Seòmar agus comataidhean

I believe that Scottish Government amendments 273 and 642 achieve the intention behind Pam Gosal’s amendment 549 and Paul O’Kane’s amendments 555 and 641, given that our amendments relate to qualifying individuals and will also cover registered foreign lawyers where appropriate.

I know that the issue is very technical, so I am happy to have further discussions before stage 3 on how we can improve things.

Amendment 271 agreed to.

Amendment 272 moved—[Siobhian Brown]—and agreed to.

Section 38, as amended, agreed to.

Section 39—Requirement for legal businesses to be authorised to provide legal services

Following engagement with Tess White on amendment 638, I am content to support her provision and I will not be moving my corresponding amendment 508. Similarly, I am content to support Paul O’Kane’s amendment 639. We may have to revisit the issue at stage 3 to ensure that the revised provisions work fully with the wider legislation and make any adjustment to reflect the intention.

However, I require to move amendment 27, which is consequential to the Government’s principal amendment 508, in order to allow the debate on this group to take place. I will seek members’ permission to withdraw amendment 27 at the end of the debate.

The Government is willing to support amendment 638 rather than our amendment 508, and I would urge members to support amendments 638 and 639.

I move amendment 27.

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.

Amendments 48 to 50 have been lodged in response to concerns raised by the Delegated Powers and Law Reform Committee and legal stakeholders that section 8 might be used to alter the categorisation of the Law Society of Scotland or the Faculty of Advocates.

The amendments reduce the breadth of the delegated power to be conferred by section 8(5). As amended, that power will allow Scottish ministers to alter only the category of a regulator that is assigned by the bill, for example by making a significant change to a regulator’s composition or the way that it operates. The power will not capture the Law Society or the Faculty of Advocates. As an additional safeguard, the regulation-making power may only be exercised at the request of the Lord President. Amendment 49 is a technical amendment to add a more specific cross-reference to the power.

I move amendment 48 and ask members to support the other amendments in the group.

Amendment 48 agreed to.

Amendments 49 and 50 moved—[Siobhian Brown]—and agreed to.

Section 8, as amended, agreed to.

Section 9—Exercise of regulatory functions

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 that 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.

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.

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. 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

Sections 25 to 27 of the bill would allow a body to apply to the Lord President and the Scottish ministers together to become a new regulator of legal services, being accredited to authorise persons to acquire the right to conduct litigation, the rights of audience in courts and the right to provide other types of legal services. The provisions will replace and modernise similar provisions that are contained in the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990.

Following engagement with the Lord President about the concerns that have been raised by the senior judiciary at stage 1 on the role of the Scottish ministers in the regulation of legal services, I gave an undertaking to the committee that I would lodge an amendment to the effect that it would be the responsibility of the Lord President acting alone to consider any application by a body wishing to enter the legal services sector as a new regulator. Amendment 200 will do just that and amendments 211, 212 and 213 will make consequential amendments.

Amendment 209 will insert proposed new section 26A into the bill to give Scottish ministers the power to specify in regulations the additional regulatory matters that must be dealt with in a draft regulatory scheme. However, Scottish ministers will be able to exercise that power only if they have received a request to do so from the Lord President, an accredited regulator or the consumer panel, following a period of consultation with the specified bodies. Except where the Lord President is the requester, the Lord President’s agreement to the request must be obtained.

To address concerns that were raised by the senior judiciary, amendments 201, 203, 206, 207 and 210 will make changes to the application requirements in respect of the draft regulatory scheme that must accompany an application for accreditation. Amendments 202, 204, 205 and 208 are consequential amendments.

The purpose of amendments 214 to 224 and 227 is to remove the involvement of Scottish ministers from consideration of an application and the accompanying draft regulatory scheme, which will leave it to the Lord President alone. The amendments will also introduce additional requirements for consultation and transparency.

Amendments 225 and 226 will place an additional duty on the Lord President, when considering a draft regulatory scheme, to consult the Scottish ministers as well as the Competition and Markets Authority, the consumer panel and other persons who are considered to be appropriate. Amendments 228 to 231 are consequential amendments.

Amendment 232 will impose a new requirement, in proposed new subsections 29(2A) and (2B), on the Lord President to publish the decision on an application under section 25 by a prospective regulator seeking accreditation.

Amendment 233 will remove the requirement for Scottish ministers to make regulations to give effect to the draft regulatory scheme.

Amendment 234 will require an applicant to give effect to and publish an approved regulatory scheme. Amendment 235 will make a consequential amendment. The committee will be aware from correspondence with the Lord President and the Law Society that the amendments are welcomed by the senior judiciary and the legal profession.

I ask members to support my other amendments in the group, and I move amendment 200.

Amendment 200 agreed to.

Amendment 201 moved—[Siobhian Brown]—and agreed to.

Section 25, as amended, agreed to.

Section 26—Regulatory scheme

Amendments 202 to 205 moved—[Siobhian Brown]—and agreed to.

Amendments 546 and 547 not moved.

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

No, thank you, convener.

Amendment 250 agreed to.

Section 32, as amended, agreed to.

Before section 33