Chamber and committees

We can definitely consider that.

I might ask the legal team about that.

I will pass the question to Michael, to talk about the technicalities.

My understanding is that codification will simplify things by bringing into legislation all the legal principles of tacit relocation. It is a technical legal question, which I will pass over to Michael Paparakis to expand on, given his expertise.

As I said in my opening speech, the law of termination of leases needs reform because it is inaccessible, uncertain and outdated. The SLC considered the case for reform by consulting advisory groups, issuing a small discussion paper and engaging with the legal profession, landlords and small businesses.

The evidence that the committee has heard shows that legal professionals, the Faculty of Advocates and the Law Society of Scotland have all agreed that reform of some kind is needed. The Law Society, for instance, was clear that there is sufficient litigation and confusion in the area to justify reform for the advantage of tenants and landlords. In Scots law currently, commercial leases are principally agreed and governed by common law rules. When the law is not clear or readily accessible, that can result in unnecessary costs to the tenant and the landlord. Current legalities can cause difficulty for the landlord and the tenant, and resolving those can result in the expense of court proceedings. The bill is looking to simplify and improve that for the tenant and the landlord.

On the economic impact of the bill, I believe that it will have some economic benefit. Most businesses, whether they are small or large, from manufacturing through to professional services, retail, digital start-ups and the hospitality sector, operate to some extent out of let premises. Let premises make up 44 per cent of all non-domestic premises that pay rates, and the rateable value from those premises comes to £2.6 billion pounds. Making the law more certain and accessible can only benefit both tenants and landlords.

The issue of adding a bit more flexibility between the tenant and the landlord has been raised by a few people. It is an interesting suggestion, which we could explore moving forward. I do not know whether there would be any legal or technical obstacles to that. Michael might want to comment on that.

I do not have any information on that, because it is technical. I will pass the question to Lori Pidgeon or Michael Paparakis.

I turn first to the amendments in my name.

Section 54(7) of the bill repeals section 12 of the Legal Profession and Legal Aid (Scotland) Act 2007, which specifies how the Scottish Legal Complaints Commission must notify the complainer and practitioner of a decision to uphold or not uphold a services complaint. The SLCC and I agree that that is too restrictive, so the amendments provide for minor and technical changes to add additional flexibility. As a result, amendments 9, 83, 84, 85 and 88 amend paragraph 26 of schedule 3 to the bill to remove the express requirement that notice under sections 3, 8, 16, 17 and 24 of the 2007 act must be given in writing.

Amendment 5 repeals section 45 of the 2007 act, which relates to the giving of notices, and amendment 89 is a consequential amendment.

New section 20A enables the complainer and the practitioners to whom the complaint relates to apply to the SLCC for a review of its decisions as listed in the provision. An amendment that was passed at stage 2 now allows the SLCC to discontinue the investigation of a complaint if the practitioner accepts a settlement that is proposed by the SLCC but the complainer does not. Amendment 7 ensures that that decision by the SLCC is reviewable, thereby securing a right of review and enhancing transparency and accountability in the complaints process.

Section 61 of the bill inserts new section 17A into the 2007 act, giving the SLCC the power to request practitioner’s details in connection with complaints. Amendments 12 and 13 expand the powers in section 17A to cover the investigation and reporting of handling complaints. The changes also enable the power to be used by the SLCC where it initiates a conduct or regulatory complaint.

Amendments 86 and 87 amend section 17 of the Legal Services Act 2007 by adding a reference to new section 2A, following the stage 2 amendments that inserted complaints initiated by the SLCC and handling complaints, to the list of sections mentioned in the 2007 act. That is to address and rectify an SLCC concern regarding the omission of handling complaints from the powers in sections 17 and 17A.

Amendment 14 amends section 66 of the bill, which in turn amends paragraph 1 of schedule 3 to the Legal Profession and Legal Aid (Scotland) Act 2007, which lists what the rules for the practice and procedure of the SLCC must include.

The effect of amendment 14 is that the rules must include provision to require complaints that are

“frivolous, vexatious or totally without merit to be considered ineligible”,

which would mean the SLCC need not take any further action other than to give notice of that fact to the complainer, the practitioner and any other person as required under the rules.

Amendment 6 and consequential amendment 8 remove the ability to review the decision to categorise a complaint as a conduct complaint or as a regulatory complaint. We agree with the SLCC’s view that these decisions should not be open to review, particularly given the introduction of hybrid complaints, which means that complaints can now be categorised as both types—conduct and regulatory.

Amendments 15 and 16 make small changes to section 66 of the bill, which amends schedule 3 to the 2007 act. The changes mean that the SLCC practice and procedure rules—that relate to the recategorisation of a services complaint—include regulatory complaints.

I turn now to Mr O’Kane’s amendments. I cannot support amendment 135, as it would weaken the SLCC’s authority to set standards in complaints handling. The minimum standard setting was introduced in response to calls for more independent regulation of legal services from stakeholders that represent consumer interests. Consumer bodies support the strengthening of the SLCC’s independent oversight of the setting of minimum standards for complaints handling. As members will remember, the committee heard evidence from Rosemary Agnew, the Scottish Public Services Ombudsman, that this is best practice. Giving the Lord President a direct role in determining whether guidance that sets minimum standards is to be complied with—or not—may be viewed as a step away from the consumer-focused approach. I do not think that allowing a veto on the setting of minimum standards, potentially prior to SLCC consultation, is in the consumer’s interest.

The current procedure in the bill for setting and issuing minimum standards is aimed at providing greater quality assurance and continuous improvements in complaints handling. As currently drafted, the process is open and transparent. Prior to issuing any guidance that sets minimum standards, the SLCC would carry out a consultation to seek the views of those persons—or their representatives—who would be affected. The SLCC must consult the Lord President, the regulators, practitioners and any other appropriate persons on the initial proposals. The SLCC must again consult the regulators and other appropriate persons on any subsequent drafts. It must take into account any representations that have been made and, further to that, publish a document that summarises the consultation that has been undertaken, the responses and any changes that have been made to the guidance as a result. The SLCC must also give its reasons for including the minimum standards. As a statutory consultee, the Lord President will have had an opportunity at that initial stage to express their views on the proposed minimum standards.

The intention is that the regulators and the Lord President have an opportunity to raise any concerns or challenge any proposed minimum standards through the initial statutory consultation process. As an iterative process, ultimately, given the role of the Lord President in approving a regulatory scheme—which must contain practice rules about the making and handling of complaints, as well as any revisions to it—the Lord President could withhold consent to any subsequent practice rule changes to reflect those standards if they retained concerns with the proposals. That would require the SLCC either to address any concerns that the Lord President raised or to abandon the proposal. The SLCC considers that adding even more stages to the process would add cost to the system and potential delay in addressing emerging consumer protection issues.

Moving on to Mr O’Kane’s other amendments in this group, I am pleased to have been able to work with him on his amendments 11 and 90, which provide relevant professional organisations with the power, when they are considering initiating a complaint against a practitioner or an authorised legal business, to give notice to the practitioner—or the practitioner’s firm or the authorised legal business—requiring the production and delivery of the documents that are specified in the notice relating to the complaint. The amendments will allow all lawyers who are working for the Crown Office and Procurator Fiscal Service to be exempt from any requirement that is placed on them to provide information to prevent interference with their prosecution functions and independence. I am grateful to Mr O’Kane for taking on board my concerns and I am content to support amendments 11 and 90.

I am also pleased to have been able to work with Mr O’Kane on his amendments 22 and 23, which provide expressly that the Law Society of Scotland, which has discretionary powers to disclose information when it is in the public interest to do so, is not subject to the restriction in section 52(1) of the 2007 act, and that the SLCC, which has discretionary powers to disclose information when it is in the public interest to do so, is not subject to the restriction in section 41(1) of the 2007 act. I am therefore content to support amendments 22 and 23.

I urge members to support amendments 5 to 9, 12 to 16 and 83 to 89, in my name, and amendments 11, 22, 23 and 90, in the name of Paul O’Kane. However, I ask them not to support amendment 135, in Mr O’Kane’s name.

I move amendment 5.

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 turn first to the amendments in my name.

Section 54(7) of the bill repeals section 12 of the Legal Profession and Legal Aid (Scotland) Act 2007, which specifies how the Scottish Legal Complaints Commission must notify the complainer and practitioner of a decision to uphold or not uphold a services complaint. The SLCC and I agree that that is too restrictive, so the amendments provide for minor and technical changes to add additional flexibility. As a result, amendments 9, 83, 84, 85 and 88 amend paragraph 26 of schedule 3 to the bill to remove the express requirement that notice under sections 3, 8, 16, 17 and 24 of the 2007 act must be given in writing.

Amendment 5 repeals section 45 of the 2007 act, which relates to the giving of notices, and amendment 89 is a consequential amendment.

New section 20A enables the complainer and the practitioners to whom the complaint relates to apply to the SLCC for a review of its decisions as listed in the provision. An amendment that was passed at stage 2 now allows the SLCC to discontinue the investigation of a complaint if the practitioner accepts a settlement that is proposed by the SLCC but the complainer does not. Amendment 7 ensures that that decision by the SLCC is reviewable, thereby securing a right of review and enhancing transparency and accountability in the complaints process.

Section 61 of the bill inserts new section 17A into the 2007 act, giving the SLCC the power to request practitioner’s details in connection with complaints. Amendments 12 and 13 expand the powers in section 17A to cover the investigation and reporting of handling complaints. The changes also enable the power to be used by the SLCC where it initiates a conduct or regulatory complaint.

Amendments 86 and 87 amend section 17 of the Legal Services Act 2007 by adding a reference to new section 2A, following the stage 2 amendments that inserted complaints initiated by the SLCC and handling complaints, to the list of sections mentioned in the 2007 act. That is to address and rectify an SLCC concern regarding the omission of handling complaints from the powers in sections 17 and 17A.

Amendment 14 amends section 66 of the bill, which in turn amends paragraph 1 of schedule 3 to the Legal Profession and Legal Aid (Scotland) Act 2007, which lists what the rules for the practice and procedure of the SLCC must include.

The effect of amendment 14 is that the rules must include provision to require complaints that are

“frivolous, vexatious or totally without merit to be considered ineligible”,

which would mean the SLCC need not take any further action other than to give notice of that fact to the complainer, the practitioner and any other person as required under the rules.

Amendment 6 and consequential amendment 8 remove the ability to review the decision to categorise a complaint as a conduct complaint or as a regulatory complaint. We agree with the SLCC’s view that these decisions should not be open to review, particularly given the introduction of hybrid complaints, which means that complaints can now be categorised as both types—conduct and regulatory.

Amendments 15 and 16 make small changes to section 66 of the bill, which amends schedule 3 to the 2007 act. The changes mean that the SLCC practice and procedure rules—that relate to the recategorisation of a services complaint—include regulatory complaints.

I turn now to Mr O’Kane’s amendments. I cannot support amendment 135, as it would weaken the SLCC’s authority to set standards in complaints handling. The minimum standard setting was introduced in response to calls for more independent regulation of legal services from stakeholders that represent consumer interests. Consumer bodies support the strengthening of the SLCC’s independent oversight of the setting of minimum standards for complaints handling. As members will remember, the committee heard evidence from Rosemary Agnew, the Scottish Public Services Ombudsman, that this is best practice. Giving the Lord President a direct role in determining whether guidance that sets minimum standards is to be complied with—or not—may be viewed as a step away from the consumer-focused approach. I do not think that allowing a veto on the setting of minimum standards, potentially prior to SLCC consultation, is in the consumer’s interest.

The current procedure in the bill for setting and issuing minimum standards is aimed at providing greater quality assurance and continuous improvements in complaints handling. As currently drafted, the process is open and transparent. Prior to issuing any guidance that sets minimum standards, the SLCC would carry out a consultation to seek the views of those persons—or their representatives—who would be affected. The SLCC must consult the Lord President, the regulators, practitioners and any other appropriate persons on the initial proposals. The SLCC must again consult the regulators and other appropriate persons on any subsequent drafts. It must take into account any representations that have been made and, further to that, publish a document that summarises the consultation that has been undertaken, the responses and any changes that have been made to the guidance as a result. The SLCC must also give its reasons for including the minimum standards. As a statutory consultee, the Lord President will have had an opportunity at that initial stage to express their views on the proposed minimum standards.

The intention is that the regulators and the Lord President have an opportunity to raise any concerns or challenge any proposed minimum standards through the initial statutory consultation process. As an iterative process, ultimately, given the role of the Lord President in approving a regulatory scheme—which must contain practice rules about the making and handling of complaints, as well as any revisions to it—the Lord President could withhold consent to any subsequent practice rule changes to reflect those standards if they retained concerns with the proposals. That would require the SLCC either to address any concerns that the Lord President raised or to abandon the proposal. The SLCC considers that adding even more stages to the process would add cost to the system and potential delay in addressing emerging consumer protection issues.

Moving on to Mr O’Kane’s other amendments in this group, I am pleased to have been able to work with him on his amendments 11 and 90, which provide relevant professional organisations with the power, when they are considering initiating a complaint against a practitioner or an authorised legal business, to give notice to the practitioner—or the practitioner’s firm or the authorised legal business—requiring the production and delivery of the documents that are specified in the notice relating to the complaint. The amendments will allow all lawyers who are working for the Crown Office and Procurator Fiscal Service to be exempt from any requirement that is placed on them to provide information to prevent interference with their prosecution functions and independence. I am grateful to Mr O’Kane for taking on board my concerns and I am content to support amendments 11 and 90.

I am also pleased to have been able to work with Mr O’Kane on his amendments 22 and 23, which provide expressly that the Law Society of Scotland, which has discretionary powers to disclose information when it is in the public interest to do so, is not subject to the restriction in section 52(1) of the 2007 act, and that the SLCC, which has discretionary powers to disclose information when it is in the public interest to do so, is not subject to the restriction in section 41(1) of the 2007 act. I am therefore content to support amendments 22 and 23.

I urge members to support amendments 5 to 9, 12 to 16 and 83 to 89, in my name, and amendments 11, 22, 23 and 90, in the name of Paul O’Kane. However, I ask them not to support amendment 135, in Mr O’Kane’s name.

I move amendment 5.