Chamber and committees

Amendment 28 makes it clear that different licence fees can be charged to different types of applicants for different types or categories of a licence to reflect the fact that there are now many types of business models entering the legal services market, such as those providing incidental financial services. The amendment allows for the charging of bespoke fees to be permissible under the Legal Services (Scotland) Act 2010. Allowing the charging of such fees would be part of the regulatory scheme rules. They would need to be approved by Scottish ministers, with the agreement of the Lord President, thus ensuring a check on the fee charging. An example of a licence that would apply only to certain businesses would be an incidental financial business licence.

Amendment 29 repeals section 49 of the Legal Services (Scotland) Act 2010. That removes the requirement that, for business entities to be eligible to be a licensed provider, they must be at least 10 per cent owned by solicitors or members of other regulated professions. That simplifies the regulatory framework and potentially broadens the pool of eligible professionals, which will encourage more diverse ownership structures within the legal profession and foster innovation and competition while maintaining high standards of professional conduct.

Under the 2010 act, an approved regulator must be satisfied that all non-solicitor investors are fit to have an interest in a licensed provider, for example in terms of their financial position and character. Section 64(4) of the 2010 act provides that, if a non-solicitor investor is a body, the regulator must be satisfied as to the fitness of both the body and any person having ownership or control of that body.

Amendment 30 relaxes that requirement so that it only applies in respect of persons who have significant control or ownership, as determined by the approved regulator, taking a more proportionate approach.

The bill repeals section 1 of the 2010 act, removing the duty on regulators to comply with specified regulatory objectives in the act in favour of the new regulatory objectives introduced by part 1 of the bill. Amendment 65 similarly repeals the obligation on legal services providers to have regard to the regulatory objectives under the 2010 act. Instead, those providers will need to adhere to the professional principles set out in part 1 of the bill. That change will reduce the regulatory burden on legal services providers, making compliance more straightforward while maintaining high professional standards.

Sections 77 and 78 of the 2010 act are, therefore, not needed. Section 77 requires approved regulators to act compatibly with the regulatory objectives in that act, and section 78 requires approved regulators to issue a policy statement in relation to section 77. Amendment 66 repeals those sections, and amendments 65 and 67 make related consequential changes.

I move amendment 28.

Amendment 28 agreed to.

Section 80—Majority ownership

Amendment 29 moved—[Siobhian Brown]—and agreed to.

After section 80

Amendment 30 moved—[Siobhian Brown]—and agreed to.

Section 86B—Safeguarding interests of clients

I am pleased that we have completed stage 3 of the Regulation of Legal Services (Scotland) Bill with so much consensus on the final amendments to the bill, just as we had at stage 2.

The bill’s journey from its introduction to this final stage has been a rigorous and collaborative process involving extensive consultation and discussion. I start, therefore, by acknowledging the contributions of all stakeholders, particularly the legal professionals, regulatory bodies, consumer representatives and members of the public who have shared their insights and views. I thank them for their input, which has been invaluable in shaping the bill and ensuring that it reflects the interests of all those who interact with the legal system.

I thank the members and the clerks of the Equalities, Human Rights and Civil Justice Committee for their scrutiny work and engagement with me throughout the passage of the bill. Last, but definitely not least, I express my deepest gratitude to the bill team, who predate my responsibility for the bill and have been a huge support throughout, for working tirelessly on the bill for two years.

There is no doubt that the Regulation of Legal Services (Scotland) Bill is a technical piece of legislation that may seem dry to many. However, it has provided Parliament with a major opportunity to modernise and improve the way in which we regulate legal services in Scotland. The bill will enhance the standards, accessibility and transparency of the legal profession, making it better equipped to serve the people of Scotland in an ever-evolving legal landscape.

At its core, the bill seeks to deliver a framework that ensures that Scotland’s legal services are accessible, accountable and of the highest quality.

When I agreed at stage 2 to support Tess White’s amendment in respect of safeguarding the interests of clients, I said that I would revisit the provisions at stage 3 to ensure that they worked fully with the wider legislation and that I would make any adjustments that were necessary to reflect the wider policy intention.

Given the implications for practitioners, and following consideration of a query from the senior judiciary, I have lodged amendments 34 and 42, which would provide an appeal mechanism on the 14-day appeal timescale and would make the appeal final. That would allow directions to be appealed before the court in a timely manner, as the power is wide and can affect a variety of persons. An appeal on a genuinely urgent matter may be expedited by the court to avoid delay.

Regarding the Law Society’s concerns about what amendments 38 and 42 would require from a business that is being wound down, perhaps due to a solicitor retiring, I do not consider that the duties that would flow from that would be unreasonable. The right for the client accounts to vest in the Law Society would apply only in relation to a practitioner who had been disqualified and would therefore not create undue requirements.

The other duties that are set out in amendment 42 are to prepare interim accounts that would, in particular, detail all sums held on behalf of clients, and to send a copy of those accounts to the Law Society. In the case of the orderly winding down of a business, that would be straightforward and would involve notifying clients of the intention to cease practice and of the powers that the Law Society has to safeguard clients and, finally, satisfying the Law Society that it had complied with the requirements to inform clients.

I ask members to support my amendments.

Amendment 31 agreed to.

I am pleased to have worked with Tess White on her amendment 137, which will require the Scottish ministers to undertake a review of the principal changes to the regulation of legal services arising from the legislation. I am grateful to Ms White for taking on board my concerns, and I am content to support the amendment.

Amendment 75 replaces with a regulation-making power the Scottish ministers’ order-making power to increase the maximum amount that the SSDT can fine a solicitor in certain circumstances, which was inserted at stage 2. That reflects modern practice and is consistent with other ministerial regulation-making powers provided by the bill.

Amendment 82 restricts the SSDT from publishing any information that identifies or is likely to identify any person other than the solicitor against whom the complaint was made, unless it is considered to be in the public interest to do so and that person consents. That mirrors the approach taken in relation to the disclosure of information about complaints by the Scottish Legal Complaints Commission and relevant professional organisations, and it provides the SSDT with additional flexibility in relation to publishing information about cases.

The bill currently makes provision allowing the SSDT to take decisions and determinations relating to previous complaints into account when deciding whether a solicitor has been guilty of unsatisfactory professional conduct. The SSDT considers that that is inappropriate. Amendment 69 allows the SSDT to instead take into account decisions and determinations in respect of previous complaints when it is deciding whether the censure of a solicitor is to have effect for a specified period only and whether to direct the solicitor to pay a fine or undertake training or to order their practising certificate to be subject to certain conditions.

Amendment 74 makes a broadly equivalent amendment in respect of the powers of the SSDT on appeal.

Amendments 68, 70 to 73, 76, 77, 80 and 81 make minor changes to tidy up provisions following changes made at stage 2.

The bill amends the 1980 act to enable the Law Society to appeal to the Court of Session against decisions of the SSDT to dismiss a complaint without inquiry. Amendments 78, 79 and 107 move those provisions from schedule 4 to the 1980 act into a new section.

Presiding Officer, there is an error in amendment 78, which should refer to leaving out line 22 on page 149 of the bill, rather than line 23. With your agreement, I have lodged a manuscript amendment, amendment 78A, to correct that error.

I ask members to support the amendments in my name.

I move amendment 68.

I am slightly confused by Ms White’s contribution. She said that the Scottish Conservatives would fully support having an independent regulator, but then she referenced the legal profession’s position. Does she appreciate that the profession was 100 per cent against having an independent regulator? We have to be on one side or the other—we cannot sit on the fence or be on both sides.

I am. I think that adopting the text that the Law Society has provided and putting it in the explanatory notes will ensure that that will be done. As I said earlier, Paul O’Kane’s amendments could have unintended consequences.

I therefore ask Mr O’Kane not to press amendment 117 and not to move his other amendments in the group, with the exception of amendments 123 and 126. If amendment 117 is pressed or if any of the other amendments is moved, I urge members to oppose it. I ask members to support my amendment 1 and Mr O’Kane’s amendments 123 and 126.

I will begin by speaking to my own amendment 1 before moving to those lodged by Paul O’Kane.

The Law Society of Scotland has asked for clarification of registered foreign lawyers being included among the “qualifying individuals” as defined in section 39 of the bill.

At stage 2, I agreed to correct and strengthen the explanatory notes to make it clear that registered foreign lawyers are included as “qualifying individuals” as they exist at present and to make it clear that part 2 of the bill, on the regulation of legal businesses, does not change the basis on which existing individual rights to practise are still required by the existing underlying legislation. That will be done in the explanatory notes to the act if the Parliament agrees to pass the bill today.

I confirm that I have engaged extensively with the Law Society of Scotland. I wrote to it last night, outlining the position and confirming that I am happy to adopt its suggested wording in the explanatory notes. In particular, registered foreign lawyers will still be required to work with other solicitors in Scotland in order to practise where that is already provided for in the existing legislation. The new regime in part 2 of the bill will not change that.

My amendment 1 will define “legal business” in section 18 by reference to the definition of that term in section 39(2) in order to make the definition consistent in the bill. That will provide additional clarification in the bill’s provision on professional indemnity insurance. The effect will be similar to that of Paul O’Kane’s amendment 119, but my amendment 1 means that amendment 119 is unnecessary, as defining “legal business” by reference to the definition of that term in section 39(2) also draws in the definition of “qualifying individual” as set out in section 39(8).

Although I recognise the intention behind Paul O’Kane’s wider amendments in the group—amendments 117 to 122 and 138, which have been developed by the Law Society—we consider that they would have unintended consequences. In particular, they would in some ways rule out use of the structures in part 2 of the bill, which will otherwise cater for those types of lawyers and allow them to be brought in as qualifying individuals if they are made licensed providers or if the other rules that govern them are changed.

On that basis, Mr O’Kane’s amendments are unnecessary, and they would be problematic in some respects as they would specifically refer to “registered European lawyers” and “registered foreign lawyers”, rather than their being included under “qualifying individuals” in the bill. The amendments would provide less future proofing to implement the legal structures in the bill.

Amendments 124 and 125 would delete section 44(1)(e), which sets out that practice rules are to include rules about

“the making and handling of any complaint about an authorised legal business”.

I consider that, given the provisions that will allow the Scottish Legal Complaints Commission to make minimum standards for complaints handling in consultation with the profession and the Lord President, it is important that section 44(1)(e) remains as a mechanism to apply those standards.

After careful consideration of amendments 123 and 126, I am content to support them.

I therefore ask Mr O’Kane not to press amendment 117 and not to move his other amendments in the group, with the exception of amendments 123 and 126. If amendment 117 is pressed—

Amendments 10, 61, 98 to 100, 102, 114 and 115 are minor and technical amendments that correct or update cross-references.

Amendments 3, 17 to 21, 24 to 26 and 103 to 106 correct errors and tidy up the bill.

In relation to amendment 4, section 37 of the bill applies the new provisions that relate to regulators that are accredited under the bill to regulators that are approved under section 26 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990—for example, allowing a review and updating of the regulatory scheme at the direction of the Lord President. To date, the only regulator that is approved under section 26 of the 1990 act is the Association of Commercial Attorneys.

Section 32A, which was inserted at stage 2, allows for a review and updating of the regulatory scheme to take place on the regulator’s own initiative as well as at the direction of the Lord President. Section 35A, which was inserted at stage 2, introduced a role for the Lord President in securing replacement regulatory arrangements for authorised providers, where their accredited regulator has ceased to operate.

Amendment 4 amends section 37 of the bill to apply to the Association of Commercial Attorneys the provisions of the proposed new sections that sections 32A and 35A would insert into the Solicitors (Scotland) Act 1980.

Section 76 of the bill expands on the information that must be included in the SLCC’s annual report and also requires the SLCC to consult the Lord President, the consumer panel and each regulator.

Amendment 27 responds to concerns that were raised by the SLCC and makes it clear that the requirement to consult is triggered at an early stage in the process, before the report is prepared.

Regarding amendment 63, section 47(1) of the Solicitors (Scotland) Act 1980, as amended at stage 2, provides that an authorised legal business must not, without written permission from the Law Society of Scotland, employ a solicitor who has been struck off the roll or suspended from practice.

The sanction for acting in contravention of that requirement is set out in section 47(4) of the 1980 act. As amended by the bill, the provision sets out that any authorised legal business acting in contravention of the requirement will have its authorisation to provide legal services automatically withdrawn for a period determined by the Scottish Solicitors’ Discipline Tribunal, or by the court, in the case of appeals against the refusal to be granted permission by the Law Society.

Amendment 63 instead provides for a more flexible approach to imposing sanctions, allowing the tribunal, or the court, in the case of an appeal, to impose conditions or restrictions on the authorisation of an authorised legal business to provide legal services.

Amendment 101 ensures that there is a right of appeal against decisions to restore a solicitor’s practising certificate, subject to conditions in cases in which the solicitor has complied with requirements relating to the refunding of excessive fees charged to a client.

Amendments 108, 109 and 112 move a provision that was inserted into section 16 of the 1980 act at stage 2 to its correct place in section 34 of that act.

Amendments 110 and 111 insert titles into sections of the 1980 act. That was noted by the Law Society of Scotland and the Scottish Solicitors’ Discipline Tribunal.

I ask members to support the amendments in my name.

I move amendment 3.

Amendment 28 makes it clear that different licence fees can be charged to different types of applicants for different types or categories of a licence to reflect the fact that there are now many types of business models entering the legal services market, such as those providing incidental financial services. The amendment allows for the charging of bespoke fees to be permissible under the Legal Services (Scotland) Act 2010. Allowing the charging of such fees would be part of the regulatory scheme rules. They would need to be approved by Scottish ministers, with the agreement of the Lord President, thus ensuring a check on the fee charging. An example of a licence that would apply only to certain businesses would be an incidental financial business licence.

Amendment 29 repeals section 49 of the Legal Services (Scotland) Act 2010. That removes the requirement that, for business entities to be eligible to be a licensed provider, they must be at least 10 per cent owned by solicitors or members of other regulated professions. That simplifies the regulatory framework and potentially broadens the pool of eligible professionals, which will encourage more diverse ownership structures within the legal profession and foster innovation and competition while maintaining high standards of professional conduct.

Under the 2010 act, an approved regulator must be satisfied that all non-solicitor investors are fit to have an interest in a licensed provider, for example in terms of their financial position and character. Section 64(4) of the 2010 act provides that, if a non-solicitor investor is a body, the regulator must be satisfied as to the fitness of both the body and any person having ownership or control of that body.

Amendment 30 relaxes that requirement so that it only applies in respect of persons who have significant control or ownership, as determined by the approved regulator, taking a more proportionate approach.

The bill repeals section 1 of the 2010 act, removing the duty on regulators to comply with specified regulatory objectives in the act in favour of the new regulatory objectives introduced by part 1 of the bill. Amendment 65 similarly repeals the obligation on legal services providers to have regard to the regulatory objectives under the 2010 act. Instead, those providers will need to adhere to the professional principles set out in part 1 of the bill. That change will reduce the regulatory burden on legal services providers, making compliance more straightforward while maintaining high professional standards.

Sections 77 and 78 of the 2010 act are, therefore, not needed. Section 77 requires approved regulators to act compatibly with the regulatory objectives in that act, and section 78 requires approved regulators to issue a policy statement in relation to section 77. Amendment 66 repeals those sections, and amendments 65 and 67 make related consequential changes.

I move amendment 28.

Amendment 28 agreed to.

Section 80—Majority ownership

Amendment 29 moved—[Siobhian Brown]—and agreed to.

After section 80

Amendment 30 moved—[Siobhian Brown]—and agreed to.

Section 86B—Safeguarding interests of clients