Seòmar agus comataidhean

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

I thank Paul O’Kane and Tess White for their amendments, which I am happy to support. However, as I said, we will have to ensure at stage 3 that the revised provisions work within the wider legislation.

Amendment 27, by agreement, withdrawn.

Amendments 28 to 37 moved—[Siobhian Brown]—and agreed to.

Schedule 1, as amended, agreed to.

Section 49—Powers of the Scottish Ministers to intervene

Amendment 309 moved—[Siobhian Brown]—and agreed to.

Section 50 agreed to.

The effect of amendment 252 is to require an accredited regulator to review its regulatory scheme if directed to do so by the Lord President. It removes from the bill ministerial involvement in triggering the review process.

A regulator also has the power to initiate such a review itself. Where it does so and proposes a revision, amendment 251 requires it to provide a report of the revision to the Lord President, who can approve the revision, not approve it, or direct another revision to be made.

Amendments 253 to 259 and amendment 261 are consequential on the removal of the role of the Scottish ministers from the process.

Amendment 260 gives a new power to allow the Lord President to comment on an accredited regulator’s proposed revisions to its regulatory scheme and direct the regulator to take account of such comments before giving the Lord President a revised report containing any revision to the scheme.

Amendment 262 places a requirement on the regulator to publish its revised scheme.

Amendment 263 gives the Lord President the power to revoke or vary any direction that they have given.

I move amendment 251 in my name and ask members to support my other amendments in the group.

Amendment 251 agreed to.

Section 33—Review of regulatory schemes

Amendments 252 to 263 moved—[Siobhian Brown]—and agreed to.

Section 33, as amended, agreed to.

Section 34—Revocation of acquired rights

Amendments 264, 266, 265 and 267 to 269 moved—[Siobhian Brown]—and agreed to.

Section 34, as amended, agreed to.

Section 35—Replacement regulatory arrangements for authorised providers

Amendment 270 moved—[Siobhian Brown]—and agreed to.

Section 35, as amended, agreed to.

Sections 36 and 37 agreed to.

Section 38—Overview of Part

I thank Paul O’Kane for his comments. I know that the bill has been on a bit of a journey since it was introduced in April 2023. When we went into stage 1, committee members wanted to see all the amendments being made at that stage, so I hope that members will now appreciate the amount of work that has had to be done and the discussions that we have had with the judiciary and the Lord President to get us to where we are today. Thanks to my officials, a lot of work has been done in the background, and I think that we are in a better place today than we maybe were at this time last year. I thank Paul O’Kane for his comments on that.

Tess White asked about the SLCC’s comments on amendment 40. There has been a lot of engagement with stakeholders during the bill process. The purpose of amendment 40 is to clarify that, under section 3, the duty of the regulatory authority to exercise its regulatory functions in a manner which is compatible with the regulatory objectives and is considered the most appropriate to meet those objectives is not an absolute duty. The regulatory authority need only carry out that duty as far as practicable. The effect of amendment 40 will be to insert the words “so far as practicable” into section 3(1) of the bill, so that a regulatory authority need only apply the regulatory objectives so far as practicable. Amendment 40 reflects many discussions with the Law Society to get agreement and that is the conclusion that we have come to.

Yes, certainly. Amendment 41 makes it clear that the requirement to exercise regulatory functions in a way that contributes to sustainable economic growth applies only to the extent that to do so would not be inconsistent with the regulatory objectives, rather than, as the bill requires at present, only to the extent that it would not be inconsistent with the exercise of regulatory functions. The amendment addresses the Law Society’s concern that it is circular and confusing to require the exercise of regulatory functions only to the extent that that is not inconsistent with the exercise of regulatory functions.

Amendment 41 makes section 3(4)(b) clear that the duty to exercise regulatory functions in a way that would help to achieve economic growth applies only to the extent that that is not inconsistent with the regulatory objectives as set out in section 2(1).

Amendment 42 adds the Scottish Solicitors Discipline Tribunal as a named regulatory authority in section 3(5), which means that, as a regulatory authority, the SSDT is subject to the duties that are set out in section 3. Those duties relate to how the regulatory objectives are applied and to other regulatory authorities, including the Lord President and category 1 and category 2 regulators.

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

Amendments 47, 522 and 466 will make the necessary changes to legislation to reflect the change of name of the Association of Commercial Attorneys to the Association of Construction Attorneys. The association sought that change following the introduction of the bill, and that was approved under section 42 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990.

Schedule 1 of the bill would make a variety of changes to the Solicitors (Scotland) Act 1980 with respect to the Law Society becoming a category 1 regulator and the move to entity regulation.

Amendments 5 to 37, with the exception of amendments 15, 24 and 27, are minor or consequential modifications to part 1 of schedule 1 and relate to the Law Society’s functions.

Amendment 24 removes paragraph 22 from part 2 of schedule 1 of the bill, because it is no longer required.

Amendments 412, 413 and 507 make consequential amendments, following a change of name in the bill from the “guarantee fund” to the “client protection fund”. Amendment 11 allows the client protection fund to provide grants, as well as loans, to judicial factors appointed, in order to mitigate the risk of any further pecuniary losses being suffered by the clients of such a person by reason of dishonesty. The amendment reflects engagement with the Law Society, which sought that addition.

Paragraph 6(6) of schedule 1 inserts a new section into the 1980 act to enable the Scottish ministers to, by regulations, adjust section 43 and schedule 3 of the 1980 act in respect of the circumstances when claims can be made and the maximum amount of any grant payable, and in connection with administrative matters.

Amendment 15 restricts the exercise of that regulation-making power only to those cases in which the Scottish ministers have received a request from either a regulator, the Lord President or the consumer panel to do so. Before making such a request, the requester must have consulted the regulatory committee, the Lord President and the consumer panel and must also have secured the Lord President’s agreement to making the request. The provision sets out what information must be provided to the Lord President when seeking their agreement and requires the requester to publish certain documents.

Amendments 461 to 465 make minor and consequential modifications to enactments in connection with regulatory objectives, professional principles and new regulators in part 1 of schedule 3 of the bill.

I move amendment 47 in my name and ask members to support the other amendments in the group.

Amendment 47 agreed to.

The sections on special rule changes relate to the practice rules and provide regulators with the powers to waive practice rules in defined circumstances for the purpose of promoting innovation or avoiding a regulatory conflict by removing an unnecessary rule or making a rule less onerous, where a regulator considers that to be necessary or appropriate. The waivers are not intended to be permanent, so the bill incorporates transparency and accountability to the Lord President in the process.

The intention of my amendments in the group is to retain the system of special rule changes that are set out in the bill as introduced, but to remove some elements, including the requirement to produce a dedicated report every year, and to introduce more flexibility in other areas in response to concerns that have been raised by the Law Society. The proposals for changes were reached following engagement with the Law Society, which feels that some provisions in sections 21 to 24 do not allow for enough flexibility in relation to the granting of waivers.

Amendment 179 will add to the conditions that are already set out in section 21 a condition that a regulator can give a direction to its member or members “only if” the regulator

“is satisfied the direction is compatible with the regulatory objectives.”

Amendments 180 and 181 will add additional circumstances in which a direction may be given—that is, where the regulator considers that a direction is

“necessary or appropriate in the circumstances.”

Amendment 182 provides that a direction may not disapply or modify a requirement under the bill “or any other enactment”. That will ensure that regulators will continue to meet their obligations in respect of the provisions in the bill or any other enactment.

Amendments 185 and 186 will add to the list of things that a direction must specify, including the period of time for which the direction is to have effect. Amendment 188 will remove the requirement that a direction ceases to have effect after five years.

Amendment 183 will limit the duty of a regulator to consult the Competition and Markets Authority before giving a direction that could restrict, distort or prevent competition to a significant extent to circumstances where the direction that is being given is for the purpose of enabling a new or alternative way of providing or regulating legal services to be piloted.

Amendment 184 will make changes to the bodies to which a copy of a direction is to be given and in what circumstances.

Amendment 187 will place a new requirement on a legal services provider to whom a direction relates to inform the regulator of any changes in circumstances.

Amendment 189 will limit the circumstances in which the Lord President may revoke a direction to the directions that have been given by a regulator, on the basis that it was desirable for the purpose of enabling new or different ways of providing or regulating legal services to be piloted. Amendment 190 will remove the duty to give notice of doing so to the Scottish ministers.

Amendment 191 will remove section 23 of the bill, with the effect that the regulator’s duty to prepare a report on each direction will be removed. Amendment 194 will make a consequential change to section 24. Section 24 of the bill requires a regulator to establish and

“maintain a register of ... Directions”

given under section 21 and sets out what documents the register must contain.

Amendments 192 and 193 will remove the need to include a copy of the application for, or application to amend, the direction.

Amendment 196 will add a requirement to specify

“whether the direction is to have effect for an indefinite period.”

Amendment 195 will make a technical change to denote the placement of the new subparagraphs of section 24(2)(b).

Amendments 197, 198 and 199 will make minor technical changes.

Paul O’Kane’s amendments 543, 544 and 545 would remove most of the special rule changes provisions—sections 21, 22 and 24—from the bill. Unfortunately, I cannot support them. Mr O’Kane’s amendment 556, which is to be debated with group 12, would not be a full replacement for the special measures approach that will be taken through sections 21 to 24, because it would apply only in relation to legal businesses, and not to all legal services providers. That would leave a gap in respect of the Faculty of Advocates and the Association of Construction Attorneys.

The provisions apply not only to the Law Society but to all current and future regulators of legal services in Scotland. The provisions would allow rules to be disregarded where that could bring innovation that could benefit consumers or make a rule less onerous for a legal services provider. The Lord President and the Law Society have been consulted on the Scottish Government amendments. I have listened to the Law Society’s comments and I have sought to address its concerns.

I also consider it important to retain transparency and oversight by the Lord President, following engagement with the senior judiciary. The senior judiciary consider that it is appropriate for the Lord President to have oversight of special rules changes and to have powers to revoke certain types of directions.

I will move amendment 179 and I ask members to support my other amendments in this group. I ask Mr O’Kane not to move his amendments 543 to 545. If he does, I urge members not to support them in favour of retaining the special rule changes arrangements in the bill.

I move amendment 179.