HL Deb 22 February 1990 vol 516 cc454-78

Consideration of amendments on Report resumed on Clause 33.

[Amendment No. 146 not moved.]

Lord Mishcon moved Amendment No. 147: Page 27, line 42, at end insert— ("(2A) Nothing in subsection (2) prevents rules made by the Council of the Law Society securing that the terms and conditions on which solicitors may act as agents of authorised practitioners do not restrict or prevent those solicitors from offering independent legal and financial advice to clients in connection with the provision of conveyancing services.").

The noble Lord said: My Lords, this is a very important amendment. I am sorry to see that the House appears somewhat diminished, certainly in quantity if not in quality. I shall proceed to move the amendment and hope that noble Lords will be patient with me.

We should be looking at subsection (2) of Clause 33 which states: Any rule imposed by any professional or other body which purports to restrict or prevent a qualified person from—

  1. (a) providing any conveyancing services as an authorised practitioner;
  2. (b) acting as an employee of an authorised practitioner in connection with the provision of any such services; or
  3. (c) acting on behalf of an authorised practitioner in connection with the provision of any such services,"

and then come the brave, bold and clear words: shall be of no effect".

At Committee stage in an attempt to protect the public—and I emphasise that that is the whole purpose of my amendment and it has no other purpose—some concern was expressed that this subsection could create a very dangerous situation in regard to rules that ought to be made to protect the public in conveyancing matters. As I understood it, the noble and learned Lord was at that time reluctant to see the complete removal of this provision. So in deference to him we have thought very carefully about how we should now seek to do two things—not to remove this subsection, but, first, to amend it and, secondly, to amend it in such a way as to make absolutely clear the evil that we seek to prevent. It was not that we wanted to be able to make rules of a very general nature which might offend the spirit of subsection (2). We were anxious to counter what we thought was an evil—certainly a possible evil.

I turn at once to the way in which we seek to accomplish that purpose. We are dealing with a clause which says that any rule of the nature that I have just indicated "shall be of no effect". The amendment adds a subsection which states: Nothing in subsection (2) prevents rules made by the Council of the Law Society"—

and then we get at the danger from which we are trying to safeguard the public— securing that the terms and conditions on which solicitors may act as agents of authorised practitioners do not restrict or prevent those solicitors from offering independent legal and financial advice to clients in connection with the provision of conveyancing services".

Perhaps I may break off for a moment to tell your Lordships that since the issue of the Green Paper the Law Society has received from solicitors over 120 examples of how the public, had they not received protection from members of the solicitors' profession—in some cases unfortunately they did not receive the protection in time—would have walked into very disadvantageous transactions indeed. I shall give only one solid example. In fact I could quote worse examples but this is a very clear one.

Mr. H and his sister had been left a property by their parents and Mr. H wished to raise a mortgage to buy his sister's share. He was told by an estate agent that he had to have an endowment policy. The solicitor to whom he went arranged for a repayment mortgate for him. Subsequently the estate agent wrote to the solicitor stating that the solicitor had not "played the game" by persuading Mr. H not to take out an endowment policy. The estate agent said that he would lose a very great deal of commission and that he would not recommend clients to go to that solicitor in the future. Subsequently the life insurance representative visited the solicitor. He was extremely angry and threatened to blacklist the solicitor's firm for dissuading a client from taking out a policy with his company.

That is just one example. I am not in any way saying that every life insurance company, every life insurance company's representative, any estate agent or any employee of an estate agent must be deemed to be dishonourable. I do not say that at all. I do say that there is a very great danger of some representatives behaving as those representatives from the estate agent and the life insurance company behaved.

As a result of this Bill, together with the other legislation which has been passed, what do we think will happen which will enable life insurance companies, building societies and banks to set up solicitors' departments if they so desire? Perhaps I may be allowed to use such shorthand. I think, and your Lordships may agree with me, that they will find it rather difficult. It would be much simpler and less expensive for them if they were to get hold of firms of solicitors and say to them, "Please, we should like you to act as our agents". The Law Society is frightened—and I repeat that the sole purpose of this amendment is the protection of the public—that contracts may be entered into between life insurance companies, banks or building societies with a firm of solicitors to do all the work of a conveyancing nature that may fall to that building society, insurance company or bank in a certain area. At the present moment, such solicitors could not enter into such a contract and see the client who was the vendor, purchaser or mortgagor, and act for that vendor, purchaser or lender. That prohibition is consistent with the policy of the Government on conflict of interest in conveyancing as laid down in 1985.

What the Law Society wants to be able to do is to ensure that it has the possibility of making proper professional rules that will govern the conditions of any such contract entered into by a member of the Law Society with a bank, an insurance company or for that matter an estate agent. We want to do it—the Law Society wants to do it; my side of the profession wants to do it—in protection of the public. What we are afraid of—indeed, we have reason to be afraid of it—is that if one reads again the subsection that I read out at the commencement of my remarks it could well be said that that was a rule imposed by a professional body (the Law Society) which purported to restrict or prevent a qualified person from providing conveyancing services or acting on behalf of an authorised practitioner, and so on.

The subsection imposed a very proper rule to ensure that the contents of any such contract should impose a duty upon the solicitor to act as though he were an independent adviser, as the member of the public would be entitled to assume, and not to act as an agent of anybody in seeing that endowment policy arrangements were not interfered with by the solicitor concerned.

We feel that it is an extremely important amendment. It amends the provisions that the noble and learned Lord thought should be in the Bill, but it is a specific amendment dealing with a specific area in which the public may be in danger. I hope that the noble and learned Lord—who seeks to do everything he can to ensure that the public receive proper independent advice, as he has made clear, and that nothing in the Bill will interfere with the right of the public to be independently advised—will consider that we have gone all the way to meet the point that he made in Committee. I hope that he will accept the amendment. I beg to move.

8.15 p.m.

Lord Boardman

My Lords, I am extremely sympathetic to the argument put forward by the noble Lord, Lord Mishcon. I shall not repeat the grounds that he has given in support of the argument. I found them convincing. All the information that I have been given fully justifies them. Indeed, there are many instances of abuses to which he has referred. Those are likely to be aggravated if the Bill remains in its present form.

I refer to one matter that I believe is important. In the Bill as it now stands, a high street solicitor can act in two capacities. He can be an independent operator and adviser, able to give the full services to which my noble and learned friend referred in Committee as available from the high street solicitor. If he acts as an agent to a building society or bank, whatever it may be, he will be confined to giving a different level of service. That is confusing and unfair to the customer. I hope that my noble and learned friend will be able to console me about the dangers that otherwise lie ahead.

Lord Hutchinson of Lullington

My Lords, I should like to support the amendment. It is very nice to hear the noble Lords, Lord Mishcon and Lord Boardman, standing up for the independence of individuals on behalf of the public. I only wish that they had been able to do the same when the matter arose earlier.

Lord Prys-Davies

My Lords, I should very much like to support the powerful case that has been presented by my noble friend Lord Mishcon. He referred to the possible evil that may flow unless this clause is amended. The real fear must be that where the authorised practitioner's services are provided by its solicitor agent, the client will be denied independent legal or financial advice. If that were to happen it could open the door to the evil to which my noble friend has referred, or at least to a diminution in the standard of service.

It is my experience that under the present system the solicitor will almost invariably offer advice if he senses that there are grounds for believing that the terms of the deal should be questioned because they are too onerous or because they stretch his client's financial means unreasonably. The point should be made that under the present system the purchaser-borrower will often be in touch with his solicitor while he is negotiating the terms of the loan or of the purchase and will receive a great deal of guidance and advice. However, under the new system, the client will first meet the solicitor when he is looking to an authorised practitioner for the provision of services after the solicitor has received his instructions from the authorised practitioner.

As I understand it—I am subject to correction—the only duties of the solicitor will be to ensure that the client fully understands the terms of the transaction and that he realises the effect of signing a contract or mortgage deed, but that the duty does not extend beyond those two considerations unless the client is buying the property when the solicitor has to ensure that the purchaser obtains a good title.

If the duties of the solicitor agent of the authorised practitioner are confined to those two or three areas, a valuable shield will be lost. I should like to ask the noble and learned Lord this question. If the clause is to stand, will there be a duty on the solicitor agent to say to the client, "You have to look elsewhere for independent legal advice on this transaction. You have to look elsewhere as to whether or not these terms are fair and reasonable and whether the repayments are within your means"? I hope the House will say that the solicitor agent should be under a statutory duty to provide independent legal advice.

Baroness Seear

My Lords, I support the amendment not as a legal person but as the woman on the Clapham omnibus, or however one may describe the non-professional.. Eighteen months ago I sold and bought a flat. I should have been extremely uneasy had I thought that the solicitor had any kind of relationship with the bank, the estate agent or any other party to the deal. The solicitor was acting for me and only for me. I wanted my solicitor to be deeply suspicious of all the other parties to the deal and therefore he must be completely independent.

Lord Coleraine

My Lords, if the Law Society does not have the powers for which the noble Lord, Lord Mishcon, asks, not only will the public be in danger but the legal profession will be irreparably damaged when it becomes known that there are firms of solicitors to whom the public go which will not give a fair deal.

The Lord Chancellor

My Lords, the noble Baroness told of her experience. I was not certain whether any mortgage facilities were involved and, if so, who acted in connection with the conveyancing in support of the mortgage. However, there is no doubt that independent solicitors in private practice act for the purchaser and the person who provides the mortgage. That happens in a high percentage of cases and, I believe, with no detriment to anyone.

In the provision to which the amendment relates I merely wish to prevent rules being made which would frustrate the scheme contained in the Bill for the provision of conveyancing services to the public by banks or building societies. It is advantageous to what has been described as the "network" of solicitors, so I am particularly anxious that a way should be open for banks, building societies and the like to provide that service by utilising the services of solicitors in private practice if they are willing to provide them. Therefore, I have little difficulty with the principle lying behind the amendment.

I envisage a solicitor in private practice being willing to provide to a purchaser at the request of a building society, say, the services that the purchaser requires in connection with conveyancing, and, further, to provide to the building society the services which it requires in connection with the transaction; namely, the conveyancing necessary to secure a proper mortgage on the property. I see nothing inconsistent with the idea of the solicitor being able to provide services to the clients over and above what may have been provided to the client at the request of the building society. The building society price, whatever that is, will cover defined services. If the client wants only conveyancing services at that price he can obtain them.

I understand that the amendment is in accordance with those ideas. It will allow the solicitor in the kind of transaction that I have in mind to say to the client that the transaction should be modified in some way so as to be in the best interests of the client.

Lord Mishcon

My Lords, the noble and learned Lord is most courteous in allowing me to intervene. I wish him to follow the kind of danger we envisage and if he has not done so it is my fault and not his.

Will he take for granted that, in order to carry out general work for the building society, insurance company or whatever institution, the solicitor is asked whether he will have a contractual arrangement to do so? Will he also take it that there is a clause in the contract which states that in no circumstances will he advise the client not to enter into a policy negotiated with the insurance company or building society before he came along?

If the Law Society properly in accordance with the noble and learned Lord's wishes tried to make a rule which provided that solicitors must not enter into any such contract in regard to conveyancing services, and that the professional right of the solicitor was restricted in certain ways in order to safeguard the public as I and other noble Lords indicated, the clause as it stands in the Bill could well prohibit the Law Society from making any such rule. That is the danger with which I am dealing.

Lord Chancellor

My Lords, I do not agree that, as it stands in the Bill, the clause will have that effect. However, we are at one on the policy. I do not wish to prevent the solicitor from giving such advice if he deems it appropriate. Whatever the Law Society rules, I do not want the building society to be able to prevent the solicitor from offering such advice and I do not believe that the clause as presently drafted, allows that. However, if it does I shall take steps to clarify the matter.

The principle of the amendment is acceptable to me. All I wish to prevent is the making of a rule which will render it impossible for a solicitor in private practice to have an arrangement with a building society under which he provides conveyancing services to the clients of the building society and also acts for the building society in connection with the title to the mortgage. There is no other remit from the building society, only that in relation to the title of the mortgage. The solicitor is acting for the private client only, the building society paying for that on agreed terms. That is the type of transaction that I have in mind. I do not believe that there is any provision in the clause which will prevent the solicitor from giving independent advice, financial or legal, if he wishes.

The noble Lord, Lord Prys-Davies, suggested that there should be a statutory duty on, I believe, the solicitor, to give independent advice. As far as I know there is no such statutory duty at present but only a reservation of conveyancing in favour of solicitors, barristers and licensed conveyancers. All I wish to do is open that up to the extent of allowing those services to be provided either by arrangement with the building society or by an employee of the building society who is properly qualified.

From my understanding of that explanation, the amendment is perfectly acceptable to me. If the noble Lord, Lord Mishcon, will allow me, I should like to take advice on the way in which it will fit into our proposals from the drafting point of view. The principle is absolutely consistent with what I am seeking to achieve. As the noble Lord knows, I am anxious to do everything that I possibly can to prevent arrangements under which members of the public are conned into accepting insurances which are not the best for them in the circumstances perhaps because the arrangements which are made in respect of commission favour those who proffer the policies. I am entirely against the public being subject to that.

As noble Lords know, the Government have initiated steps to widen the matter considerably in relation to estate agents and the like. The Director General of Fair Trading is considering these matters, as we announced some time ago, because the sort of difficulty to which the noble Lord referred exists at present. He gave examples of things which can happen. I believe that he said that in the case to which he referered the evil had been prevented. However, from the 120 cases which were referred to, he illustrated other situations in which the evil had not been prevented. Therefore, those evils can happen under the present system.

I am anxious to avoid those and to make no step in the new system which would make it any less effective in preventing that sort of difficulty which arises at present. Therefore, if the noble Lord, Lord Mishcon, is prepared to allow me time to consider this amendment with my drafting adviser, I think I can assure him that it will receive the most favourable consideration.

Baroness Seear

My Lords, I ask the noble and learned Lord a direct question. In these circumstances, is the solicitor's primary loyalty to the building society or to the individual purchaser?

8.30 p.m.

The Lord Chancellor

My Lords, this is what I have set out before and it is the same here. I regard the arrangements as being that a solicitor will have all the responsibilities of a private solicitor to his client. The only responsibility which he will have to the building society is to secure for the building society a proper title in respect of the mortgage. The arrangements which I have in mind will secure that. In other words, the building society is providing a solicitor for the client, either a solicitor employed by the building society or arranged by it if the client wants that. That does not prevent the client going to another solicitor altogether if he so wishes. There is no suggestion that this arrangement is compulsory. It is merely a facility which the building society will be able to offer to the client if the proposals of this scheme go through.

Lord Mishcon

My Lords, one of the first lessons which an advocate learns—and nobody knows this better than the noble and learned Lord—is that if the judge is with you, for heaven's sake be quiet and sit down. I merely make the excuse of saying anything else in view of the fact that I wanted to make something abundantly clear.

This amendment gives the power to the Law Society—so that there is no doubt about it—to see to it that arrangements are not made on an agency basis with solicitors which would prevent them from giving independent legal and financial advice to clients in connection with the provision of conveyancing services. It is limited to that. It makes the clause clear. However, I express my gratitude to the noble and learned Lord who has told me that the most favourable consideration will be given to seeing that a suitable provision is put in if the wording of this amendment is not acceptable. Therefore, I unreservedly beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 148: Page 27, line 44, leave out ("notary") and insert ("duly certificated notary public").

The noble and learned Lord said: My Lords, I have already spoken to this amendment with Amendment No. 98. I beg to move.

On Question, amendment agreed to.

Clause 34 [Authorisation of practitioners];

Baroness Stedman moved Amendment No. 149: Page 28, line 10, after ("person") insert ("and that it is conducted with prudence and integrity and with adequate professional skills").

The noble Baroness said: My Lords, I shall also speak to Amendment No. 153. At this stage I seek some clarification as to how the noble and learned Lord sees the position which we are putting to him.

Amendment No. 149 seeks to ensure that when considering applications for authorisation as a conveyancing practitioner, the board is satisfied that the applicants are fit and proper persons to carry out their duties with prudence, integrity and adequate professional skills. In suggesting that in this amendment we are importing two of the relevant criteria of prudent management from Section 45(3) of the Building Societies Act 1986, to which the building society authorised practitioners will be subject in any event.

It also seems appropriate that those criteria should apply to other practitioners. They would give the board important additional grounds to the fit and proper one which is already stated in considering the applications for authorisation. Perhaps it may be suggested that the two phrases which we are using are in effect synonymous. However, I believe my proposal in Amendment No. 149 would make the clause more specific in what it says.

The purpose of Amendment No. 153 would be to require the board to take an existing authorisation into account not only for the purposes of the fit and proper requirement of subsection (l)(a), but also when considering whether the applicant will comply with the Clause 34(7) requirements relating to compliance with the relevant rules and regulations, having satisfactory arrangements to meet claims and so on. I am arguing that an existing authorisation as a building society, insurance company or bank is relevant in regard to these matters as well as the fit and proper requirement. I beg to move.

The Lord Chancellor

My Lords, prudence, integrity and adequate professional skills are all matters which concern me. I believe, however, that the present Bill and the proposed regulations will adequately cover the aim of this amendment. Clause 34(1)(a), to which the noble Baroness referred, requires an applicant's business to be carried on by fit and proper persons or, if an individual, by a fit and proper person, The provision for the manner in which those persons are to operate is set out elsewhere. Under subsection (l)(b) the board must be of the opinion that the applicant will comply with the requirements of subsection (7). It is these requirements which will govern how the work is to be done. In particular, Clause 37(1) provides for regulations to secure that authorised practitioners maintain satisfactory standards of competence and conduct and that clients' interests are satisfactorily protected. Clause 37(2) also covers other matters which may be included in the regulations, such as the efficient transaction of business and supervision by qualified persons.

The noble Baroness will know, from indications which I have already given, that I propose that the regulations should cover in some detail the standard of supervision to be required, including the provision of a personal interview at the outset of the conveyancing transaction.

Therefore, my approach to the amendment of the noble Baroness is that the principle of it is entirely acceptable to me and entirely appropriate. However, I believe that the necessary professional skills and the manner in which the transaction is carried out requires to be more closely regulated than those words of generality. Therefore, this matter is appropriately dealt with by detailed regulations. That is the way in which the Bill proposes to take forward the aims of the noble Baroness.

Baroness Stedman

My Lords, I am most grateful to the noble and learned Lord for that reply. It has given some clarification and I am satisfied that, by regulations, he will be able to cover the points which I made. I beg to leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Prys-Davies moved Amendment No. 150: Page 28, line 40, at end insert— ("() submits to the Board annually a report by an accountant as to whether in his opinion the accounts of the authorised practitioner have been kept in accordance with regulations made under section 37(2)(f).").

The noble Lord said: My Lords, the accountant's report plays a key role in the procedures which are designed to protect clients' money. We believe that he can, and should, play the same role in monitoring the practices of the authorised practitioner. If we rely on the accountant's report, if something is amiss with the way the authorised practitioner handles his client's money, it should be spotted by the accountant at an early stage and attention drawn to it in his report.

We appreciate that Clause 37(2)(f) makes it possible for regulations to cover the handling by authorised practitioners of their clients' money, but we consider that that is not specific enough or does not go far enough. We want to see on the face of the Bill a requirement that the authorised practitioner files with the conveyancing board an annual report that the accounts have been kept in accordance with Clause 37(2)(f).

In Committee the noble and learned Lord the Lord Chancellor indicated that reliance should be placed on the information received from the conveyancing ombudsman and other regulatory bodies. The snag with that is that much damage will already have been caused before the circumstances come to the attention of the conveyancing ombudsman. Therefore, what is required is an early warning system, and the accountant's report is the best warning method available.

Again in Committee the noble and learned Lord the Lord Chancellor suggested that the requirement in the Bill that an accountant's report be filed would impose an unnecessary burden on the authorised practitioners and could entail expenditure of time and expense which eventually would have to be borne by the client. The Law Society has considered that response and does not attach so much weight to that particular argument because in any event an accountant will invariably be instructed for various other purposes.

The purpose of the amendment, therefore, is to plead for the accountant's report to play a significant role as far as the procedures of the authorised practitioners are concerned. I beg to move.

The Lord Chancellor

My Lords, as I said in Committee in response to a similar amendment, the existing powers already set out in the Bill are adequate to allow regulations to ensure what is required without imposing unnecessary burdens. In addition, Clause 32 provides that, in discharging its duty to supervise the activities of authorised practitioners, the board shall make arrangements designed to enable it to ascertain whether authorised practitioners are complying with regulations made by the Lord Chancellor under Section 37. I do not believe that it is necessary to make specific provision for an annual certificate by an accountant to be provided in this particular way. If the board finds, in the light of experience, that this is necessary for supervision, then there are adequate powers for it to make such a requirement. If, on the other hand, the board considers such a requirement to be unnecessary, the only thing the amendment would achieve is to increase the cost for the client.

Perhaps I may take an illustration. Let us suppose a building society were to arrange its affairs, so far as conveyancing was concerned, in the manner we were discussing in the earlier amendment moved by the noble Lord, Lord Mishcon, by using an independent solicitor. In that situation such a requirement would not appear to be necessary because the actual conveyancing would be handled by someone whose accounts were already subject to the surveillance of the Law Society.

I entirely accept the spirit of the amendment in the sense that we want to have power to make sure that what the authorised practitioners' board and the Lord Chancellor's regulations require are being fulfilled, but it is not necessary to tie ourselves down in primary legislation to this particular method of enforcement. There are other methods which might be more suitable in the circumstances.

The noble Lord may take it therefore that I wish to secure that the regulations are complied with, but that I do not believe it is necessary to tie ourselves down to this particular method; this method being open should circumstances suggest that it is the appropriate one. I am sure the noble Lord has no more desire than I have to impose unnecessary costs on companies or on clients. If this is a necessary cost, in the light of all the circumstances, it would be right to impose it, but if it turns out not to be, then I believe the right thing to do in that situation is not to impose it. To leave the flexibility with the regulations is, in my submission, the appropriate course.

In the light of that explanation I hope the noble Lord may feel that the purpose of moving the amendment has been served.

Lord Prys-Davies

My Lords, I am somewhat dismayed by the response of the noble and learned Lord the Lord Chancellor. We believe that we are possibly exaggerating the financial burden which would be borne by the authorised practitioners. I am told that any company or firm offering conveyancing services would almost certainly need to instruct an accountant for various other purposes, such as the Companies Act, auditing and the production of accounts for tax purposes. The accountant instructed for these purposes is unlikely to charge the institution a considerable additional sum if he is instructed to produce a report certifying that the institution had complied with the regulations made under Clause 37(2)(f)

I am satisfied that we have raised this issue and I very much hope that the mischief which we fear will not arise. In the circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 151: Page 28, line 42, leave out ("a bank") and insert ("an institution").

The noble and learned Lord said: My Lords, this is a technical amendment which brings the definition of "bank" in this clause into line with that used in Clause 44. The main reason for the proposed alteration is that an institution may be authorised under the Banking Act 1987 if it has minimum net assets of £1 million. An institution may, however, only call itself a bank if it is a company incorporated in the UK and has paid-up share capital and/or undistributed reserves of £5 million in accordance with Section 67(2)(a). It was not intended to exclude those institutions whose minimum paid-up share capital was less than £5 million but were nevertheless authorised to take deposits in the United Kingdom under Part I of the Act. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 152: Page 28, line 43, leave out ("operate") and insert ("carry on").

The noble and learned Lord said: My Lords, with this amendment I speak also to Amendment No. 162. These are technical amendments which bring the terminology of the clause into line with that used in the Banking Act 1987. I beg to move.

On Question, amendment agreed to.

[Amendment No. 153 not moved.]

The Lord Chancellor moved Amendment No. 154: Page 29, line 5, at end insert— ("(8A) The Board shall maintain a register of authorised practitioners which shall be open to inspection, at all reasonable times, without charge").

The noble and learned Lord said: My Lords, this is an amendment I bring forward to implement an undertaking given in Committee to consider favourably an amendment by the noble Lord, Lord Prys-Davies, which required the conveyancing board to keep a register of authorised practitioners which could be inspected by members of the public free of charge.

This amendment fulfils that undertaking and contains the results of my consideration. I hope it is acceptable to the noble Lord. I beg to move.

Lord Prys-Davies

My Lords, I am grateful to the noble and learned Lord the Lord Chancellor for his favourable response.

On Question, amendment agreed to.

Lord Boardman moved Amendment No. 154A: After Clause 34, insert the following new clause:

Fiduciary relationships in relation to conveyancing services. (".—(1) A fiduciary relationship shall be deemed to exist between an authorised practitioner and any person for whom the authorised practitioner provides any conveyancing services. (2) The extent of the fiduciary relationship imposed by subsection (1) shall be the same as would exist between a solicitor and his client for whom similar services were being provided.").

The noble Lord said: My Lords, this amendment goes to the heart of a problem debated at some length on previous stages of this Bill; that is, the conflict of interests. I am sorry that the noble Lord, Lord Hutchinson of Lullington, is not in his place because I should like to reassure him that on this amendment, as indeed on every other one to which I have spoken—and indeed on every amendment to which the noble Lord, Lord Mishcon, has spoken—we have been concerned with the interests of the consumer and not with specifically narrow interests. I hope I misunderstood what he said in his comments, but I should like to get it clearly on record for my part—and certainly I am convinced also on the part of the noble Lord, Lord Mishcon—that that is so.

This issue of conflict of interest was debated fully on 1st February. There was very wide concern coming from all parts of the Committee at the conflicts of interest that could arise, particularly when authorised practitioners were part of a group with varied activities such as estate agents, insurance agents and the rest. My noble and learned friend the Lord Chancellor fully recognised that. As I understand his comments, he said that the protection against that would be adequately provided by the personal interview with the solicitor or licensed conveyancer that would have to be provided by the authorised practitioner.

The noble and learned Lord said, as reported in Hansard at col. 461: But I consider that there may be conflicts of interest depending on individual circumstances … I have asked myself how one can deal with that. I took the view that the way to deal with it is that the professional person should have the responsibility of saying whether there was a conflict of interest in relation to the transaction, and if there was, the building society or the bank would not be able to act. That is the purpose, among other matters, of the initial interview; namely, that that would be a matter for determination by the professional person in the light of his standards of competence and conduct as laid down by his own professional body".

My noble and learned friend went on to say at col. 463: I envisage that the regulations under this clause—as set out in the White Paper—will provide that the qualified person in charge of the transaction should have a personal interview with the client at the beginning of the transaction. A number of points should then be considered, the most important being whether there is any likelihood of a conflict of interest. I also envisage that the qualified person will advise on the nature of the services he can provide and whether there are any other legal services related to the transaction which he is not able to provide. He should then indicate to the client that those services are desirable but not available from him. That is a perfectly reasonable requirement to deal with the type of problem raised by my noble friend".

It begs the question as to whom the professional person conducting the interview is accountable. That matter was raised during the debate and was dealt with by my noble and learned friend in col. 466, where he said: We have provided, and I intend to provide, that if the solicitor employed by the building society undertakes a transaction for a client, then his primary duty will be to the client. There is nothing to prevent that happening merely because he is employed. The terms of employment can secure that position. Therefore, his mandate from the employer will be to secure for the employer a properly secured mortgage on the property in question".

I fully support what my noble and learned friend said there. He went on to say that he was extremely open to proposals which might improve the measure of protection. It is with that in mind that my amendment has been tabled. I believe it does precisely that. It makes quite clear where the primary duty lies, which is to the lay client with whom the fiduciary relationship will be established. It places a responsibility on the professional adviser, the authorised practitioner, to have that duty to the lay client who is seeking advice.

The matter goes somewhat further than that. The fiduciary relationship would also overcome certain other matters of concern. It would ensure that there is equal treatment between the authorised practitioner and the independent practitioner, the high street solicitor, on such matters as disclosure and accounting. These matters were debated in Committee and it was decided to accept an amendment which said that the Lord Chancellor may make—I stress "may"—provision for disclosure and accounting.

I believe that duty should be even more. A fiduciary relationship would make it a statutory duty that the authorised practitioner must accept the same obligations as a private solicitor would accept with his client. As we were told in Committee, that duty includes disclosing any amounts that he receives and accounting to his client for them. I believe that is a duty which should be accepted by the authorised practitioner. If there is received an insurance commission on an endowment policy or whatever it may be, the solicitor must be accountable to the customer client for that.

In the course of discussing various amendments we have spoken of the need for level playing fields. I certainly believe that this is an area where we should seek to get level playing fields between the independent high street solicitor and the authorised practitioner. If my amendment were accepted, both the independent solicitor and the authorised practitioner would be on equal terms. That is consistent with the decision that the House made on Tuesday concerning the cab rank rule; namely, those who accept extended rights—in this case it would be the authorised practitioner—should also accept the same duties as those with whom they would be in competition.

I hope that those who felt the need to vote in favour of the extension of equal rights under the cab rank rule will be no less convinced of the need to support an amendment which provides for equal rights between the independent high street solicitor and the authorised practitioner. I believe that this is an essential requirement for the protection of the consumer. It is the consumer who is entitled to have the best advice, to be protected, and also to know that he is getting independent advice; namely, the kind of advice to which the noble Baroness, Lady Seear, referred concerning an earlier amendment. I beg to move.

Lord Mishcon

My Lords, we on these Benches support this amendment for the reasons given so eloquently by the noble Lord, Lord Boardman.

Lord Coleraine

My Lords, I believe it is axiomatic that anyone providing conveyancing services should be under a fiduciary duty to the client and that any derogation from his duty, however allowed, is entirely against the interests of justice. It seems to me that whether or not it is the case that an authorised practitioner is under this fiduciary duty, it should be spelt out on the face of the Bill where we are dealing with authorised praactitioners who, in the majority of cases, will not represent organisations which have in the past subjected themselves to the kinds of responsibilities which they should and ought to be assuming if they are to provide conveyancing services.

The Lord Chancellor

My Lords, as I see it, the essential point is that the person who is acting as the qualified person—namely, the solicitor or licensed conveyancer—should owe the proper professional duty to the client whether he is an employee or acting as an agent of a building society. This clause as drafted would go further than that. The idea must be that the conveyancing work is done by a person who owes the client the proper professional duty, and that should rest on the professional person.

For example, suppose that a building society arranges for a solicitor to do my conveyancing work. I believe that it would be perfectly reasonable to arrange the matter in such a way that the solicitor doing that work was under a duty to me and that duty to me was the same kind of duty as if the solicitor was employed by me directly without the intervention of the building society. That is what I believe to be the correct situation. As regards this clause, I am not sure to what extent this fiduciary duty is supposed to extend. The amendment states: (1) A fiduciary relationship shall be deemed to exist between an authorised practitioner and any person for whom the authorised practitioner provides any conveyancing services. (2) The extent of the fiduciary relationship imposed by subsection (1) shall be the same as would exist between a solicitor and his client for whom similar services were being provided". The extent of that duty is restricted to the conveyancing work. The building society, for example, will be giving a mortgage to the client. That mortgage cannot be in pursuance of a fiduciary duty. If the fiduciary duty is the duty in relation to the conveyancing services, I suggest to my noble friend that it is much better put upon the professional person who is required to supervise the transaction. It is by that method that the interests of the client will best be safeguarded. That fiduciary duty, as I explained, is already implied by the arrangements that I have made. But to seek to make the building society itself subject to a fiduciary duty when it is, for example, a lender to the client would have consequences that my noble friend does not have in mind.

9 p.m.

Lord Boardman

My Lords, perhaps I may try to clarify the point. I see the duties of the authorised practitioner in so far as he is doing the work that was otherwise done by the high street solicitor to be identical, and it is for the building society, if it is employing a professional person in order that he may do the conveyancing work, to accept a fiduciary responsibility to that person that a firm of solicitors would accept from its client. That includes such matters as disclosure of commission, accounting, and so on.

The drafting of the clause may be inadequate for carrying out the wish, which my noble and learned friend and I share, that the client should be properly advised. If my noble and learned friend felt that we could have something to put that principle more firmly into the Bill I would welcome it. But unless that happens there will be concern regarding the position of a solicitor or professional person employed by a building society to which he looks for his salary, pension, and so on, as distinct from his duty to the person who has come to him from the estate agency. I believe that the establishment of a fiduciary duty could reinforce the point. I hope that that may be helpful to my noble and learned friend.

The Lord Chancellor

My Lords, what my noble friend has said is helpful. He wishes to establish that the professional person who is in charge of the transaction, even if he is employed, has a fiduciary duty to the client. As I understand it, the amendment seeks to ensure that the professional person, even if he is employed by a building society, will have a fiduciary duty to the client which will override any duty that he may owe to the building society by which he is employed. If that is my noble friend's point, I do not have any difficulty in trying to achieve that. I doubt whether the amendment does it. The amendment is directed to placing a fiduciary duty on the authorised practitioner who may be the employer. My noble friend has just said that he wants to be sure that when the solicitor is acting, even if he is an employee of the building society, he will act for the client in the same way and with the same responsibility as if he were acting for the client and was not employed by the building society.

Lord Boardman

My Lords, I am grateful to my noble and learned friend. If I have understood him correctly, he accepts the obligation for the professional person acting in the matter to accept the same fiduciary duties as a solicitor has to his client. If my noble and learned friend feels able to look at that point to see whether he can bring something forward to underline that duty, I shall happily not proceed further with the amendment. I do not know whether my noble and learned friend is able to give that assurance.

The Lord Chancellor

My Lords, I should like to read the report of our discussions. So far as I have understood my noble friend's point, I believe that I can favourably consider bringing forward an amendment to make it clear that where the authorised practitioner is providing these services, the person who is responsible for the transaction at the professional level shall have the responsibility to the client in carrying out the transaction that a solicitor would have in relation to the ordinary practice. There may be difficulties about that. My noble friend will, I am sure, take that into account. I shall look carefully at this point to see to what extent I can meet his concern.

Lord Boardman

My Lords, I am grateful to my noble and learned friend. In anticipation of his being able to achieve something to meet my problem—I recognise the drafting difficulties—I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 37 [Regulations about competence and conduct of authorised practitioners]:

Lord Mishcon moved Amendment No. 155: Page 30, line 25, at end insert— ("(c) that authorised practitioners do not engage in unfair competition by settling their prices for the provision of conveyancing services at a level that fails to provide a reasonable rate of return on the costs of providing those services.").

The noble Lord said: My Lords, in order that noble Lords may have a full understanding of this important amendment perhaps I may ask them to refer to Clause 37 of the Bill. Against the clause there is the marginal note: Regulations about competence and conduct of authorised practitioners".

Noble Lords will see that this is an empowering clause for the Lord Chancellor to make provision by regulation as he considers expedient with a view to securing satisfactory standards of competence and conduct and ensuring that the interests of the clients are satisfactorily protected. At first sight one sees that, both by the marginal note and much more importantly by the wording of the clause, this enabling power to make the regulation is restricted to competence and conduct and the interests of clients.

In his speeches both in this House and outside the noble and learned Lord has made it perfectly clear that the last thing in the world that he would want to see is unfair competition in regard to charges that would have, as he himself has admitted or as he himself has confirmed, the very damaging effect of closing up the little high street solicitor who is of such great advantage to the public who want legal advice. The Green Paper and the White Paper were awfully keen on this point.

I ventured to move an amendment at Committee stage which went somewhere near the amendment that I am in fact moving today. I want to base my amendment very clearly on government policy. That is why I made the introduction that I did as to the White Paper and to the noble and learned Lord's own views, as I know them.

I hope that your Lordships will forgive me if I quote the relevant paragraph of the White Paper, so that there is no misunderstanding. It is paragraph 5.14, and I am omitting a few words that are irrelevant to my argument. It says: …the Green Paper proposed that unauthorised practitioners should be prevented from offering conveyancing services at less than their true cost, and that their annual accounts would have to provide proof of that… It was argued"—

that was during the consultation period, if I may make that intervention— that an annual requirement to demonstrate in the accounts that there was no predatory pricing would impose very substantial costs, and might also lead to increased qualification of accounts. In the light of the consultation response, authorised practitioners will be required to submit to their regulatory bodies each year details of the prices they charge for conveyancing services, certifying that those prices have been settled on a fair and reasonable basis to provide a reasonable rate of return on costs of providing those services alone. This aims to remove cross-subsidy on a significant and systematic basis".

Nothing could be clearer, that this was to protect the solicitor—I repeat it—the high street solicitor in particular, from unfair competition by way of pricing, because obviously the large financial institutions will not aim to make their money out of conveyancing costs. They will aim to make their money out of all that goes with it, in regard to mortgage loans, endowment policies and perfectly honourable matters of that nature. But from their point of view that is where the money will be.

The CBI, of all people, saw that and they fully suppported the amendment which I moved at Committee stage. They said that one of industry's grave concerns was the effect of the proposals in the Green Paper, and then the White Paper, and the effect that they might have of a damaging nature unless there was proper, fair competition in regard to prices.

The noble and learned Lord knows that I always speak with deep respect in regard not only to him personally, but in regard to the interpretation that he gives us and as he sees it of the provisions of the Bill. As I understood him he seemed to take the point at Committee stage, but to say that Clause 37 enabled him to make regulations which would protect the position that I had mentioned in this amendment, and that therefore one need not worry about it because, quite obviously, he had clearly in mind the policy in the White Paper. That was why I asked your Lordships, in your kindness, to refer first of all to the provision in Clause 37. I would merely remind your Lordships of what I read out and what was the margin note, which is the shorthand for what really is set out fully in the Bill: Regulations about competence and conduct of authorised practitioners".

I concede at once that, although the matters raised in the amendment are so very definitely spoken of in the White Paper as government policy, at all events it strains interpretation to say that these matters are covered by competence or the conduct of authorised practitioners.

The noble and learned Lord seems to have the great ability not only to sit at late hours and keep clarity of mind, but even at a late hour to hear two arguments going on at once. I must say that he is the envy of every one of us.

I was saying that the interpretation was at all events strained; but whatever it be, is it not at least arguable—I put the submission at the lowest that I can—that someone would later say that they could challenge the Lord Chancellor's right under Clause 37 to make a regulation which operates against charges being unfair or cross-subsidised? I give him—I do it most respectfully—the opportunity to see that any such argument has no chance of success, by the Bill clearly stating that such a power exists and, as he has expressed the willingness to carry out the policy of the White Paper, to see that on the face of the Bill that regulatory power is open to him, and is one that will be carried through.

I also want to make it clear, because of what was said in Committee, that the question of predatory pricing and cross-subsidy being prevented is vital, and that they are two different, although somewhat connected, matters. Therefore it is against both evils—if I may put it that way—that the regulation should be made pursuant to the White Paper policy; namely, that there should be neither predatory pricing nor cross-subsidy, and that the conveyancing costs should stand on their own and should be shown to be fair and attributable to the conveyancing department of the institution concerned. I beg to move.

9.15 p.m.

The Earl of Kinnoull

My Lords, I do not know whether one is allowed to interfere in what is a two-man argument, but I am interfering because, although I respect totally the noble Lord, Lord Mishcon, I disagree with the amendment. I disagree with the amendment because, although there is clearly a balance to be achieved in the Bill or by subsequent regulation, there is the argument relating to the interference with commercial practice; there is the argument as to whether the competition legislation would bite on that situation, and there is the argument, which I believe my noble and learned friend put up in Committee, which I support, that the solicitor in the high street would not capitulate merely because he found that the conveyancing part of his business was becoming competitive.

Despite the fact that the CBI has supported the amendment moved by the noble Lord, Lord Mishcon, there is a consumer interest in the position. I feel passionately that much progress has been made towards benefiting the consumer, and I feel that the substance of the amendment would be far better in regulations than in the Bill.

The Lord Chancellor

My Lords, the noble Lord, Lord Mishcon, is asking me whether the regulation-making power, as drafted in the Bill, is wide enough to enable me to make the type of regulations that he has in mind. I have sought advice upon that point, but in view of the question that the noble Lord has asked, I shall look at the matter again.

I would not wish to restrict the unfair competition aspect to the one that the noble Lord has suggested. That is one aspect, but there could be other aspects of unfair competition which might require to be dealt with. One which is important and which arose in the Green and the White Papers, was the system whereby, if the costs were incurred by a private solicitor, they would not be added to the mortgage but, "If you take our service", they will be added. That is a type of tying-in which is brought within Clause 72. There are other aspects of unfair competition, apart from this one, which I would wish to have in my sights in case they should develop. The precise way in which this aspect of unfair competition should be dealt with is a matter of some judgment.

When we drew up the White Paper, I had intended that the different institutions would be answerable to their own prudential regulations—the building societies, the building societies registrar and so on, each being separate. Following recommendations and suggestions made to us by the Law Society among others, we have now put all the authorised practitioners under one board. That makes it much easier for the board to take a bird's eye view of all that is happening. It will see all the prices. It may be much easier for it to tell what is going on in a particular area because it will have the high street solicitors' prices, the prices of the various authorised practitioners available to it for the various services. In that way they may be able to operate an even more efficient method of getting at the problem than I had originally thought of when I was putting the White Paper together.

The board has a duty to promote competition. While the noble Lord was putting forward his argument I was looking at a certain passage and I received an item of information from his noble friend in passing, rather than listening to the argument. I thought of suggesting that, as in Clause 32. we insert: to seek to develop fair competition"— I think that is implied but not expressed— in the provision of conveyancing services". It may be that I ought to have a provision mirroring that at the beginning of Clause 37. If the noble Lord will leave the matter with me, I shall be happy to consider it further in the light of what has been said.

The policy I have is to seek to ensure that the competition is fair. That is in the interests of the consumer. I do not wish to propose any improper protection from competition for any of those providing conveyancing services, but I wish to do my best to ensure that the arrangements that we make provide for fair competition in the interests of the client.

Lord Mishcon

My Lords, as I understand the noble and learned Lord, he has been good enough to say in reply to the amendment that he will look into whether Clause 37 would give him the power to make a regulation dealing with fair pricing, fair costing and cross-subsidy. Secondly, he would wish in any regulations he made to carry out the policy in the White Paper, an extract from which I read. Thirdly, he will obviously have in mind, when we come to the third stage, putting down an amendment if he finds that it is necessary after examining the powers under Clause 37 which will deal with these matters. On the basis that I have understood the noble and learned Lord correctly, I am pleased to withdraw the amendment. However, I should like him to confirm that.

The Lord Chancellor

My Lords, I wish to make sure that I have the necessary power to ensure fair competition in all aspects—price, cross-subsidy and so on, and any other matters that may occur to us as we develop the proposals for regulations. The main heading in issue here is fair competition. We wish to see as we go along the precise way in which these aims may be achieved, but that is the purpose that I have in mind. I believe that what the noble Lord says is in accordance with what I propose.

Lord Mishcon

My Lords, I think this is important. Perhaps the noble and learned Lord will say that he in no way seeks to differ now from the policy set out in the White Paper.

The Lord Chancellor

My Lords, all I am saying is that the precise manner in which the policy is carried out is different from what we had in the White Paper. I am not sure now, for example, that the best way of securing what I had in mind in the passage which the noble Lord read from the White Paper is the statement annually to the prudential authorities. It may be much better to look at their prices and judge whether the prices are fair, rather than relying on certificates and so on. I do not want the noble Lord to be misled. What I have in mind is to achieve the aims that were set out in that passage of the White Paper. The precise manner in which we shall achieve them will be developed in the course of consultation on the regulations.

Lord Mishcon

My Lords, it was of course the aims of the passage that I had in mind. I understand that the machinery can obviously be dealt with after consideration as regards the best machinery to be employed. I am deeply grateful to the noble and learned Lord for his remarks. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 156 not moved.]

Lord Airedale moved Amendment No. 157: Page 30, line 34, leave out ("each transaction to be") and insert ("any transaction to remain").

The noble Lord said: My Lords, this amendment arises out of an amendment that was tabled in Committee by my noble friend Lord Evans of Claughton. I notice that the next amendment that we are to discuss is identical with the amendment of my noble friend Lord Evans. However, this time it stands in the name of the noble and learned Lord the Lord Chancellor. I may in pursuing my amendment, be open to the charge that the Liberal Democrats are never satisfied. However, I think there is common ground between us that paragraph (c), which we are discussing, is not satisfactory as it stands. It makes use of the expression "each transaction". Assuredly, people will take the words "each transaction" to mean every transaction. They will think that paragraph (c) therefore states that every transaction shall come under the overall control of the same member of a firm, however large the firm.

I understand that that is not at all the intention of the noble and learned Lord the Lord Chancellor as he expressed it in Committee. The intention is simply that each single transaction will remain under the control of the same member of a firm throughout its course so that the client does not get pushed around from one member of the firm to another. This amendment replaces the words "each transaction" with the words "any transaction" and therefore ensures that we are talking about transactions taken one at a time. The amendment introduces the words "to remain" instead of the words "to be" so as to emphasise the continuity of supervision which is, I believe, very much part of the intention of the noble and learned Lord. I beg to move.

The Lord Chancellor

My Lords, it would never occur to me to suggest that the Liberal Democrats were never satisfied. However, we had intended to satisfy the noble Lord, Lord Evans of Claughton, whom I am sorry cannot be with us. However, I understand perfectly the reason for that. I thought that in satisfying the noble Lord I could do no better than carry out what he suggested. However, I am advised that what I am proposing in Amendment No. 158 would have the effect that each transaction—that is to say, each individual transaction—would be under the overall control of one individual. That is what I wish to achieve. I believe my amendment does achieve my intention; namely, that a particular transaction should be under the overall control of a single identified person from start to finish. This is perhaps a matter of style and judgment. As I have accepted in effect the amendment of the noble Lord, Lord Evans, the noble Lord, Lord Airedale, may feel that it is appropriate to leave the matter at that. However, I am of course in his hands.

Lord Airedale

My Lords, no doubt my noble friend Lord Evans would be pleased to learn that the noble and learned Lord the Lord Chancellor had moved an identical amendment to his on Report. Therefore, in that case I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 158: Page 30, line 35, leave out ("the same") and insert ("one").

The noble and learned Lord said: My Lords, this is the amendment that we discussed. I am very grateful to the noble Lord, Lord Airedale, for taking the trouble to suggest an amendment. I am sure that he did so before he knew what I intended to do. I am extremely grateful to him for accepting what I have proposed. I beg to move.

On Question, amendment agreed to.

9.30 p.m.

Lord Prys-Davies moved Amendment No. 159: After Clause 37, insert the following new clause:

("Safeguarding clients' money etc.

.—(1) The Lord Chancellor shall, for the purpose of safeguarding clients' money and clients' affairs, by order provide for—

(a) the circumstances in which the Board may intervene in the conveyancing business of an authorised practitioner; and

(b) the powers which the High Court and the Board may exercise on an intervention under this section.

(2) An order under this section shall, in particular, empower the Board to intervene where—

(a) an authorised practitioner ceases to conduct conveyancing business; and

(b) the Board has reason to suspect dishonesty on the part of an authorised practitioner or an officer, employee or associate of an authorised practitioner.

(3) an order under this section shall, in particular, on an intervention under this section—

(a) empower the High Court to order that no payment shall be made without the leave of the court by any bank, building society or other person or any money held by it or him on behalf of the authorised practitioner; and

(b) empower the Board to require an authorised practitioner to deliver to the Board documents in its possession relating to its conveyancing business.

(4) The power to make an order under this section shall be exercisable by statutory instrument.").

The noble Lord said: My Lords, the purpose of the amendment is to enable the Lord Chancellor to make an order by statutory instrument empowering the Authorised Conveyancing Practitioners Board to intervene in the conveyancing business of an authorised practitioner where it is necessary to do so to safeguard clients' money. An amendment was moved by my noble friend Lord Mishcon at Committee stage which was designed to achieve the same end as this amendment.

The Law Society is empowered to intervene in a solicitor's practice in certain circumstances where clients' money and clients' affairs require to be safeguarded. Similar powers are vested in the Council for Licensed Conveyancers and I understand that Sections 64 to 71 of the Financial Services Act 1986 contain detailed provisions regarding powers of intervention.

In Committee, in response to the amendment moved by my noble friend Lord Mishcon, the noble and learned Lord the Lord Chancellor said that he felt that the Bill as drawn gave sufficient control to the Authorised Conveyancing Practitioners Board without attempting to give it the full panoply of intervention powers of a professional body. That is a role which the noble and learned Lord felt was unnecessary and unsuitable for the board. The noble and learned Lord referred the Committee to certain duties and powers which were conferred on the board under Clause 32(1)(b), Clause 32(2) and Clause 36(3)(d). However, the power of intervention is missing from all three clauses. Therefore my noble friend Lord Mishcon was unhappy with the reply of the noble and learned Lord the Lord Chancellor and reserved the right to return to the matter. Having received advice from the Law Society we have tabled the amendment which is now before the House.

It is generally felt that the response of the noble and learned Lord at Committee did not address the vital point that where a business handles large sums of clients' money it is essential that the regulatory body has emergency powers to intervene swiftly if it learns of a breach of regulations in order to safeguard such money. In our submission, it is not sufficient for the Bill to require the board to supervise the activities of authorised practitioners under Section 32(1)(b) or to require it in Clause 32(2) to make arrangements to ascertain that authorised practitioners are complying with the relevant regulations. Those powers will not enable the board to intervene.

Moreover, it should be said again that if the board is to be given the power of intervention it must be such as to enable the board not only to bind the authorised practitioner but also third parties such as banks and building societies which hold money on behalf of the authorised practitioner. None of the provisions in the Bill as currently drawn would create such powers which would be binding on third parties.

It is fair to say that in Committee the noble and learned Lord the Lord Chancellor referred to Clause 36(3)(d) which enables the board to make rules concerning transitional arrangements for dealing with work in hand should an authorised petitioner's authorisation be revoked or suspended. However, in practice, there is likely to be a considerable lapse of time after the board learns of an alleged dishonesty or malpractice and before the authorised practitioner's authorisation is revoked or suspended. The transitional provisions would be used only once revocation or suspension had taken effect. The missing element is the power for the board to intervene quickly and decisively where it is necessary to do so in order to protect clients' money and affairs. I beg to move.

The Lord Chancellor

My Lords, the powers that the Bill confers on the board are aimed to enable it to perform its duties of authorising and supervising practitioners in a way that is light and flexible as well as effective. The board has a general duty to supervise the activities of authorised practitioners and it will have to make arrangements designed to enable it to ascertain whether authorised practitioners are complying with the extensive regulations which the Lord Chancellor will make if Parliament so decides. In addition, the board may make rules concerning transitional arrangements for dealing with any work in hand should an authorised practitioner's authorisation be revoked or suspended.

As I said in Committee, I do not consider it necessary to give the board the full panoply of intervention powers which the Law Society has. That is because the board is not in a similar position to the Law Society. It is a regulatory body similar in many ways to the Building Societies Commission and the Bank of England. Those institutions provide a more appropriate model for the kind of powers that it needs to carry out its supervisory and disciplinary functions. I am therefore considering whether the board should have intervention powers similar to those provided by Section 55 of the Building Societies Act 1986 which would provide that the board may appoint one or more competent persons to investigate and report to it on the state and conduct of the business of the authorised practitioner concerned, or any particular aspect of that business. That, together with the specific statutory powers to call for an authorised practitioner's documents which I propose to provide, and the powers which are already given to the board, give the board ample powers to carry out its duty of supervising authorised practitioners in connection with their provision of conveyancing services.

A number of the bodies that we have in mind will already be subject to prudential supervision by other authorities such as the Building Societies Commission. We want a reasonably self-consistent system. Where it is a question of conferring power on the board, it is probably wise to confer those powers in the primary legislation rather than by order, as in the amendment of the noble Lord, Lord Prys-Davies, although I understand the reason for his choice. In my further consideration of the comments of the noble Lord, Lord Mishcon, on the last occasion and in preparing to address the amendment. I took the view that any additional powers that we thought of providing should probably be provided in the primary legislation.

I hope that in the light of that explanation the noble Lord will feel able to withdraw the amendment. However, I believe that the full panoply of powers of the Law Society would probably not be appropriate here. To that extent, there is something between us. On the other hand, I cannot expect the noble Lord to express a concluded view until he sees the proposal with which I shall come forward, but I am certainly working on that aspect of the matter.

Lord Prys-Davies

My Lords, I am particularly grateful to the noble and learned Lord for his reassuring response. I take the point that he does not consider that the Law Society's powers are a precedent in that respect, but we are nevertheless pleased that the matter is being given further consideration. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 160:

After Schedule 6, insert the following new schedule

("SCHEDULE

Forward to