HL Deb 20 October 2004 vol 665 cc852-6

7.50 p.m.

Lord Evans of Temple Guiting rose to move, That the draft regulations laid before the House on 15 July be approved [26th Report from the Joint Committee].

The noble Lord said: My Lords, these draft regulations implement provisions contained in Section 26 of the Courts and Legal Services Act 1990. The regulations extend the remit of the Legal Services Ombudsman, allowing her to oversee complaints handling in respect of probate services provided by members of bodies authorised by the Secretary of State for Constitutional Affairs. As a result, they will provide an additional layer of protection for consumers who purchase probate services from authorised bodies.

The draft regulations will allow the functions of the Legal Services Ombudsman, as set out in Sections 21 to 25 of the 1990 Act, to apply in cases where probate services have been provided for a fee by a member of an authorised body under Section 55 of the 1990 Act.

If the House approves these draft regulations, and once further negative regulations have been laid to open the probate market to new providers, the Legal Services Ombudsman will be able to investigate the way in which a complaint regarding probate was dealt with by the authorised body. If she is dissatisfied with the way in which the complaint was addressed, she may then require the body to reconsider that complaint.

To ensure that suitable legislative protections are in place for consumers before approved bodies begin to offer services in this area, these draft regulations have been laid prior to laying further regulations that will open the probate market to new providers.

As your Lordships know, when a person dies, it is necessary for someone to deal with his or her estate. By "estate", I refer to the money, property and possessions left by the deceased. That person is responsible for collecting in all moneys, paying any debts and distributing what is left to the people legally entitled to it. In order for a person, or persons, to obtain the required authority to do that, they usually need to obtain a legal document, called a grant of representation, from the Probate Registry. The grant of representation will be either a grant of probate or a grant of letters of administration. I refer to all those when I talk about probate services.

Currently, only a solicitor, a barrister or a duly certified notary public, most of whom are already qualified solicitors, are able to take instructions or to draft or prepare the papers on which a grant of probate or letters of administration depend. Section 23 of the Solicitors Act 1974 makes it an offence for anyone else to prepare these papers for payment.

In his report, Competition in professions, published in March 2001, the Director-General of Fair Trading suggested that consideration should he given to implementing Sections 54 and 55 of the Courts and Legal Services Act 1990. Implementing Section 54 would allow banks, building societies, insurance and trust companies to prepare the grant of probate or letters of administration for a fee. Implementing Section 55 would allow bodies authorised by the Secretary of State to provide those papers for a fee.

It was considered that doing so would increase competition in the market by allowing a greater number of providers to offer these services for a fee. The recommendation does not apply to individuals conducting their own applications for probate as they may already do so unhindered by the Solicitors Act.

The Government accepted the recommendation to increase competition in this area and announced their decision in July 2003 in the report, Competition and Regulation in the Legal Services Market, published by the Department for Constitutional Affairs.

The provisions of the 1990 Act require that new providers of probate services must be members of a complaints-handling scheme and satisfy any requirements of the Secretary of State with respect to complaints handling. As a result, before any new providers may charge members of the public for offering probate services, they must demonstrate to the Secretary of State that they belong to a complaints-handling scheme and have their own complaints-handling mechanisms in place.

However, in addition to ensuring that new providers have a suitable complaints-handling scheme, the 1990 Act also provides that the Legal Services Ombudsman may oversee complaints handling by the bodies authorised by the Secretary of State under Section 55. Her powers are contained in Section 26 of the 1990 Act.

In preparing these regulations, the Legal Services Ombudsman has been consulted. She has confirmed that she is content for them to go ahead.

As noble Lords will see, the draft regulations apply only to bodies seeking authorisation under Section 55 of the 1990 Act. They do not apply to banks, building societies, insurance and trust companies under Section 54. The reason for that is that the Legal Services Ombudsman does not have jurisdiction over the financial institutions specified in Section 54.

As there would be no equivalent oversight for financial institutions, the Government have decided that it is not in the public interest to move ahead with implementation of Section 54. That decision has been taken after consultation with the Law Society and the Legal Services Ombudsman.

In the mean time, it remains the Government's intention to implement Section 55 by the end of the year in order to allow bodies authorised by the Secretary of State to provide probate services for a fee. A statutory instrument will commence Section 55. That will go some way to removing the competition barrier identified by the Office of Fair Trading, while ensuring that the necessary consumer safeguards are in place. I beg to move.

Moved, That the draft regulations laid before the House on 15 July be approved [26th Report from the Joint Committee].—(Lord Evans of Temple Guiting.)

Lord Henley

My Lords, again, the Official Opposition do not oppose these regulations and we consider their substance to be uncontentious.

As regards any delay that there has been in implementing the provisions of the 1990 Act, it seems to me that both sides can share the blame equally. It has been 14 years since the Act was passed, for seven of which we were in office, and it is seven years since the noble Lord's party came to office. However, as I understand it, there has not in fact been a delay because it was not until July 2003 that the Director-General of Fair Trading made the report that encouraged the Government to bring forward this measure, and the Government then made the decision to do so. As I said, we welcome that.

I have only one brief question. I think that the noble Lord answered it but I probably did not hear him. Do I understand that further regulations, of both an affirmative and negative nature, will have to be brought into effect before this measure comes into operation? At what stage will the Government consider extending it and bringing Section 54 into effect, or will we have to wait until the appropriate mechanism is in place for complaints handling within the banks and financial services? Having said that, and as I said earlier, we have no intention of opposing these regulations.

Lord Thomas of Gresford

My Lords, I am not surprised that the noble Lord, Lord Henley, is not opposing the regulations. They emanate from an Act in 1990 which was passed at the height of pro-market and anti-professional Thatcherism. As this Government have now embraced Thatcherism to the point that the Prime Minister was yesterday described as a "neo-con" by an American right-wing thinker, it is perhaps appropriate that they go along those lines.

Obviously it is practical to extend the remit of the Legal Services Ombudsman. Therefore, I do not oppose the measure, but I regret that it is deemed desirable to widen the provision of legal services to non-lawyers in the name of competition, as though each firm of solicitors throughout the country is not in competition with all the others. There are no fixed fees, and the provision of legal services between firms is highly competitive, from the point of view of both fees and efficiency. Lawyers have always competed among themselves.

There is possibly a case for licensed conveyancers because the transactions that they govern on the conveyancing of a house are immediate and are immediately under the oversight of the client. But probate is a very different sort of animal. Probate is a service which deals with the administration of large assets and possible trust funds. It deals with people who are bereaved and weakened and there is undoubtedly potential for fraud. It has happened in the past that solicitors have been found guilty of fraud in this field.

A new body, which is less qualified and less well regulated may not be in the public interest. This is a precursor to the extension of probate services to non-professional bodies. I can only hope that the procedures set out in Schedule 9 to the 1990 Act are rigorous enough to ensure that standards are kept. I think we can expect to see aggressive marketing of probate services, as we have in other spheres, aimed at the most vulnerable, and competing no doubt on afternoon television with stair lifts and walk-in baths and the like, just as happened with the competition for ambulance chasers. Fortunately, many of the firms who adopted that particular way of earning a living have gone into liquidation.

I note that only Section 55 of the Act is affected. Section 54, which relates to banks and insurance companies, must surely await the outcome of the Clementi report. I did not have much to do with probate as a solicitor in my youth, but I wondered at the way in which banks could charge for administering small estates when the local solicitors would not have charged anything at all. This is just another way in which banks and insurance companies are going to make a lot of money.

Lord Henley

My Lords, before the noble Lord sits down, he seemed to think that this is ultimately a Thatcherite measure. I wonder whether he was speaking for his own party or whether Mr David Heath was in another place on 13 October 2004 at the Fifth Standing Committee on Delegated Legislation when he said: I have no problem with the regulations, which appear to enact provisions in the correct order, for once".

Lord Thomas of Gresford

My Lords, I think I made clear that we have no problem with the regulations if they are the precursor to the widening of the provision of legal services. It was the provision of legal services by non-professional bodies to which I addressed my criticism.

Lord Evans of Temple Guiting

My Lords, I thank the two noble Lords for their contribution to this discussion. I am particularly grateful to the noble Lord, Lord Henley, for sharing the blame. I accept that seven years on our side and seven years on their side, here we are. There will be further regulations, but this is by way of affirmative resolution. The rest will be by way of negative resolution.

What are the next steps, particularly in relation to Section 54? Obviously further statutory instruments will be required to open up the probate market while ensuring that suitable complaints handling mechanisms are in place. These statutory instruments will open up the market to new providers and allow the Council of Licensed Conveyancers to offer probate services by commencing Sections 53 and 55 and Schedule 9 of the Courts and Legal Services Act 1990 and also to prescribe the requirements of the complaints handling scheme with which the person seeking exemption under Section 55 must comply.

It is likely—this answers a point raised by the noble Lord, Lord Thomas of Gresford—that we shall want to await the publication of the Clementi report before again considering the question of allocating to banks and building societies the right to offer probate services.

The noble Lord, Lord Thomas of Gresford, had a few things to say and he said them. They seemed to centre around the fact that here is a legal profession which is rather anxious not to allow other organisations in to provide those services, presumably to the detriment perhaps of certain solicitors.

Lord Thomas of Gresford

My Lords, perhaps I may respectfully interrupt the Minister. My concern is not for solicitors but for the consumer and the protection of the consumer, and for the protection of assets and estates where a person has died.

Lord Evans of Temple Guiting

My Lords, yes, but the presumption is that solicitors are the only people qualified to offer that service. Our argument would be that other professional bodies are able to do that very successfully. The noble Lord must take on board the fact that we were responding to a suggestion by the Director-General of Fair Trading. This was not a government initiative plucked out of the air; it was an absolute response to a person and an organisation for which I think all noble Lords have great respect.

There is little more for me to say. I commend the regulations to the House.

On Question, Motion agreed to.