Chamber and committees

We went through the history of the independent regulator in last week’s stage 1 debate. I watched Esther Roberton give evidence at committee, and she acknowledged that there was a divide and that views were so polarised that it would be very difficult to get everybody on board. That is why a compromise was reached at stage 1 in order to move things forward.

As I have said, cases such as the McClure Solicitors one show the need for legal regulation that centres on the public interest and protection of the consumer. That is what the Regulation of Legal Services (Scotland) Bill, which was agreed to at stage 1 last week, seeks to achieve. The current legal framework places the emphasis on regulating the individual solicitor, rather than the law firm by which they are employed. In a significant shift for legal services regulation, the bill introduces a requirement for all legal businesses to be regulated as entities.

That new system of entity regulation will bring greater oversight and monitoring of legal businesses. It will introduce a requirement for all legal businesses to be authorised to provide legal services, with public and consumer interests at their heart. That will allow the Law Society to review a business’s performance to ensure that it is complying with its duties to clients and that it is financially sustainable. The regulator will be able to direct changes and impose sanctions where there is non-compliance.

Entity regulation will also introduce greater consistency in the regulation of legal firms, with all entities having to meet the same high standards. A greater ability to collate data will help the Law Society identify and address deficiencies early and take the necessary preventative action. The intention behind the bill’s extension of regulatory complaints to cover such legal entities is to allow for a mechanism for addressing systemic issues in legal firms.

The bill also sets out the regulatory objectives that must be complied with as legal regulators exercise their functions, including consideration of the consumer principles, the better regulation principles and the human rights principles. The bill will streamline the legal complaints system, as many stakeholders have called for, making the process faster and simpler for the consumers and legal practitioners who find themselves involved with it, such as all those who have been affected by the McClure situation. Where there is any concern that a legal regulator is failing in its duties, the bill will introduce an ability for the regulator’s performance to be reviewed and for measures to be taken to ensure that improvements are made, where necessary.

During the parliamentary passage of the Trusts and Succession (Scotland) Bill last year, we learned about the fallout of the failure of McClure Solicitors and the impact on existing trusts. I thank Stuart McMillan, who, as convener of the Delegated Powers and Law Reform Committee, led scrutiny of that bill and ensured that the matter of McClure in the context of trusts was fully considered.

The Trusts and Succession (Scotland) Act 2024 has made important changes to how trusts are administered and how trustees are appointed and removed. Parliament made amendments to the bill at stages 2 and 3 to respond to the significant practical difficulties that co-trustees might face in removing a trustee who was appointed in their professional capacity and who is no longer a member of the profession.

I will now highlight a few of the issues that have been raised. First, I appreciate the need to raise public awareness about McClure in the public domain. When McClure ceased trading, the Law Society published notifications on its website to flag up the situation. As we know, the good will, the work in progress and certain assets have been taken over by Jones Whyte Solicitors, but it is now the responsibility of the acquiring firm to contact McClure’s former clients. That process is on-going and, due to the large number of people affected, Jones Whyte has indicated that it is prioritising the cases that need immediate attention and is continuing to inform all clients.

Will the member take an intervention?

I thank Mr McMillan for raising this important matter, and all members who have spoken and raised a number of important points. I will respond as far as I can in the time allowed.

I sympathise with all those who have been adversely affected by the collapse of McClure Solicitors. It is important that, when that happens in a regulated market, measures are in place to protect consumers. I encourage those affected to seek advice from the Law Society of Scotland and the Scottish Legal Complaints Commission, which can provide information and clarity on how to seek redress through raising a complaint, making a claim under the client protection fund or making a claim through the professional indemnity insurance scheme. Such measures and schemes provide consumer protection and redress where appropriate, and they remain a route to redress when a legal firm has gone into administration.

The Government has also taken proactive steps to strengthen the legislation in respect of both legal regulation and trust, which will help militate against such a situation happening in future. Cases such as that of McClure Solicitors show the need for legal regulation that centres on the public interest and the protection of the consumer.

I appreciate that point. There is no specific legal duty on Jones Whyte to contact the clients, and there is a risk of making legislative changes for individual situations that would not be appropriate and which could, in future, act as a deterrent to a legal firm stepping in to take over a case and the files of another legal firm that has gone into administration in such a situation. That could be detrimental to the clients involved. However, I acknowledge the member’s point.

I also want to delicately raise one issue about police involvement. I am aware that the matter has been reported to Police Scotland, which has met with those affected. Given that, as I understand it, Police Scotland has commented that an assessment of the information is on-going, it would be inappropriate for me, as minister, to comment further, and I caution elected members against stating that any criminality has happened.

Clare Haughey raised concerns about the SLCC’s workload—and rightly so. As she has said, it is funded by a levy on the legal professions in Scotland. I meet regularly with the SLCC, and any proposed levy that takes into consideration increases in complaints, such as the complaints relating to this matter—

Does Russell Findlay recognise that the Scottish Legal Complaints Commission urged all members to agree to the general principles of the Regulation of Legal Services (Scotland) Bill at last week’s stage 1 debate in order to secure much-needed reform?

I would advise the member’s constituent to get in touch with the SLCC, but if she is not getting anywhere, the member can write to me—I do not know the personal circumstances—and I can look into it on her behalf.

As for the calls for an inquiry, the priority at the moment is to find a solution for the people who have been adversely affected by the situation. Because this is an on-going regulatory matter and because an inquiry would not provide practical help to any of those who have been adversely affected, I do not support establishing an inquiry at this stage.

The Scottish Government will continue to monitor the situation alongside the regulatory authorities. I am aware of the calls from Stuart McMillan and Marie McNair for the Scottish Government to consider initiating an information campaign to raise awareness among the former clients, not all of whom might have been informed of the situation as yet. That is a matter for the Law Society of Scotland as a regulatory body, and I understand that the legal firm Jones Whyte took on the McClure files and is engaging with those affected.

The priority in respect of McClure is to find a solution for those who might have been adversely affected, and I encourage those with concerns to seek advice from the Law Society or the Scottish Legal Complaints Commission. This is an on-going regulatory matter, and the overall responsibility for the regulation of the solicitor profession rests with our primary regulators—the Law Society of Scotland and the Lord President.

The Law Society has written to me today to advise that an independent regulatory committee is taking proactive action and intends to bring in new practice rules and additional guidance, principally in relation to obligations and expectations, including on the issue of communications, when a solicitor or practice makes arrangements to pass client assets to another. That letter has come in only today, and more information will be coming to MSPs in that regard.

The Scottish Government will, of course, continue to monitor the situation alongside the regulatory authorities.

As I have said, there were polarised views going back to 2015 and from the Scottish Government’s consultation. Members will note from the briefings about stage 1 that have been sent to MSPs in the past few days that the Scottish Legal Complaints Commission, Citizens Advice Scotland, Consumer Scotland, the Competition and Markets Authority and the Law Society of Scotland all welcome stage 1 and urge the Parliament to agree to the general principles of the bill. I think that there will be collaborative agreement on aspects of the bill, moving forward.

Following the introduction of the bill, and having carefully considered the responses to the committee’s call for views—

I am sorry; I have read that paragraph.

The provisions are only one part of the bill and are based on existing legislation. Nonetheless, I have sought to address those concerns, and my officials have been working closely and collaboratively with stakeholders and, in particular, the Lord President’s office and the Law Society of Scotland.

The bill has received much support during stage 1, and I would like to note some of that support, for members in the chamber today. Consumer Scotland welcomed the fact that the bill will require legal regulators to exercise their regulatory functions in a manner that is compatible with consumer principles. I was also pleased to read the Law Society of Scotland’s comments to the Equalities, Human Rights and Civil Justice Committee: it has said that the bill contains many important reforms.

The committee also heard broad support for proposals in the bill that will reform the legal complaints system. The Scottish Public Services Ombudsman, Rosemary Agnew, said of measures in the bill that they enable

“the development of best practice.”—[Official Report, Equalities, Human Rights and Civil Justice Committee, 14 November 2023; c 23.]

As I said, in developing the bill, the Scottish Government sought to ensure that it strikes the right balance between the various interests of stakeholders. The committee’s stage 1 report recognised that and raised a number of important points. I have addressed those in my written response, and I will continue to update the committee after further consideration of the recommendations, ahead of stage 2.

The bill will provide a modern and forward-looking regulatory framework for Scotland that will best promote competition, innovation and public consumer interest in an efficient, effective and independent legal sector, while placing the consumer public interest at heart.

I move,

That the Parliament agrees to the general principles of the Regulation of Legal Services (Scotland) Bill.

I welcome the opportunity to open the debate on the general principles of the Regulation of Legal Services (Scotland) Bill.

I thank the Equalities, Human Rights and Civil Justice Committee, the Delegated Powers and Law Reform Committee and the Finance and Public Administration Committee for their careful and considered scrutiny of the bill, and I thank all those who submitted views and gave evidence at stage 1. I very much welcome the lead committee’s stage 1 report, in which the majority of members agreed with the general principles of the bill.

The current legislative framework that underpins regulation of legal services and complaints handling is complex and dated. The bill presents a modern regulatory framework that is designed to promote competition and innovation, while improving the transparency and public accountability of legal regulation and the legal complaints system, and placing the public and consumer interests at its heart.

The bill sets out the regulatory objectives that must be complied with as legal regulators exercise their functions, including consideration of consumer principles, better-regulation principles and human rights principles. It is a highly technical bill that builds on existing legislation from 1980, 1990, 2007 and 2010.

The bill proposes a number of significant and positive changes to the legal services regulatory framework in Scotland, so I will take the opportunity to outline the many benefits that it will bring. It will streamline the legal complaints system, which many stakeholders have called for, thereby making the process faster and simpler for the consumers and the legal practitioners who find themselves involved in it. That includes introducing a new ability to make complaints against unregulated legal services providers, which will increase consumer protection.

The new regulatory framework will introduce greater transparency and accountability for our legal services regulators, in order to deliver a framework that maintains public trust and ensures that regulators are operating their regulatory functions independently of any other function.

Will the member take an intervention?