acquired rights, allows Scottish ministers to revoke the approval of an application under section 29 when it appears to them that the body that made the application had failed to comply with a direction under section 33.

Amendments 264, 265, 266 and 269 reflect the shifting of the role to the Lord President alone.

Amendments 267 and 268 set out the notification, publication and consultation steps that the Lord President must take when they wish to revoke the approval.

The bill grants ministers the power to intervene by establishing a new regulator, transferring rights to another regulator, or, if necessary, assuming direct regulatory responsibilities themselves.

Amendment 270 transfers the responsibility and authority to the Lord President. In the new section that it introduces, powers are given to the Lord President to seek appropriate arrangements where an accredited regulator is a discontinuing regulator. That will involve consulting each authorised provider to determine, in particular, whether a majority of the authorised providers would like another regulator to authorise and regulate them. If the majority is in favour of another regulator authorising and regulating the providers, the Lord President, where the new receiving regulator is an accredited regulator or a body that has had an application granted under section 25 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990, can amend the regulatory functions of the receiving regulator to enable it to regulate the authorised providers of the discontinuing regulator.

In any other case, the Lord President can ask the Scottish ministers to make regulations subject to the affirmative procedure to amend the functions of the receiving regulator. As noted with the previous group, the Lord President and the Law Society have welcomed these amendments.

I move amendment 236 and ask that members support the amendments in the group.

Amendment 236 agreed to.

Amendments 237 to 249 moved—[Siobhian Brown]—and agreed to.

Section 31, as amended, agreed to.

Section 32—Offence of pretending to have acquired rights

The Scottish Government recognised the differing views on the primary recommendation in Esther Roberton’s report, so it committed to seeking a wide range of views through consultation to inform the shape and extent of the reform. The bill takes a proportionate approach that seeks to balance and deliver the key priorities of all stakeholders, and it has been shaped by the responses to the consultation. As I said in my opening statement, we have had to balance those differing views as we aim to modernise the regulatory system.

The consultation highlighted that views were evenly split between support for and opposition to the primary recommendation. However, it is important to state that there are many areas where there is broad agreement between stakeholders, such as the introduction of entity regulation, protections around the title lawyer, and improvements to the complaints system. It is agreed on both sides of the polarised debate that reform is long overdue and is needed through the bill.

The bill will require that regulators of legal services exercise regulatory functions independently of other functions and activities. By removing complaints handling from regulators, the bill reflects the position that 60 per cent of the respondents supported, retaining and improving the current position in respect of responsibility for complaints handling. It was considered important that the body that is responsible for setting the rules deals with conduct complaints in relation to failure to adhere to those rules.

The SLCC will remain the single gateway for all legal complaints against legal practitioners for consumers of legal services, with a limited exception. When a complaint is identified by a regulator, it will be able to investigate it immediately.

The bill will introduce a more efficient and flexible system to allow complaints to be dealt with more swiftly. The Scottish Government has given very careful consideration to which bodies should have responsibility for investigating conduct, services and regulatory complaints. Although there is general agreement that improvement is needed, there is again significant divergence in views on what that improvement should look like. I think that everybody appreciates the need to find a balance as the bill progresses.

The bill retains a multi-agency approach, but it introduces changes that will vastly simplify and strengthen the process to the benefit of consumers, practitioners and the bodies that are responsible for handling complaints. The bill establishes a new legislative framework that will allow the SLCC to design its own flexible and responsive complaints system. It is intended that a proportionate system will be created for processing complaints. The bill will also remove steps in the current system that slow down the investigation of complaints by allowing the Law Society and the Faculty of Advocates to raise a complaint and directly investigate it without first going through the SLCC in certain circumstances. The introduction of those new systems, as well as the new ability for the SLCC or the regulator to initiate its own complaints, will be hugely beneficial for consumers and practitioners alike.

The Scottish Legal Complaints Commission currently has a role in monitoring trends in legal complaints and making regulations with which the regulator does not have to comply. The bill will build on that in providing greater independent oversight of complaints handling by allowing the SLCC to set minimum standards in consultation with the regulators and the Lord President. That will ensure consistency and best practice in the way that complaints are handled and it will mean that consumers should receive redress as quickly as possible and that fewer complaints should reach the SLCC.

Setting minimum standards for regulators will also improve the experience for those who have a complaint to lodge and for practitioners. The committee heard evidence from Rosemary Agnew, the Scottish Public Services Ombudsman, that that approach is best practice.

I appreciate that, in this part of stage 2, we are focusing a lot on removing ministerial powers and on all the legal aspects of the bill. In future sessions, we will consider how consumer interests are strengthened and improvements to the complaints system. The voice of the consumer will be placed at the heart of legal regulation by the expansion of the consumer panel’s remit. The panel will be able to make recommendations on, for example, client relation rules and price transparency. The introduction of the consumer principles will reinforce that, as the bill will require that the views of consumers are understood and taken into account.

I note the concerns that the Law Society raised in its letter of 17 January, in which it advised that the problems in the complaints system today are not because of who regulates but stem from complex, cumbersome and confusing processes that are required by statute. I have lodged a significant number of amendments that have been developed following engagement with the bodies that are involved in the complaints system, and they will streamline and deliver a more proportionate and flexible system to better serve legal practitioners and consumers. I will speak to those amendments when they are debated in subsequent groups.

I will address one of my concerns with Tess White’s amendments. At the moment, the Court of Session is responsible for the regulation of advocates, so we would undermine that court if we agreed to her amendments. That is just one of my concerns. However, I am very happy to discuss with Tess White before stage 3 how we can strengthen the consumer’s voice, which I am trying to do with my stage 2 amendments that we will discuss further down the track.

These amendments relate to part 2 of the bill, which makes provision for category 1 regulators to authorise legal businesses to provide legal services. Amendments 273 and 642 extend the definition of an authorised legal business to include business entities that are owned by a solicitor or solicitors jointly with a person or persons who are regulated by a category 1 regulator and clarify that a business may be wholly owned either directly or through one or more other bodies, or partly directly and partly through one or more other bodies. These amendments address a concern that was raised by the Law Society that various types of business entities are not covered by the provisions.

It is an offence under section 39, liable to a £20,000 fine, for a person to own or operate a legal business that provides legal services to the public for a fee, gain or reward without that business being authorised under part 2 of the bill. The Scottish ministers have the power to change the amount of the fine by regulations, and amendment 274 requires them to consult each category 1 regulator and other persons considered appropriate before making such regulations and to publish any responses to the consultation.

Amendment 275 has the effect of treating a sole solicitor, a firm of solicitors, an incorporated practice and a multinational practice, all as defined in the Solicitors (Scotland) Act 1980, as authorised by the Law Society of Scotland to provide legal services to the public for a fee, gain or reward on the coming into force of the section. This amendment meets a request by the Law Society of Scotland for existing authorised legal businesses to be passported into authorisation when the relevant provisions of the bill commence, so that existing legal businesses are deemed to be authorised rather than all of them having to go through the authorisation process at the same time.

Section 40 introduces the offence of taking or using

“any name, title, addition or description implying that the person is an authorised legal business”

or otherwise pretending

“to be an authorised legal business”

with the “intent to deceive”. Amendment 276 removes the “intent to deceive” ground for the offence and replaces it with the words, “without reasonable excuse”. That aligns with our discussions with the Law Society in respect of the offence of pretending to be regulated.

In response to the views of the Law Society, amendment 277 imposes a new requirement on the Scottish ministers to consult each category 1 regulator and other persons considered appropriate before making regulations to increase the maximum penalty for an offence of pretending to be an authorised legal business and to publish responses.

Section 41 requires a category 1 regulator to prepare and operate a set of rules to authorise and regulate legal businesses, which are referred to in the bill as “ALB rules”. Amendment 279 expands what legal business and legal services ALB rules may relate to by including services—other than legal services—that form part of the professional practice of solicitors or individuals that are regulated by a category 1 regulator within a legal business.

Amendment 280 transfers to the Lord President—rather than the Scottish ministers—the power to approve an amendment to ALB rules. Amendment 281 restricts the requirement to consult about changes to ALB rules to apply only in cases where the change is “material”. Amendment 283 requires the consultation response to be submitted with the amendment of the rules sought by the regulator. Amendment 282 makes a consequential change.

Section 41(2)(c) confers power on the Scottish ministers to specify in regulations such other regulatory matters that ALB rules are to deal with. Amendments 284 and 285 provide that the Scottish ministers may exercise that power only when requested to do so by the Lord President, the consumer panel or a category 1 regulator. The provisions also specify the process in respect of consultation and for obtaining the Lord President’s approval.

Amendment 288 provides that regulator rules for authorising legal businesses may make provision about imposing or varying the conditions or restrictions that apply to existing authorisations.

Amendment 291 adds to the list of things that authorisation rules can be about, to include

“circumstances in which an authorised legal business may surrender its authorisation”.

Amendment 289 means that

“renewal of a legal business’s authorisation”

is no longer one of the particular matters that the authorisation rules must include. Amendments 293 and 298 are consequential to that.

Amendment 292 removes examples of particular fees that may be covered by authorisation rules, such as a fee for renewal, leaving a general provision, which states that authorisation rules can be about chargeable fees.

Amendment 295 provides that authorisation rules can include

“rules or arrangements relating to the continued authorisation ... of a legal business that is a partnership other than a limited liability partnership if ... a person ceases to be a partner ... or ... a person is admitted as a partner”.

The purpose of amendment 295 is to provide clarity regarding such arrangements, following a request by the Law Society.

Both amendments 296 and 297 amend section 43 to recognise a right of appeal to the sheriff by an authorised legal business against a regulator’s decision after an internal review. Amendment 299 provides that the sheriff may

“impose, vary or revoke conditions or restrictions”

in relation to that appeal.

Section 45 allows practice rules under section 44 to provide for the imposition of a financial penalty. Amendments 301 and 302 provide for

“the withdrawal of the imposition of a financial penalty”

where the regulator considers that it is not reasonable to seek payment of it.

Amendment 303 provides that the regulator can recover from the authorised legal business the reasonable cost of collecting any financial penalty that is imposed on the business. The purpose of amendment 303 is to allow the regulator to recover the costs that they incur when collecting any financial penalty from an authorised legal business.

Section 45(2) of the bill allows the Scottish ministers to specify, by regulations, the maximum amount that the financial penalty can be. Amendment 304 requires the Scottish ministers, before making such regulations, to consult the category 1 regulator—and other persons or bodies that they “consider appropriate”—and to publish the responses.

Amendment 305 provides that the Scottish ministers can make such regulations in respect of reconciling different sets of regulatory rules only if they have received a request from the Lord President, a category 1 regulator or the consumer panel, which has undertaken a period of consultation and has included with the request information about the consultation responses that have been received. Following the request, the requester must publish the documents that are included in the request.

Amendment 308 requires the Law Society to seek approval for its first ALB rules under the bill.

Amendment 309 removes section 49, which would have allowed Scottish ministers to intervene to establish a body

“with a view to it becoming a category 1 regulator”

or allow for direct authorisation by ministers. I wrote to the committee in January last year, accepting that the

“risk of the Law Society of Scotland being unable to operate its regulatory functions as a category 1 regulator is ... low”,

and again in April, undertaking to

“lodge an amendment at Stage 2 to remove section 49.”

Amendments 271, 272, 278, 286, 287, 290, 294, 300, 306 and 307 are on minor technical and consequential points.

As I mentioned when speaking to group 7, on special rule changes, Paul O’Kane’s amendment 556 in the current group is not a full replacement for the special measures approach to be taken, as it would apply only to legal businesses and not to all legal services providers. As I said previously, that would leave a gap with regard to the Faculty of Advocates and the Association of Construction Attorneys, so unfortunately I cannot support it.

With regard to what Pam Gosal and Paul O’Kane seek to do through amendments 549 to 556 and amendment 641, amendments 273 and 642 in my name will cover a mixture of a legal business as wholly owned by either solicitors or qualifying individuals and will cover registered foreign lawyers where appropriate. My amendment 275 will also address the concerns by confirming the approach in respect of any such multinational practice. That is subject to alternative provision made by rules approved under section 41.

That means that the Law Society of Scotland will be able to make rules, but the starting position is that multinational practices that are wholly owned by solicitors enrolled in Scotland, or qualifying individuals, or a mixture of both, will be treated as authorised businesses under the controls in part 2 of the bill, unless or until the Law Society makes alternative provision in rules. The amendments in my name will therefore achieve the stated aim, while providing a proportionate level of flexibility.

I believe that we all share the same intention in this area, and I am happy to consider working with Pam Gosal and Paul O’Kane again at stage 3 to see how we can adjust the explanatory notes to the bill to ensure that the position is clear.

I ask members to support each of my amendments in the group. In particular, I ask members to support my amendments 273 and 642, and not amendments 549 to 555, and 641, from Pam Gosal and Paul O’Kane. I also ask Paul O’Kane not to move his amendment 556 on special rules for legal business, in favour of the approach that is taken in the bill to special rules changes for all legal services providers. If he moves that amendment, I would ask members not to support it.

I move amendment 271.

Section 20 currently allows Scottish ministers to intervene in the event of concerns being raised that a regulator is failing to exercise their regulatory functions in a way that is compatible with the regulatory objectives, and to take certain specified measures. Amendments 112 to 116 and 118 to 120 have the effect of transferring that power from the Scottish ministers to the Lord President. Although the regulation-making power allowing the Scottish ministers to specify intervention measures that may be taken other than those already provided for is retained in section 20(6), amendment 122 ensures that both the Lord President and other stakeholders have a greater role in the process. That amendment provides that the Scottish ministers can exercise the regulation-making power only at the request of the Lord President, who must, before making such a request, consult regulators, the consumer panel and other persons considered appropriate, as well as adhere to certain publication requirements. Those provisions will ensure an appropriate level of stakeholder involvement in the exercise of the delegated power.

The amendments to section 20 have been welcomed by both the Law Society and the senior judiciary in their recent correspondence to the committee. The amendments alter the sanctions available, with amendment 117 removing the ability to impose a financial penalty from the measures available to the Lord President.

Amendments 68, 121, 146, 310 and 311 make consequential changes to provisions in the bill. Amendment 123 makes a small technical change.

Section 19, together with section 20, provides an important mechanism so that there is a process for review of regulatory performance if concerns are raised about a regulator not upholding the regulatory objectives, with a process allowing specified intervention measures to be taken following such a review.

Amendments 93 and 94 reflect the change of powers to the Lord President that have already been discussed.

Amendments 95 to 99, 101 and 106 to 111 make further changes to alter the bodies that may seek a review of the performance of a legal services regulator, the criteria for a review, the process for conducting a review and the types of things that a performance review can include.

Amendment 99 makes a technical change to clarify that a regulator must provide information about performance when requested to do so by the Lord President in connection with a performance review or a decision as to whether to conduct such a review. Amendment 100 requires that information to be provided within 28, rather than 21, days.

Amendments 102 and 104 insert new provisions into the bill to impose duties on persons other than the relevant regulator in relation to information that they hold relating to the performance of that regulator. That will ensure that the Lord President has all the necessary information available when conducting a review.

Amendment 105 allows the Lord President, when a regulator has failed to provide the information within 28 days, to add such a failure to the existing review. However, the regulator must be given an opportunity to respond to the Lord President’s proposal.

Amendment 103 requires the Lord President to consult such bodies as are considered appropriate in conducting a review of performance.

Amendment 109 requires the Lord President to also send a copy of the report to the relevant regulator and to any requesting body, and amendment 110 requires the Lord President to inform a body that has requested a review of any decision not to conduct such a review.

Amendments 98, 101, 106, 107, 108 and 111 make consequential changes.

Amendment 459 inserts new section 86A into the bill. The new section allows the Lord President to make rules in connection with the exercise of their functions under part 1 or 2 of the bill. Before making rules, the Lord President must consult the consumer panel and each category 1 and category 2 regulator.?

The Lord President is required to publish the rules, once finalised. That transparency provides a check on the exercise of the Lord President’s power.?

I will move on to discuss technical amendments that reflect the substantive changes that have been made to sections 19 and 20 in relation to powers being with the Lord President.

Amendment 147 enables the Lord President to direct a new regulator, or any regulator that acquired rights for its members to provide legal services—other than rights to conduct litigation and rights of audience—under the 1990 act, to change its regulatory scheme in the manner directed by the Lord President. In other cases, the amendment provides that the Lord President can ask Scottish ministers to make regulations to make provision to change the regulatory functions or the way in which those functions are exercised.

Amendments 148 to 152 are consequential or technical amendments, as are amendments 156 to 178, with the exception of amendment 169.

Amendment 169 requires the Lord President, when proposing to remove all the regulatory functions of either an accredited regulator or a body that has acquired rights for its members to conduct litigation and has acquired rights of audience, to give notice of that intention to authorised providers and to consult them.

I move amendment 68 and ask members to support the other amendments in the group.

Amendment 68 agreed to.

Amendments 69 to 73 moved—[Siobhian Brown]—and agreed to.

Section 13, as amended, agreed to.

Section 14—Compensation funds

Amendments 74 and 75 moved—[Siobhian Brown]—and agreed to.

Section 14, as amended, agreed to.

Section 15 agreed to.

Section 16—Annual reports of category 2 regulators

Amendment 76 moved—[Siobhian Brown]—and agreed to.