(1) In this Act references to the “regulatory functions” of an approved regulator are to any functions the approved regulator has—
(a) under or in relation to its regulatory arrangements, or
(b) in connection with the making or alteration of those arrangements.
(2) In this Act references to the “representative functions” of an approved regulator are to any functions the approved regulator has in connection with the representation, or promotion, of the interests of persons regulated by it.
(1) In discharging its regulatory functions (whether in connection with a reserved legal activity or otherwise) an approved regulator must comply with the requirements of this section.
(2) The approved regulator must, so far as is reasonably practicable, act in a way—
(a) which is compatible with the regulatory objectives, and
(b) which the approved regulator considers most appropriate for the purpose of meeting those objectives.
(3) The approved regulator must have regard to—
(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and
(b) any other principle appearing to it to represent the best regulatory practice.
(1) Nothing in this Act authorises the Board to exercise its functions in relation to any representative function of an approved regulator.
(2) But subsection (1) does not prevent the Board exercising its functions for the purpose of ensuring—
(a) that the exercise of an approved regulator’s regulatory functions is not prejudiced by its representative functions, or
(b) that decisions relating to the exercise of an approved regulator’s regulatory functions are, so far as reasonably practicable, taken independently from decisions relating to the exercise of its representative functions.
(1) The Board must make rules (“internal governance rules”) setting out requirements to be met by approved regulators for the purpose of ensuring—
(a) that the exercise of an approved regulator’s regulatory functions is not prejudiced by its representative functions, and
(b) that decisions relating to the exercise of an approved regulator’s regulatory functions are so far as reasonably practicable taken independently from decisions relating to the exercise of its representative functions.
(2) The internal governance rules must require each approved regulator to have in place arrangements which ensure—
(a) that the persons involved in the exercise of its regulatory functions are, in that capacity, able to make representations to, be consulted by and enter into communications with the Board, the Consumer Panel, the OLC and other approved regulators, and
(b) that the exercise by those persons of those powers is not prejudiced by the approved regulator’s representative functions and is, so far as reasonably practicable, independent from the exercise of those functions.
(3) The internal governance rules must also require each approved regulator—
(a) to take such steps as are reasonably practicable to ensure that it provides such resources as are reasonably required for or in connection with the exercise of its regulatory functions;
(b) to make such provision as is necessary to enable persons involved in the exercise of its regulatory functions to be able to notify the Board where they consider that their independence or effectiveness is being prejudiced.
(4) The first set of rules under this section must be made before the day appointed by the Lord Chancellor by order for the purposes of this section.
(1) The Board may—
(a) set one or more performance targets relating to the performance by an approved regulator of any of its regulatory functions, or
(b) direct an approved regulator to set one or more performance targets relating to the performance by the approved regulator of any of its regulatory functions,
if the Board is satisfied that the conditions in subsection (2) are satisfied.
(2) Those conditions are—
(a) that an act or omission of the approved regulator (or a series of such acts or omissions) has had, or is likely to have, an adverse impact on one or more of the regulatory objectives, and
(b) that it is appropriate to take the action proposed under subsection (1) in all the circumstances of the case (including in particular the impact of taking the action on the other regulatory objectives).
(3) A direction under subsection (1)(b) may impose conditions with which the performance targets must conform.
(4) If the Board proposes to take action under this section in respect of an approved regulator it must give notice to the approved regulator—
(a) describing the action it proposes to take,
(b) specifying the acts or omissions to which the proposed action relates and any other facts which, in the opinion of the Board, justify the taking of that action, and
(c) specifying the time (not being earlier than the end of the period of 28 days beginning with the day on which the notice is given) before which representations with respect to that action may be made.
(5) Before taking action under this section, the Board must consider any representations which are duly made.
(6) In exercising its regulatory functions, an approved regulator must seek to meet any performance target set for or by it under this section.
(7) The Board must publish any target set or direction given by it under this section.
(8) An approved regulator must publish any target set by it pursuant to a direction under subsection (1)(b).
(9) The Board may take such steps as it regards as appropriate to monitor the extent to which any performance target set under this section is being, or has been, met.
(1) This section applies if the Board is satisfied—
(a) that an act or omission of an approved regulator (or a series of such acts or omissions) has had, or is likely to have, an adverse impact on one or more of the regulatory objectives,
(b) that an approved regulator has failed to comply with any requirement imposed on it by or under this Act (including this section) or any other enactment, or
(c) that an approved regulator—
(i) has failed to ensure that the exercise of its regulatory functions is not prejudiced by any of its representative functions, or
(ii) has failed to ensure that decisions relating to the exercise of its regulatory functions are, so far as reasonably practicable, taken independently from decisions relating to the exercise of its representative functions.
(2) If, in all the circumstances of the case, the Board is satisfied that it is appropriate to do so, it may direct the approved regulator to take—
(a) in a case within subsection (1)(a), such steps as the Board considers will counter the adverse impact, mitigate its effect or prevent its occurrence or recurrence;
(b) in a case within subsection (1)(b) or (c), such steps as the Board considers will remedy the failure, mitigate its effect or prevent its recurrence.
(3) In a case within subsection (1)(a), before giving a direction under subsection (2) the Board must in particular consider the impact of giving the direction on the other regulatory objectives.
(4) A direction under subsection (2)—
(a) may only require an approved regulator to take steps which it has power to take;
(b) may require an approved regulator to take steps with a view to the modification of any part of its regulatory arrangements.
(5) The Board may not exercise its powers under this section so as to give a direction requiring an approved regulator to take steps in respect of a specific disciplinary case or other specific regulatory proceedings (as opposed to all, or a specified class of, such cases or proceedings).
(6) For the purposes of this section a direction to take steps includes a direction which requires an approved regulator to refrain from taking a particular course of action.
(7) The power to give a direction under this section is subject to any provision made by or under any other enactment.
(8) The Board may take such steps as it regards as appropriate to monitor the extent to which a direction under this section is being, or has been, complied with.
(9) Where the Board revokes a direction under this section, it must—
(a) give the approved regulator to whom the direction was given notice of the revocation, and
(b) publish that notice.
Schedule 7 makes provision about the procedure which must be complied with before a direction is given under section 32.
(1) If at any time it appears to the Board that an approved regulator has failed to comply with a direction given under section 32, the Board may make an application to the High Court under this section.
(2) If, on an application under this section, the High Court decides that the approved regulator has failed to comply with the direction in question, it may order the approved regulator to take such steps as the High Court directs for securing that the direction is complied with.
(3) This section is without prejudice to any other powers conferred on the Board by this Part.
(1) This section applies if the Board is satisfied—
(a) that an act or omission of an approved regulator (or a series of such acts or omissions) has had, or is likely to have, an adverse impact on one or more of the regulatory objectives, and
(b) that it is appropriate to act under this section in all the circumstances of the case (including in particular the impact of so acting on the other regulatory objectives).
(2) The Board may publish a statement censuring the approved regulator for the act or omission (or series of acts or omissions).
(1) If the Board proposes to publish a statement under section 35 in respect of an approved regulator, it must give notice to the approved regulator—
(a) stating that the Board proposes to publish such a statement and setting out the terms of the proposed statement,
(b) specifying the acts or omissions to which the proposed statement relates, and
(c) specifying the time (not being earlier than the end of the period of 28 days beginning with the day on which the notice is given to the approved regulator) before which representations with respect to the proposed statement may be made.
(2) Before publishing the statement, the Board must consider any representations which are duly made.
(3) Before varying any proposed statement set out in a notice under subsection (1)(a), the Board must give notice to the approved regulator—
(a) setting out the proposed variation and the reasons for it, and
(b) specifying the time (not being earlier than the end of the period of 28 days beginning with the day on which the notice is given to the approved regulator) before which representations with respect to the proposed variation may be made.
(4) Before varying the proposal, the Board must consider any representations which are duly made.
(1) This section applies if the Board is satisfied—
(a) that an approved regulator has failed to comply with a requirement to which this section applies, and
(b) that, in all the circumstances of the case, it is appropriate to impose a financial penalty on the approved regulator.
(2) This section applies to any requirement imposed on the approved regulator—
(a) by rules under section 30 (internal governance rules),
(b) by a direction given under section 32 (Board directions), or
(c) by section 51 (control of practising fees charged by approved regulators) or by rules under that section.
(3) The Board may impose a penalty, in respect of the failure, of such an amount as it considers appropriate, but not exceeding the maximum amount prescribed under subsection (4).
(4) The Board must make rules prescribing the maximum amount of a penalty which may be imposed under this section.
(5) Rules may be made only under subsection (4) with the consent of the Lord Chancellor.
(6) A penalty under this section is payable to the Board.
(7) In sections 38 to 40 references to a “penalty” are to a penalty under this section.
(1) If the Board proposes to impose a penalty on an approved regulator, it must give notice to the approved regulator—
(a) stating that the Board proposes to impose a penalty and the amount of the penalty proposed to be imposed,
(b) specifying the failure to which the proposed penalty relates,
(c) specifying the other facts which, in the Board’s opinion, justify the imposition of a penalty and the amount of the penalty, and
(d) specifying the time (not being earlier than the end of the period of 21 days beginning with the day on which the notice is published under subsection (8)) before which representations with respect to the proposed penalty may be made.
(2) Before imposing a penalty on an approved regulator, the Board must consider any representations which are duly made.
(3) Where the Board proposes to vary the amount of a proposed penalty stated in a notice under subsection (1)(a), the Board must give notice to the approved regulator—
(a) setting out the proposed variation and the reasons for it, and
(b) specifying the time (not being earlier than the end of the period of 21 days beginning with the day on which the notice is published under subsection (8)) before which representations with respect to the proposed variation may be made.
(4) Before varying the proposal, the Board must consider any representations which are duly made.
(5) As soon as practicable after imposing a penalty, the Board must give notice to the approved regulator—
(a) stating that it has imposed a penalty on the approved regulator and its amount,
(b) specifying the failure to which the penalty relates,
(c) specifying the other facts which, in the Board’s opinion, justify the imposition of the penalty and its amount, and
(d) specifying a time (not being earlier than the end of the period of 3 months beginning with the day on which the notice is given to the approved regulator), before which the penalty is required to be paid.
(6) The approved regulator may, within the period of 21 days beginning with the day on which it is given the notice under subsection (5), make an application to the Board for it to specify different times by which different portions of the penalty are to be paid.
(7) If an application is made under subsection (6) in relation to a penalty, the penalty is not required to be paid until the application has been determined.
(8) The Board must publish any notice given under this section.
(1) An approved regulator on whom a penalty is imposed may appeal to the court on one or more of the appeal grounds.
(2) The appeal grounds are—
(a) that the imposition of the penalty was not within the power of the Board under section 37;
(b) that any of the requirements of section 38 have not been complied with in relation to the imposition of the penalty and the interests of the approved regulator have been substantially prejudiced by the non-compliance;
(c) that the amount of the penalty is unreasonable;
(d) that it was unreasonable of the Board to require the penalty imposed or any portion of it to be paid by the time or times by which it was required to be paid.
(3) An appeal under subsection (1) must be made—
(a) within the period of 3 months beginning with the day on which the notice under section 38(5) is given to the approved regulator in respect of the penalty, or
(b) where the appeal relates to a decision of the Board on an application by the approved regulator under section 38(6), within the period of 3 months beginning with the day on which the approved regulator is notified of the decision.
(4) On any such appeal, where the court considers it appropriate to do so in all the circumstances of the case and is satisfied of one or more of the appeal grounds, the court may—
(a) quash the penalty,
(b) substitute a penalty of such lesser amount as the court considers appropriate, or
(c) in the case of the appeal ground in subsection (2)(d), substitute for any time imposed by the Board a different time or times.
(5) Where the court substitutes a penalty of a lesser amount it may require the payment of interest on the substituted penalty at such rate, and from such time, as it considers just and equitable.
(6) Where the court specifies as a time by which the penalty, or a portion of the penalty, is to be paid a time before the determination of the appeal under this section, it may require the payment of interest on the penalty, or portion, from that time at such rate as it considers just and equitable.
(7) Except as provided by this section, the validity of a penalty is not to be questioned by any legal proceedings whatever.
(8) In this section “the court” means the High Court.
(1) If the whole or any part of a penalty is not paid by the time by which it is required to be paid, the unpaid balance from time to time carries interest at the rate for the time being specified in section 17 of the Judgments Act 1838 (c. 110).
(2) If an appeal is made under section 39 in relation to a penalty, the penalty is not required to be paid until the appeal has been determined or withdrawn.
(3) If the Board grants an application under subsection (6) of section 38 in relation to a penalty but any portion of the penalty is not paid by the time specified in relation to it by the Board under that subsection, the Board may where it considers it appropriate require so much of the penalty as has not already been paid to be paid immediately.
(4) Where a penalty, or any portion of it, has not been paid by the time when it is required to be paid and—
(a) no appeal relating to the penalty has been made under section 39 during the period within which such an appeal can be made, or
(b) an appeal has been made under that section and determined or withdrawn,
the Board may recover from the approved regulator, as a debt due to the Board, any of the penalty and any interest which has not been paid.
(1) The Board may give an approved regulator an intervention direction in relation to any of the approved regulator’s regulatory functions if the Board is satisfied—
(a) that an act or omission of an approved regulator (or a series of such acts or omissions) has had, or is likely to have, an adverse impact on one or more of the regulatory objectives, and
(b) that it is appropriate to give the intervention direction in all the circumstances of the case (including in particular the impact of giving the direction on the other regulatory objectives).
(2) An intervention direction, in relation to a regulatory function of an approved regulator, is a direction—
(a) that the regulatory function is to be exercised by the Board or a person nominated by it, and
(b) that the approved regulator must comply with any instructions of the Board or its nominee in relation to the exercise of the function.
(3) The Board may not determine that it is appropriate to give an intervention direction unless it is satisfied that the matter cannot be adequately addressed by the Board exercising the powers available to it under sections 31 to 40.
(4) Part 1 of Schedule 8 makes provision about the procedure which must be complied with before an intervention direction is given and the manner in which such a direction is to be given.
(5) The Board must make rules as to the persons it may nominate for the purposes of subsection (2)(a).
(1) This section applies where an intervention direction has effect in respect of a function of an approved regulator (“the relevant function”).
(2) The approved regulator must give the specified person all such assistance, in connection with the proposed exercise of the relevant function by the specified person in pursuance of the direction, as the approved regulator is reasonably able to give.
(3) On an application by the specified person (or a person appointed by the specified person to act on its behalf) a judge of the High Court, Circuit judge or justice of the peace may issue a warrant authorising that person to—
(a) enter and search the premises of the approved regulator, and
(b) take possession of any written or electronic records found on the premises.
(4) The person so authorised may, for the purpose of the exercise by the specified person of the relevant function, take copies of written or electronic records found on a search carried out by virtue of the warrant.
(5) The judge or justice of the peace may not issue the warrant unless satisfied that its issue is necessary or desirable for the exercise by the specified person of the relevant function.
(6) The Lord Chancellor must make regulations—
(a) specifying further matters which a judge or justice of the peace must be satisfied of, or matters which a judge or justice of the peace must have regard to, before issuing a warrant, and
(b) regulating the exercise of a power conferred by a warrant issued under subsection (3) or by subsection (4) (whether by restricting the circumstances in which a power may be exercised, by specifying conditions to be complied with in the exercise of a power, or otherwise).
(7) Regulations under subsection (6)(b) must in particular make provision as to the circumstances in which written or electronic records of which a person has taken possession by virtue of a warrant issued under subsection (3) may be copied or must be returned.
(8) But the Lord Chancellor may not make regulations under subsection (6) unless—
(a) they are made in accordance with a recommendation made by the Board, or
(b) the Lord Chancellor has consulted the Board about the making of the regulations.
(9) In this section “the specified person” means the Board or, where a person is nominated by it as mentioned in section 41(2), that person.
(10) The Board must make rules as to the persons a specified person may appoint for the purposes of subsection (3).
(1) If at any time it appears to the Board that an approved regulator has failed to comply with an obligation imposed on it by, or by virtue of, an intervention direction or section 42(2), the Board may make an application to the High Court under this section.
(2) If, on an application under subsection (1), the High Court decides that the approved regulator has failed to comply with the obligation in question, it may order the approved regulator to take such steps as the High Court directs for securing that the obligation is complied with.
(3) This section is without prejudice to any other powers conferred on the Board by this Part.
(1) An intervention direction has effect until such time as it is revoked by the Board (whether on the application of the approved regulator or otherwise).
(2) Part 2 of Schedule 8 makes provision about the procedure which must be complied with before an intervention direction is revoked and the manner in which notice of the revocation is to be given.
(1) The Lord Chancellor may by order cancel a body’s designation as an approved regulator—
(a) in relation to all the reserved legal activities in relation to which it is an approved regulator, or
(b) in relation to one or more, but not all, of those reserved legal activities,
with effect from a date specified in the order.
(2) But the Lord Chancellor may only make an order under subsection (1) in accordance with a recommendation made by the Board under subsection (3) or (5).
(3) The Board must recommend that an order is made cancelling a body’s designation as an approved regulator in relation to one or more reserved legal activities, if—
(a) the body applies to the Board for such a recommendation to be made,
(b) the application is made in such form and manner as may be prescribed by rules made by the Board, and is accompanied by the prescribed fee, and
(c) the body publishes a notice giving details of the application in accordance with such requirements as may be specified in rules made by the Board.
(4) In this section “the prescribed fee”, in relation to an application, means the fee specified in, or determined in accordance with, rules made by the Board, with the consent of the Lord Chancellor.
(5) The Board may recommend that an order is made cancelling a body’s designation as an approved regulator in relation to one or more reserved legal activities if it is satisfied—
(a) that an act or omission of an approved regulator (or a series of such acts or omissions) has had, or is likely to have, an adverse impact on one or more of the regulatory objectives, and
(b) that it is appropriate to cancel the body’s designation in relation to the activity or activities in question in all the circumstances of the case (including in particular the impact of cancelling the designation on the other regulatory objectives).
(6) The Board may not determine that it is appropriate to cancel a body’s designation in relation to an activity or activities unless it is satisfied that the matter cannot be adequately addressed by the Board exercising the powers available to it under sections 31 to 43.
(7) Schedule 9 makes further provision about the making of recommendations under subsection (5).
(8) If the Lord Chancellor decides not to make an order in response to a recommendation made under subsection (3) or (5), the Lord Chancellor must give the Board notice of the decision and the reasons for it.
(9) The Lord Chancellor must publish a notice given under subsection (8).
(10) The Board may not make a recommendation under subsection (5) in respect of a body’s designation as an approved regulator in relation to a reserved legal activity at any time when, by virtue of Part 2 of Schedule 5 (protection of rights during a transitional period), any person is being treated as authorised by the body to carry on that activity.
(1) This section applies where a body (“the former regulator”) has its designation in relation to one or more reserved legal activities cancelled by an order under section 45.
(2) The Lord Chancellor may by order make—
(a) such modifications of provisions made by or under any enactment (including this Act or any enactment passed after this Act), prerogative instrument or other instrument or document, and
(b) such transitional or consequential provision,
as the Lord Chancellor considers necessary or expedient in consequence of the cancellation.
(3) The Lord Chancellor may, by order, make transfer arrangements.
(4) “Transfer arrangements” are arrangements in accordance with which each person authorised by the former regulator who consents to the arrangements is, from the time the cancellation takes effect, treated as being authorised to carry on each protected activity by either—
(a) a relevant approved regulator, in relation to the protected activity, who consents to the transfer arrangements, or
(b) the Board acting in its capacity as a relevant approved regulator in relation to the protected activity by virtue of an order made under section 62.
(5) The transfer arrangements—
(a) must make such provision as is necessary to ensure that, where a person is treated under those arrangements as being authorised to carry on a protected activity by the new regulator, that person is subject to the regulatory arrangements of the new regulator;
(b) may make provision requiring amounts held by the former regulator which represent amounts paid to it by way of practising fees by the persons to whom the transfer arrangements apply (or a part of the amounts so held) to be paid to the new regulator and treated as if they were amounts paid by those persons by way of practising fees to the new regulator.
(6) Subsection (5)(a) is subject to any transitional provision which may be made by the transfer arrangements, including provision modifying the regulatory arrangements of the new regulator as they apply to persons to whom the transfer arrangements apply.