§ Order for Second Reading read.8.22 pm
§ The Attorney-General (Sir Michael Havers)
I beg to move, That the Bill be now read a Second time.
In introducing the Second Reading debate on this Bill in the other place, my noble and learned Friend the Lord Chancellor described the Bill as covering a wide range of disparate subjects with, like Mr. Churchill's blancmange, no central theme. The House will well appreciate the force of this description—the 62 clauses and eight schedules of the Bill will make a number of small, helpful, uncontroversial and unconnected changes as well as, more substantially, extending the Law Society's disciplinary powers and enabling licensed conveyancers who are not solicitors to undertake conveyancing for reward. I will not delay the House with an exposition of the overriding aims of the Bill or of the sources from which its provisions are drawn. Although it has no central theme, it will introduce a number of changes of a good legal housekeeping nature and other changes in the law that I hope will be welcomed in all parts of the House.
A number of moves and proposals are in train to improve the existing system of professional discipline imposed upon solicitors and the handling of complaints against them. The proposals contained in part I are perhaps the most important and immediate of these, but they are by no means the only significant ones.
There is a simple reason for this. The Government do not seek a direct role in this area. We believe that the existence, strength and vitality of the independent legal profession, and public confidence in it, are fundamental to the freedom under the law on which our parliamentary democracy depends. It is therefore to the Law Society that we must look to maintain the high levels of conduct, the standards of service and the collective discipline that we expect from solicitors. It has a central, but far from sole, function in the operation of the present arrangements for preserving those standards, and with that goes an obligation to ensure that those arrangements are working effectively and to propose or make improvements and extensions when that is necessary.
The Law Society is making efforts in three directions. First, over recent years it has set about improving its in-house arrangements. Secondly, it seeks the agreement of Parliament for extending and improving the existing legislation. Thirdly, it is planning for the future.
On the first of these—what the society has itself been doing—there has been criticism that the society has not been as active or as positive in response to criticism of solicitors as it might have been. To some extent, that is the result of the limitations of its statutory role — investigating, adjudicating and "prosecuting" before the solicitors disciplinary tribunal allegations of professional misconduct by a solicitor — which the Bill seeks to extend. In part, it follows from the way in which the society has seen it right to operate that role. For instance, where, as often happens, a case involves allegations of professional misconduct as well as matters that fall to be 564 resolved by a court, the society had until recently taken the view that the professional proceedings should not progress until the court action had been determined.
In many cases that must be right, as simultaneous proceedings would be difficult and carry risk of mutual prejudice. The society has also rightly been very conscious that it is only to a court action that the client can look for damages, and it has been anxious to do nothing that might adversely alter that right. But any such suspension must always involve some delay. The reasons for it are not always understood and it is not invariably necessary. The society has therefore decided that the existence of court action should not be an automatic bar to disciplinary proceedings, each case being considered in the light of its particular circumstances.
The society has also been seeking to improve and strengthen both the resources devoted to handling complaints and their presentation to the public. More staff, of higher grade, have been taken on. Working procedures and management responsibilities have been clarified and strengthened. Work is now assisted by computer. The phrasing of letters to the public and published pamphlets has been reworded, in consultation with the consumer bodies.
The society has recognised the importance for some people of having someone with whom to talk through their problems, and to organise the more complex ones in ways that a complaints system can handle, and it is setting up an interview panel for this purpose.
The quest for improved standards is not confined to this sector. The society is about to publish the first batch of written professional standards covering wide areas of a solicitor's practice, as recommended by the Benson royal commission. Improvements are being sought in professional education both generally and in specialist areas, through initiatives such as the new continuing education service and the development of a practice management service.
The Law Society has therefore demonstrated its desire and ability to discharge its public responsibilities in a determined and up-to-date way within, as it were, its own walls. But much of the disciplinary system is provided for by statute and any change therefore requires primary legislation.
The society has therefore made proposals for changing the statutory provision, and the Government have decided that it would be in the public interest to help forward those proposals by finding space in the legislative programme for them. We have therefore accepted responsibility for the proposals contained in part I of the present Bill.
Perhaps one of the two most far-reaching changes in this part is contained in clause 1, which introduces a new section 44A into the Solicitors Act 1974, making a major addition to the range of available remedies where something has gone wrong between a solicitor and his client.
I think I should point out here that the various sanctions that a solicitor faces are greater in variety and power than those ranged against any other profession. First, the High Court has an inherent jurisdiction over him as one of its officers and may strike him off the roll or penalise him in costs. The keystone of the professional disciplinary system is the statutory solicitors disciplinary tribunal, which deals with cases of conduct unbefitting a solicitor. It has both solicitor and lay members and is independent of any other organ.
565 The more minor misconduct matters may be dealt with by the Law Society, which has a range of remedies, such as the imposition of conditions on practising certificates. It also investigates and acts in the majority of cases before the tribunal. But that has been the limit of the society's disciplinary role hitherto, and recourse for a financial remedy has been by way of an action for damages before the courts, or seeking to have the bill reduced by the formal process of a remuneration certificate or taxation.
All those measures provide necessarily diverse remedies for what are inevitably diverse problems. But there has been an important gap, because all the measures in this list tend to be of greater use where the problems are serious, and where comparatively large sums of money are at stake. Where this was not so—either because the financial loss has not been great enough to warrant an action for negligence, or perhaps because inadequate service would not even have given rise to a cause of action —there was no help through the courts, and no place in the society's powers for it to assist either.
Clause 1 makes a significant change to that position by extending the society's regulatory powers to give it a wholly new function. Where work has not met the standard which could reasonably be expected of a solicitor, the society will be able to order that he should reduce or repay all or part of his bill, or carry out specified items of work.
The society is already planning to publish—before this new jurisdiction comes into force — written professional standards. Those cannot realistically hope to cover the whole wide and diverse area of practice, but they will cover most areas and provide important clarification of what is expected of a solicitor and, therefore, provide important background to the new jurisdiction.
Failure to comply with the society's order will be a disciplinary matter to be dealt with by the disciplinary tribunal, whose orders are enforceable as if made by the High Court. I should perhaps mention that we hope that it is possible to improve the Bill by simplifying the disposal of cases that give rise to misconduct and the new shoddy work jurisdiction, and an amendment will be brought forward in Committee.
Clause 2 makes a significant contribution to making the society's investigation of complaints more effective by inserting a further new section into the principal Act, under which the society may compel a solicitor to produce his case files. Under the Solicitors Act 1974, that power is restricted to cases where there has been undue delay in dealing with a matter, so that the files can be given to another solicitor to complete the work. It is now extended to cover cases in which it is necessary for the society to examine papers for the purpose of investigating a complaint. That power will provide a useful evidential tool in matters of misconduct, but, equally importantly, will be the starting point in investigating complaints of shoddy work.
Perhaps the other most significant development is in schedule 1. Hitherto, the only involvement in the existing system of persons who are not lawyers has been outside the Law Society. The solicitors disciplinary tribunal must, as I have indicated, sit with at least one lay member. Overseeing the whole operation of the society is, of course, the lay observer, who has powers under the 1974 Act to investigate the society's handling of a complaint and makes an annual report to the Lord Chancellor, which is laid before Parliament.
566 Under the Act, the society is obliged to consider any report or recommendation received from a lay observer and to notify him of any action taken in consequence. The society has decided that it should take these developments a stage further, believing that it would help in discharging its duties in the public interest to have a wider measure of representation in the committee or committees which investigate and adjudicate on complaints. Schedule 1 provides for the society to appoint to those committees as full members both solicitors who are not members of the council and laymen from outside the profession. It is intended that the Master of the Rolls should make the nominations. In fact, he has already put forward his first list of names in advance of the legislation, and the society has invited those people to take part in meetings. They have been doing so since last November, and have been playing an increasingly valuable role.
Apart from the provisions relating to bad work, the Bill also makes changes in the arrangements relating to practising certificates. Section 12 of the 1974 Act gives the society a discretion to impose conditions upon the annual practising certificate. That discretion can at present be exercised only when a certificate is next applied for, not in relation to the one currently in force.
The power is extended by clauses 3 and 4. First, it will now be exercisable where a solicitor has failed to provide accountants' reports within the time required. Secondly, the Act is amended to make it clear that the society has power to impose as a condition on a certificate specified steps—which may or may not cost the solicitor money. For instance, the society would be able to require that a practice management service should be consulted and its recommendations complied with, or that retraining be undertaken. Thirdly, in circumstances where urgent action is appropriate, the society is now enabled to impose conditions on an existing practice certificate, and it will not have to wait for its expiry to impose them on the next.
Clause 6 and schedule 1 make minor amendments to the existing legislation.
Those are, in brief, the most significant of the immediate steps that the society has taken, or for which it is seeking the approval of Parliament. But that is not all that is in contemplation. The society has drawn up plans, on which it is now consulting interested bodies, for a system of arbitration for small claims for damages, which may well be a useful addition to the existing repertoire of remedies. That—like all the other changes in train—will, however, sharpen the need for dissatisfied clients to be adequately advised of the range of available remedies and to select the one which would be most appropriate. To ensure that that is done, the society is reviewing the operation of its negligence panel, whose ability to provide experienced and sympathetic advice to those who have problems in this area has been one of the more welcome developments over recent years.
The society has commissioned management consultants to advise it on its functions and structure. They have been specifically asked to consider in general the way in which complaints against solicitors are handled. Hon. Members may be aware that the consultants have recently issued a consultation paper, which canvasses a number of options in this area and in others, which are now being evaluated.
All of those show something of the new enterprise in this area, together with a number of major contributions 567 to the remedies available to dissatisfied clients, which will be a major improvement in the services available to the public.
Part II of the Bill establishes a framework for enabling non-solicitors to compete with solicitors for conveyancing work. It gives effect to the main recommendations of the Farrand committee's first report, which was published last September. The House will recall that the Farrand committee, as it became known, was, established in February of last year following the withdrawal of the House Buyers Bill, which had obtained a Second Reading in this House some two months earlier. The committee was asked to advise on the tests of competence and other requirements needed to ensure adequate consumer protection when non-solicitor conveyancers were per-mitted to compete for the work.
Despite the untimely death of its original chairman, Professor Street, the committee produced its report remarkably quickly. On all substantial matters, the committee was unanimous in its conclusions. That was a considerable achievement when one remembers the wide variety of interest groups that were represented on the Farrand committee.
The committee's terms of reference, which were of course agreed by the sponsors of the House Buyers Bill, reflected the concern, which I believe is shared by all in this House, that care must be taken to ensure that consumer protection is maintained when competition is extended in the area of buying and selling houses.
The Government are committed to increasing competition wherever possible. That policy applies to the provision of services, such as conveyancing, as well as to consumer goods. We have already made significant progress. During the last year or so, the greater freedom given to individual solicitors to advertise their charges has provided an unprecedented stimulus to increased competition. Charges have fallen by about 30 per cent. The Bill injects a further element of competition by extending the right to undertake conveyancing for reward to properly qualified non-solicitors.
But, in extending competition in that area, we must, of course, be careful not to sacrifice consumer protection. For the vast majority of the population, house purchase represents the single largest investment of their lives. It often involves the commitment of their entire life savings and a substantial portion of current income for many years. It is thus essential to maintain protection from incompetence and dishonesty. Some restrictions of competition in that area are, therefore, necessary.
The approach taken by the Farrand committee is, in our view, the right one. In paragraph 1.35 of its report, it said:The risks to the consumer are too great to permit market forces alone to control entrance to … the conveyancing market. Our approach in considering the safeguards needed for non-solicitors to undertake conveyancing has thus been to propose certain essential restrictions on competition, although these are intended to go no wider than is necessary to ensure adequate consumer protection.The rules to be made under part II of this Bill will set the necessary minimum safeguards sufficient to protect the consumer without undermining the impact of greater competition.
Clause 8 establishes the Council for Licensed Conveyancers, which will be responsible for ensuring the competence and integrity of those who seek to practise as 568 licensed conveyancers. The following clauses give the council the requisite powers and responsibilities. It will be for the council to determine such matters as the necessary training and financial requirements and rules of conduct. The rules made by the council will require the Lord Chancellor's concurrence. That will enable us to ensure that the requirements set by the council are neither unduly restrictive nor inadequate to protect the consumer.
It remains our intention to legislate in the next Session with regard to the position of employed solicitors working for banks. building societies and other institutions.
§ Mr. Robert Maclennan (Caithness and Sutherland)
Will the right hon. and learned Gentleman say whether the Government have formed a view of the recommendations in the second Farrand report and whether they will look with favour on the inclusion in the Bill of some of those recommendations, which seem necessary if the benefits of the first report are to be given full effect, particularly to reduce the cost of conveyancing?
§ The Attorney-General
That is a lengthy report of well over 100 pages, with many extremely detailed recommendations. I suggest that the present measure is large enough as it is. The second report is still under consideration, there being a great deal in it. There is no intention to increase the size of this measure to reflect the second report, which was published only at the beginning of this year.
The form of that legislation—I am speaking of next Session — will take into account the need to protect consumers against prejudice resulting from any conflict of interest and will be drafted in the light of our recent consultations on that subject, which to some extent reflects the anxiety shown on Second Reading of the original measure. Consideration will also have to be given to the differences in Scots law and practice in this area.
Before I leave this subject I should mention clause 5 which falls into part I of the Bill. This clause rationalises the restrictions on conveyancing for reward. First, it extends the restriction to the preparation of the contract —which is the stage at which protection is most needed — and, secondly, it makes it clear that no offence is committed where a qualified person directs and supervises an employee to carry out conveyancing work.
The licensed conveyancing provisions of the Bill will introduce greater competition into the provision of conveyancing services. Solicitors are now competing actively with each other. The Bill injects an additional element of competition, and it does so without lowering the standards of consumer protection.
§ Mr. Ken Weetch (Ipswich)
Last year the Government gave an undertaking in a written answer that they were in favour of banks and building societies undertaking conveyancing. There is considerable speculation in today's press whether that undertaking still holds. Is the right hon. and learned Gentleman prepared to say officially that the undertaking still stands, but that he is considering the method by which it can be brought about, not the principle underlining the issue?
§ The Attorney-General
I cannot give that undertaking, because, as I said earlier, anxiety was expressed by hon. Members on Second Reading about what could be a conflict of interest and the need to protect the consumer. 569 I am not saying that every speaker in that debate took that view, but it was expressed clearly and powerfully, for example, by the right hon. and learned Member for Aberavon (Mr. Morris), on behalf of the alliance by the hon. Member for Southwark and Bermondsey (Mr. Hughes) and by many other hon. Members.
§ The Attorney-General
I am dealing with the last intervention. I promise to give way to the hon. Gentleman.
We want to get this matter right. I can only say that we shall introduce legislation, but that the exact scope of it is not at the moment decided.
§ Mr. Austin Mitchell
I was alarmed to hear that the right hon. and learned Gentleman could not give an undertaking. But that may be unnecessary because the Solicitor-General has already given such an undertaking. He gave it to me on 12 January 1984 in a letter in which he wrote:We are committed to legislation to enable solicitors employed by organisations such as building societies and banks to undertake conveyancing.On that basis I agreed to withdraw my Bill.
§ The Attorney-General
The undertaking in writing to which the hon. Gentleman refers — and the hon. Gentleman has played a considerable part in the progress that we have made—was contained in a letter from the Solicitor-General to him which I do not think has been published. That letter, although committing the Government to legislation to enable solicitors employed by organisations such as building societies to undertake conveyancing, sounded several warning notes. For example, it said:A consultation paper will be issued early next month. So far as conflicts of interest are concerned, our provisional view is that we can rely primarily on appropriate amendments to the Solicitors Practice Rules.The letter made this important point, which was expressed in the clearest terms to the hon. Gentleman:Our view is that, provided the potential conflicts of interest can be avoided, it is right to enable all employed solicitors to do so.That is to convey. The consultations then took place—
§ The Attorney-General
I am answering the hon. Gentleman's last intervention. When I have finished, he may intervene again.
The consultations have been taking place. They have reflected largely the anxieties expressed in the House, and, as I say, the scope of that Bill is still under consideration.
§ Mr. Austin Mitchell
I agree that points were made about the process of consultation and about possible conflicts of interest. However, the impression given in the letter was that those could easily be got round and that they presented no real problems. The letter went on to make points about seeking views.
However, in answer to a parliamentary question, the Solicitor-General did not say "if' about banks and building societies doing conveyancing. He used the word "when." The commitment in the letter dated 12 January, on which the whole agreement was based—it was the foundation on which we built the agreement — was, "We are committed." It is impossible to be more definite than that.
§ The Attorney-General
"We are committed," said my hon. and learned Friend, but we shall consult, and it is 570 worth re-reading what was said in the debate to see exactly what views were expressed. If one says, "You have given a commitment, and you have said that you will consult, but you have said that you will not stick to the commitment whatever the consultation produces," then one is talking about empty consultation.
It might help if I were to repeat what I said on the subject. I said that the form of that legislation would take into account the need to protect consumers against prejudice resulting from any conflict of interest and would be drafted in the light of our recent consultation. That is the position. That fairly sets it out, and there is nothing that I can add to it.
§ Mr. Simon Hughes (Southwark and Bermondsey)
That is a different argument from that used by the Government, for example, on the measure to abolish the GLC. There they made a commitment which, in spite of any consultation, they regard as unmoveable. The right hon. and learned Gentleman knows the view that I took on the previous occasion. He should now tell the House honestly, "We have changed our position," rather than pretend that the position then and the position now are the same, because they are not.
§ The Attorney-General
I shall say this just once more, and then I should like to continue my speech. We have not changed our position. We said in the letter to the hon. Member for Great Grimsby (Mr. Mitchell), "This is our intention, but we shall consult." The powerful speech of the right hon. and learned Member for Aberavon would have alerted anyone to the fact that this is not an easy issue and that we must examine it carefully. That is the position now, and that is all I can say about it.
It is also the Government's intention to enable solicitors to act in corporate form rather than simply in partnership with other solicitors as is the case now. Clause 28 will enable licensed conveyancers to operate in this way, and it is right to open up this possibility to solicitors as well. An amendment will be brought forward in Committee.
Part III of the Bill contains provisions relating to legal aid. Clauses 36 to 40, which implement a recommendation of the Royal Commission on legal services, introduce changes in the way in which legal aid complaints relating to solicitors and banisters are handled.
At present legal aid complaints—which arise, by and large, from a practitioner's failure to comply with the legal aid legislation rather than from an assisted person's dissatisfaction with his advisers — are considered by tribunals established under the Legal Aid Act 1974. Those tribunals have been used hardly at all in the last 12 years. That is because, first, the Law Society and the Bar Council regard legal aid complaints as extremely serious matters relating to professional conduct and therefore to he treated as such, and, secondly, there is some concern that the constitutions and procedures of the relevant tribunals might offend against the rules of natural justice. The Bill therefore transfers the jurisdiction to the solicitors disciplinary tribunal and a senate disciplinary tribunal, at the same time empowering those tribunals to reduce or cancel legal aid remuneration or to exclude a practitioner from undertaking further legal aid work.
Such legal aid complaints will usually relate to matters, such as failure to respond to inquiries from the legal aid area office, which do not directly concern the client. The sanctions that the tribunals may impose will therefore be 571 intended more to safeguard the interests of the legal aid fund than to give some benefit to the assisted person. He may nevertheless benefit, since the reduction or cancellation of the practitioner's remuneration will reduce the liability of the fund and thus the client may recover some part of any contribution he has paid or be subject to a smaller statutory charge.
These changes will enable legal aid complaints to be considered in a more effective and fairer way and will ensure that the professional disciplinary tribunals will have available a wide range of sanctions.
Clauses 41 and 42 also amend the Legal Aid Act 1974. Clause 41 will enable the Lord Chancellor to align the capital limit of eligibility for assistance by way of representation with that for legal aid proper. That is, the capital limit involved will be £3,000. The difference between the limits is at present £765 and £3,000. Clause 42 overcomes a difficulty in making payments out of the legal aid fund for urgent work done before a legal aid order is granted. That aspect was crying out for reform, and I am sure that that measure is supported by every hon. Member.
Part IV introduces a number of changes relating to the procedures and powers of the High Court and county courts. I do not think that it is necessary for me to go through those on Second Reading, except to point out that clause 48 is a technical revision which corrects a defect in the provisions enacted in 1982 relating to the right of certain financial institutions, such as banks, to deduct a prescribed amount towards the adminstrative expenses they incur in giving effect to the recovery of a judgment debt garnishee order.
Clause 50 will enable the Lord Chancellor to contract out the keeping of the register of county court judgments. That is a task presently carried out by the Lord Chancellor's Department, which can equally appropriately be carried out in the private sector and enable staff to be redeployed to other work in the Department. Clause 50 will therefore enable the Lord Chancellor to enter into an agreement as to the keeping of the register by a body corporate. The Lord Chancellor will still be able to maintain by regulations control over services and fees.
Clause 51 corrects the present anomalous state of affairs under which the High Court and the county courts do not have the same powers to grant lessees relief from forfeiture for non-payment of rent.
The final part of the Bill passes under the description of "Miscellaneous and General" — often known as the rag-bag provisions. I shall not attempt to identify a common purpose for its contents—I do not think that I could—which cover such diverse subjects as limitation periods in defamation actions, appeals to pension appeals tribunals and the constitution of juvenile courts. They have one common feature. They are all helpful, all make the administration of justice more effective and all are, I hope, uncontroversial.
That completes my description of what is in the Bill. I am sorry that it has taken a little time. I have already referred to two new clauses which are to be brought forward in Committee. Two others will be proposed at that time. The first will fulfil an undertaking given by the Lord Chancellor that a new clause would be brought forward which would make provision for the reimbursement of costs incurred by reason of the death or incapacity of a 572 judge. The Lord Chancellor will be empowered to reimburse to each party to the action wasted costs up to a fixed sum. The second will afford magistrates in Northern Ireland a measure of protection from legal action in cases where they have acted without jurisdiction. That will give them protection similar to that which magistrates in England and Wales have.
This Bill will make a number of useful and, I hope, welcome changes in the law. It will increase disciplinary powers over solicitors, for the first time enabling the Law Society to impose sanctions for bad work. That has always been a missing link. The Bill will introduce a welcome increase in competition in conveyancing, but it will still ensure that the interests of the consumer are protected. It will improve the operation of the machinery of justice in a number of varied ways. I therefore commend the Bill to the House.
§ Mr. Nicholas Brown (Newcastle upon Tyne, East)
I thank the Attorney-General for his exposition of the measures in the Bill. I thank him especially for giving us new information about the Law Society's attitude to the workings of part I. As the right hon. and learned Gentleman said, the two principal proposals are the new measures designed to deal with complaints against solicitors and the proposals designed to increase competition for house conveyancing work.
In principle, the Labour party is in favour of new machinery to deal with complaints against solicitors and of increased competition in house conveyancing work. However, we are unable to give the Bill an unqualified welcome on either of its main proposals. Our most serious reservations are over part I, dealing with complaints against solicitors. Many right hon. and hon. Members know from personal involvement in constituents' cases of the general public's concern about the difficulty in getting to grips with complaints against solicitors. Many right hon. and hon. Members know just how intractable these issues can be. I have a constituency case which, I believe, is a clear-cut negligence case against a firm of Newcastle solicitors. I have been vigorously pressing that case for the past year and a half, yet it is no further forward.
There is a widespread belief among our fellow citizens that members of the legal profession protect themselves from the rest of us. The National Consumer Council commissioned research from MORI to discover attitudes towards the solicitors complaints system. The survey found that only 15 per cent. of those polled thought that solicitors, or a solicitors' body, should investigate compaints. Of the rest of those polled, 24 per cent. opted for an independent body. They were followed by 11 per cent. who favoured some form of Government body, and 10 per cent. who wanted an independent person who was not a solicitor. When asked about the composition of a possible new complaints body, only 3 per cent. of those asked thought that it should consist entirely of solicitors; 60 per cent. thought that it should be composed of solicitors and other people, and 34 per cent. thought that it should be composed of people who were not solicitors. Nearly two thirds thought that it should be a mixed body consisting 50:50 of solicitors and non-solicitors; 36 per cent. thought that there should be a majority of non-solicitors, while a loyal 3 per cent. preferred a majority of solicitors. That is not a sign of public confidence in the present system.
573 Any new system created to deal with complaints against solicitors should meet the legitimate anxieties of the public. Part I does not do so. It amends section 44 of the Solicitors Act 1974, and it extends the disciplinary sanctions which the Law Society can apply. The Law Society will potentially be able to investigate a wider range of complaints, but there is still no clear definition of the difference between negligence and misconduct. I understood the Attorney-General to say that that matter would be considered. That is a welcome assurance.
The Bill contains no provision for compensation, and as I understand it, that matter will not be considered by the Government. What is far more serious is that the Law Society is left with an intractable duality of functions. It is the solicitors' professional body representing their interests, advising its members and making representations on its behalf. All of that is proper. The Law Society functions like any other trade union, but it also regulates the profession and makes decisions in disciplinary cases involving its members. To make matters worse, the multiplicity of avenues for complaints against solicitors causes confusion. In practice, it wastes the time, money, patience and temper of those complaining against the profession.
Two points stand out clearly. There should be one procedure for dealing with complaints against the profession. It needs to be accessible and to have its own staff and independent investigative powers. It should be able to impose its decisions effectively so that injustices are rectified as far as they can be.
The second point that stands out is that the procedure for dealing with complaints against solicitors cannot be run by their own trade union. As the MORI poll demonstrates, that is widely perceived to be unfair. I can see that any institution dealing with complaints against a professional practitioner needs to have professional advice. I can even see the case for members of the profession serving on the decision-making body. However, there must be a substantial lay involvement from an informed cross-section of our society if the charge of vested interest is to be effectively dispelled. That is the most contentious part of the Bill.
The issues with which we are dealing are no longer merely those of a private consumer seeking resolution of a grievance against the supplier of a service. Since the inception of the legal aid scheme, a substantial portion of legal services is paid for by the taxpayer. Those who have charge of the distribution and expenditure of public funds should be publicly accountable for that charge. Legal aid gives a new dimension to the different interests with a stake in the procedure for investigating complaints against solicitors. The state's duty to protect its citizens is augmented by its duty to protect the fruits of the citizens' taxes.
How likely is it that part I will provide a lasting solution to the problems that it seeks to address? Part I leaves key issues unresolved. It has been superseded, to some extent, by the findings of the report commissioned by the Law Society from Coopers and Lybrand. I have no doubt that we shall be discussing this matter again before too long.
I have mixed feelings about part II. I look forward to exploring what is proposed in more detail in Committee. The Opposition welcome in principle the Government's intention to open conveyancing work to those qualified to undertake it and to end the solicitors' professional monopoly. We welcome those measures.
574 There is a fear that Parliament will be setting up a new mini-profession which will blunt the competitive edge of the proposals contained in the Bill sponsored by my hon. Friend the Member for Great Grimsby (Mr. Mitchell). I accept that there is a need for proper safeguards for the consumer and an overview of those who undertake conveyancing work. I also accept that the new conveyancers must be regulated by something more than their insurance companies.
I believe that the advertising of services will probably have as much impact on conveyancing fees as the proposals contained in the Bill.
The Attorney-General referred to a major issue which I feel remains outstanding. I am uncertain about the position of banking institutions and building societies under clause 28. I noted carefully what the Attorney-General said about the Government's intention to return to the House with further legislation. The opportunity to do in-house conveyancing must be attractive to those who are providing the mortgage. I can see the point about conflict of interest, and I wonder whether it is possible to make regulations to meet it.
On 16 December 1983 the Solicitor-General gave the House this assurance:We therefore intend to introduce our own legislation where necessary to extend the right of conveyancing, not just of registered land, but of all land, to solicitors employed by, for example, building societies and banks, subject to safeguards.Later, in response to a question from the hon. Member for Hertford and Stortford (Mr. Wells), he said—I shall quote the whole passage so that there can be no question of leaving bits out:We are satisfied that it is possible and proper to legislate in respect of solicitors employed by building societies. That will need legislation. We think that it is right that solicitors employed by banks should be able to convey. Our mind is not closed to the possibility of solicitors employed by other institutions being permitted to convey, but in some cases there could be an insuperable conflict of interests. We shall investigate the possibilities."—[Official Report, 16 December 1983; Vol. 50, c. 1325–26.1Do the Government stand by that statement in its entirety? There is no suggestion in the statement of any reservations about conveyancing by banks. All the reservations refer to other institutions which may be permitted to do conveyancing work. That seems to be under investigation still, and presumably consultations are taking place.
§ Mr. Weetch
Is my hon. Friend aware that the National Consumer Council and the Consumers Association have made very strong submissions that there should be adequate safeguards if building societies and banks are to be responsible for conveyancing property?
§ Mr. Brown
Yes; I am well aware of the submissions of those organisations. I find them persuasive, but until one sees the proposals one is not able to judge whether the safeguards are sufficient. Because of the assurances that have previously been given to the House I thought that there would be proposals for us to see, but there are not. That is why I ask the Attorney-General whether the commitment given to the House still stands, or whether it has been diluted in some way. It is not clear to me where we stand on the issue. Perhaps in the summation the Solicitor-General will be able to clarify the position for me. I cannot believe that the Government are reneging on the assurances that the House has been given. To my 575 untutored mind it is not clear whether clause 28 already permits banks to do in-house work. The Attorney-General shakes his head, so I take the point.
I do not wish to go into matters that should be raised more properly in Committee, but I wish to comment briefly on some points. Clause 41 will allow the Government to increase the financially eligible level of capital for an applicant for assistance by way of representation under the legal aid scheme. This is a welcome reform which the Government were right to bring forward. At first sight I thought that the clause which enables the Lord Chancellor to transfer the registry of county court judgments to a company run by the users of that registry, was a concession to the privatisation enthusiasts on the Government Benches, but on a closer examination I see that the proposal has merit and may well result in a more efficient service.
Reducing the time limit for slander and libel actions from six years to three years also has merit. In my view these actions are only for the very rich or the very angry. I am disappointed that the Government did not feel able to undertake a more far-reaching consideration of the present state of the libel and slander laws. I am sure that other hon. Members will be sympathetic to the point of view that we may be missing an opportunity to deal with the issue of misrepresentation in the press and in broadcasting. An accessible independent tribunal which could adjudicate on such complaints would be a welcome reform. In particular, it would give the individual of ordinary financial means access to a remedy which is at present for all practical purposes denied to him.
We seem to be establishing a tradition in legal affairs debates that we comment on what is not in the Bill because it was removed in another place. I shall content myself with saying that the original clause 43, ending a citizen's rights to go to the Court of Appeal when a lower court says that he cannot challenge the decision of a Government body, was ill-considered by the Government. It was almost universally condemned, and I think that we are well rid of it. Although I appreciate the Government's concern to save money, it should not be done at the expense of the citizen.
Two other matters missing from the Bill—I suspect that it was never intended to include them— are the issue of law centre and advice service funding and, separately, other recommendations of the Legal Aid Advisory Committee contained in its 34th report. I accept that law and advice centres are funded from a variety of different sources, but surely the time has come for the Lord Chancellor to take an overview of what is being done and to try to co-ordinate the present endeavours.
With regard to the Legal Aid Advisory Committee recommendations, I think that it would be wrong of Parliament to shelve the results of the review of legal aid eligibility. The report contains some useful ideas which meet criticisms which have been made of the legal aid scheme and which would also enhance the provision of legal services.
The Bill is more to be commended for effort than achievement, and I look forward to making a constructive contribution to its progress through Committee.
§ Sir Ian Percival (Southport)
I want to say a brief word on part II of the Bill and first to congratulate my right hon. and learned Friend the Attorney-General and his colleagues on having implemented their commitment on licensed conveyancing so quickly, so fully and in such a satisfactory manner.
The preoccupation with banks and building societies has perhaps taken people's minds off what has been done in the Bill. It provides for the matters for which the hon. Member for Great Grimsby (Mr. Mitchell) was principally pressing; it provides for what the hon. Member for Ipswich (Mr. Weetch) has wanted for so long. Now they have got what they wanted. I hope that the hon. Member for Great Grimsby will feel that the taking over of his Bill by the Government has proved a worthwhile exercise and produced a solution which he will find very satisfactory.
I congratulate not only the Government but those who have co-operated with them in producing such a speedy solution—in particular the Farrand committee and the Law Society. We are all very ready to criticise lawyers but we should also be ready to give them a pat on the back when they co-operate so fully and speedily as here to introduce competition in their own field. I hope that we shall not lose sight of the great progress made in that respect, as it was the principal objective of the hon. Member for Great Grimsby.
I congratulate my right hon. and learned Friend and his colleagues in the Government on being so cautious about the risks involved in going any further. Initially, as one remembers, there was a great outcry about the lawyers trying to look after their own interests. That always happens and there is nothing new about it. But when people got over that and had a close look at what was involved in giving powers to the banks and building societies, it was recognised that there really is a conflict of interest to be considered. Some credit must be given to the lawyers. All the lawyers I know who have been interested in the measure have recognised that conflict, and have then set about trying to find an answer to it, and if genuine safeguards to cover that conflict of interest can be found, so be it.
We hear a great deal about consumer interest. It would certainly not be in the interest of the consumer to open up new practices involving a conflict of interest acting to the detriment only of the consumer. There would necessarily be a conflict of interest between the bank or the building society in doing the conveyancing work, and the consumer whom they purport to be serving.
I cannot believe that either the hon. Member for Great Grimsby or the hon. Member for Ipswich want to do something which would be to the detriment of the consumer. Therefore, I hope that they will accept that there is here a serious point to be dealt with. I hope that they will also say that, while everybody should be looking for the answer, they must not and will not try to hustle the Government into doing something unless and until the answer has been found. If they can find it, let them find it. I promise them this. All the lawyers I know would be most interested to hear positive suggestions from those who want to get on faster on how the conflict of interest could be met. If and in so far as they are put forward, and from whatever quarter they come, they will receive the most interested and serious consideration.
§ Mr. Austin Mitchell
I shall develop this point in my speech. I remind the right hon. and learned Gentleman that the idea of allowing solicitors employed by banks and building societies to do conveyancing was the Government's own idea, not mine. It was also the Government's own decision to extend that power to unregistered as well as registered land.
§ Sir Ian Percival
Be that as it may, all the more credit that they are now recognising that there is a danger of conflict of interest in all the areas referred to, and so have determined not to do something which could operate to the detriment of the consumer, and not to go ahead until the serious point of that conflict has been resolved.
I for one congratulate the Government upon the Bill. I hope that they will stand fast on this ground. It would be absurd to go ahead unless and until the answer to that conflict is found.
§ Mr. Austin Mitchell (Great Grimsby)
The Administration of Justice Bill has been described as a blancmange. In fact, it is a curate's omelette in many respects. Even though it has been cooked at a low regulo, and at this time of night, it is good to see the serried ranks of lawyers on the Conservative Benches. I am not sure what the collective noun is—perhaps it is a charge of lawyers, all offering their services free of charge at a time when they are free from their work at the courts. However, the Bill is a mixed bag. I shall start with part I, but the substance of what I have to say concerns part II.
Undoubtedly part I fulfils a long-felt want. There is a growing dissatisfaction with all professions, not just the law, with the lack of redress for abuse. Let me take the medical profession as an example. A doctor who puts his hand on a patient's knee or who makes a sexual advance to the patient can be dealt with for professional misconduct, but a doctor who, through incompetence, kills the patient cannot be dealt with in the same way. If bad professional work is done by people such as doctors and solicitors, the answer is to make a claim for damages or professional negligence. That means getting another solicitor to fight the case, going through the uncertainties of the law. That is an inadequate means of redress. The Bill does something to rectify that. We have something that we should have in all the professions. I am glad to see it coming in the legal profession.
However, the Bill deals with the matter in a limited way. It does not cover arguments over costs. That was what precipitated action in the first place. The Glanville Davies affair, with the gross overcharging that went on then, precipitated much of the concern, yet that problem is not dealt with in this proposed legislation. It was a major scandal. The Law Society failed drastically to live up to its responsibilities, and it was dealt with only by High Court action, with enormous expense and delay. The matter is not covered by the legislation, which is supposed to be bringing the Law Society up to date. It does not provide for lay representation on important Law Society committees, which was a recommendation of the Benson commission. It recommended that laymen should be on the assessment committees reviewing costs, and they are not. Thirdly, it is permissive, because it is up to the Law Society to decide when and how to use it.
Fourthly, it does not solve the basic problem, because the Law Society is two different things—a trade union 578 to advance the interests and purposes of lawyers and a servant of the public interest. When those interests conflict, the society cannot possibly carry out both functions. That is the whole point of asking for an independent means of review for disputes of this kind. A trade union cannot be a regulator and, if it poses as one, it cannot be trusted. That is why there have been so many complaints.
People do not see the Law Society as behaving objectively in the interests of the public. The MORI survey commissioned by the National Consumer Council shows this dramatically. The Law Society is not seen to be fair and it is not trusted. Yet that is the body to which these powers are to be given. Coopers and Lybrand management consultants are carrying out a far-ranging review of this type of problem. If they conclude that the Law Society cannot be both plaintiff and judge in its own case and cannot act as both trade union and protector of the public interest and that the only solution is an independent complaints procedure, all the effort that has gone into this legislation will be wasted. Moreover, what has been done today will stand in the way of the truly radical improvement that we believe is necessary.
There is an interesting contrast between the two parts of the Bill. Part II establishes a council for conveyancers, to be responsible for standards and discipline. Why cannot the legal profession have a body which functions in the same way and with the same semi-independent approach? It is not difficult to achieve. The Legal Action Group has put up a proposal. My hon. Friend the Member for Battersea (Mr. Dubs) introduced the Solicitors (Independent Complaints Procedure) Bill, which I am proud and honoured to have sponsored. The National Consumer Council has produced an excellent report entitled "In Dispute with a Solicitor". Others have suggested an ombudsman, which the insurance industry already has and the banking industry is trying to establish — not to mention the Daily Mirror, although that ombudsman will probably be in Liechtenstein.
There must be an independent body of some kind to deal with complaints from outside and to mediate between the interested party and the public. As the National Consumer Council has suggested, a legal council is needed through which all complaints can be channelled — a single, integrated body composed of laymen and solicitors and operating independently with a legal ombudsman. Until that is achieved, the flood of complaints will continue. When I introduced the House Buyers Bill was astonished and horrified at the deluge of complaints about solicitors all over the country, many involving serious malpractices. One Member of Parliament cannot deal with all those complaints, and it is extremely difficult to get anyone else to deal with them. This Bill takes us only part of the way. We need a proper independent complaints procedure to deal with the problem and to pro vide the public with the satisfaction of knowing that their complaints will be independently assessed.
§ Mr. Ivan Lawrence (Burton)
How does the hon. Gentleman know how far we need to go before he has seen whether this scheme works?
§ Mr. Mitchell
I have already pointed out that the danger of an inadequate, halfway-house scheme of this kind is that it will block the further progress that is really needed. The general principle is clear. There must be an 579 independent body. The Law Society cannot be both trade union and public protector, because that is an impossible role and it is bound to fail. Therefore, we must argue for what is really required rather than what the Bill proposes. That is certainly the view of Labour Members, and that is why the response to part I of the Bill from all the interested organisations whose views I respect, including the Consumers Association, the National Consumer Council, the National Association of Citizens Advice Bureaux, has been to praise with faint damns. The Bill is all right, but it is just not good enough. That has been the general reaction to part I— to welcome the provisions but to stress their inadequacy. That is what we must do with part I.
It is a rare pleasure in opposition to have played a part in the paternity of legislation, and part II springs directly from the House Buyers Bill. I am pleased to acknowledge that fact. Originally the Government tried to praise my measure with faint doubts, perhaps even to kill it. They certainly tried to buy off support for it. But they have now come round to accepting the principle implicit in that measure — the ending of the monopoly and the enfranchisment of conveyancers.
There was no drive from the Lord Chancellor's department to end the conveyancing monopoly. It simply hid behind the Benson recommendations until my Bill was introduced and until, on 16 December 1983, it was carried. The House then expressed itself in favour of ending the monopoly which solicitors enjoyed in relation to house conveyancing. That led to two months of negotiations and discussions, at the end of which I withdrew my Bill in return for what I regarded—and still do so—as a series of absolute commitments, of which this measure is one but only one.
That commitment was to set up the Farrand committee to consider the tests of competence needed for non-solicitor conveyancers. All interested parties sat on that committee, and it did an excellent, rapid and important job. To report in September 1984 was a real achievement, and part II implements its recommendations.
However, not all the detailed qualifications are given. The proposal is to set up a council which will set out the qualifications, establish the standard of competence and all the rest. That is the sensible way of doing things, and it will be done with regard to Farrand's proposals.
I am sure that my hon. Friend the Member for Ipswich (Mr. Weetch) will refer to some of the problems. We have received representations from conveyancers who are already functioning about what will happen to them under the transitional arrangements. It could be argued that the framework is over-elaborate. Indeed, the Law Society and a number of solicitors are now rushing forward to praise what they attacked and condemned less than two years ago. I therefore get a mite suspicious that the framework might be slightly over-elaborate. It is certainly elaborate compared with the proposals in my Bill, which were basically designed to safeguard the money of customers.
There is a further problem about solicitors which can only be resolved afterwards. What will happen if people wish to practise as both solicitors and conveyancers? On 13 February a correspondent in the Law Society Gazette spoke of conveyancers as a sub-professional class, and suggested that fully fledged lawyers who wanted to practice as conveyancers should be barred. The 580 consultation paper on the changes in the rules of conduct leaves this option open. Clearly, the Law Society has not yet decided on this matter, but solicitors should be able to register in both capacities, certainly in the early stages. That point should be clarified.
On what terms will conveyancers serve on building society panels? If they do not do so, that will impose an extra cost of about £70 to have the work done again by a solicitor. I see no reason why we should not legislate to provide that conveyancers should serve on building society panels on the same basis and with the same right of entry as solicitors. Personally, I should like to abolish such panels, but as they exist it would be wrong to give solicitors a monopoly and it would be right to put conveyancers on exactly the same footing.
There are problems about advertising. The conveyancing council should be able to compete with the type of advertising that the Law Society is now undertaking on a substantial scale. How will that be funded? Yet on the essentials my view is simple and straightforward. The House has expressed itself clearly as being in favour of the principle of breaking the monopoly and allowing conveyancers to operate, but many hon. Members also made it clear on 16 December that they were in favour of imposing some framework of qualifications as a safeguard for the consumer. It was right that we should delegate the job of deciding what those qualifications should be to a committee representing all the interested parties. In my view, we should accept that committee's decisions. It conducted a vigorous and stringent inquiry.
I cannot agree with many of the points made by my hon. Friend the Member for Ipswich. I see these measures as the logical culmination of our efforts to break the monopoly. It was a case of swings and roundabouts. The legislation represents a balance. Both sides have made concessions. The Law Society wanted conveyancers barred from commercial conveyancing, but the Bill makes no such provision. The Law Society wanted a line to be drawn between conveyancers and any association with estate agents. No such provision appears. What is provided for is a council that will rule in the light of circumstances. That is sensible. There are consumer representatives on the council. Almost half the representatives are not licensed conveyancers. The council will have to act liberally and sensibly because the future of the profession is in its hands, and it will be up to the council to make a success of it. That responsibility will guarantee that the council rules sensibly and that there will be a liberal interpretation of the framework.
Without a healthy, vigorous and profitable profession, everything will have been in vain. With the guidance of the Fan-and report, and the representation that is provided for, the council will have the opportunity to regulate sensibly and to modify the regulations in the light of the circumstances of the time and the needs of the profession as it develops. The council will have to make a success of the profession.
There is the vexed question of existing conveyancers. I can see why there is a sense of frustration, but the problem is open to solution in the same way. We must provide for responsibility and public protection. The National Consumer Council believes that the council should be required to exempt those with sufficient practical experience. It will be possible, on a flexible basis, to make sensible arrangements and to consider 581 deserving cases — people with competence, skill and experience--with a benign eye, and to do them justice. On that basis, I welcome the measure.
However, there is a wider question. We do not establish complete competition just by adding conveyancers to solicitors. We do not break the monopoly by widening it. There is still a monopoly — a monopoly of authorised persons rather than solicitors. There will not be the full and free competition envisaged in the Bill, which is essential if the. lot of the house buyer is to be improved.
There is no provision for the establishment of a comprehensive service for the house buyer. It should be possible for one institution — whether solicitors with property centres, as in Scotland, estate agents providing a conveyancing service, or building societies — to provide a comprehensive service for a generation of house buyers many of whom do not share the long middle-class tradition of buying and selling houses with the aid of the family solicitor.
§ Mr. Richard Ottaway (Nottingham, North)
Is not the difficulty that, if we are to protect the consumer, those who do the conveyancing must be qualified in some way and, if there is some form of qualification, a cartel or closed shop is automatically introduced?
§ Mr. Mitchell
The legislation provides for qualifications. Solicitors employed by banks and building societies to do conveyancing would have qualifications. I am talking about institutional competition and the widened monopoly being broken because organisations employ whom they want. Banks and building societies will employ solicitors to offer a comprehensive service. I do not want the professional monopoly that has prevented all change.
My Bill provided for institutional competition by allowing banks and building societies to do conveyancing on registered land. The Lord Chancellor—this is my interpretation — in an attempt to divert support away from my comprehensive measure, proposed that solicitors could be employed by banks and building societies to do conveyancing on all land. It was a gambler's throw. It failed, but it left us with his proposal.
After Second Reading, and during the negotiations about how to achieve my Bill's objectives, I felt that it was vital to sustain the Chancellor's commitment to widen competition. It remained the central objective, as it had been a central part of the Bill, to ensure that banks and building societies would be able to do conveyancing. I am satisfied that we got a commitment in absolute and inescapable terms. In view of our earlier discussion, I should like to put on record the first commitment given in the Solicitor-General's letter to me of 12 January, the terms of which were inescapable. He wrote:We are committed to legislation to enable solicitors employed by organisations such as building societies and banks to undertake conveyancing.
§ Sir Ian Percival
Does the hon. Gentleman agree that we owe it to the consumer who, as he rightly says, will usually be wholly mystified, to ensure that his conveyancing is not carried out by someone who has an interest in conflict with his? How does the hon. Gentleman suggest that we provide that protection to the consumer if conveyancing is done by the bank or building society which would, as the lender, have an interest in the conflict with the consumer? How does the hon. Gentleman suggest that we provide that safeguard for the consumer?
§ Mr. Mitchell
I must emphasise that the proposal was the Government's. The Lord Chancellor is highly skilled in legal matters and has legal officers. They will have thought about that problem before the proposal was made. Such ideas are not clutched out of the air by those in government. The had thought about it. The letter continued to give the impression that it was a fairly straightforward matter to resolve. It stated:So far as conflicts of interest are concerned, our provisional view is that we can rely primarily on appropriate amendments to the Solicitors Practice Rules.I agree with that. The letter continues:This might be supplemented, in the case of building societies, by a Code of Practice issued by the Building Societies Association and by a statutory requirement for societies to inform clients of the desirability of seeking independent advice where, for instance, the society wishes to impose a special condition on the loan. The Code of Practice, which might be policed by the Director General of Fair Trading or perhaps by the Registrar of Friendly Societies, could also prohibit societies from discriminating against borrowers who chose not to use the Society's conveyancing services.It is a straightforward matter, and the way around it is not difficult. The Government are committed to legislation to enable solicitors to act in this way. The letter of 12 January is the foundation on which we erected the agreement, and is central to it. Without it, I would not have withdrawn my Bill. The written answer said:We will shortly issue a consultation paper on how best to ensure that conflicts of interest and anti-competitive practices do not arise when solicitors employed by banks, building societies and other organisations are permitted to undertake conveyanc-ing."—[Official Report, 17 February 1984; Vol. 54, c. 347.]There is no more absolute commitment than that. It is clear, absolute, straightforward and unequivocal.
§ Mr. Weetch
Does my hon. Friend realise that, when someone buys a house and employs a solicitor to undertake the conveyancing, that person not only pays his solicitor for the conveyancing but the person, usually the same person, who acts on behalf of the building society to check the deeds and the terms of the loan? In other words, one and the same person acts both for the purchaser and the mortgagee in the form of the building society. There are potential conflicts of interest in that. However, not until this convenient time have they ever been put forward in public.
§ Mr. Mitchell
My hon. Friend has contributed a major point, which is on my next page of notes. He is absolutely right. Conflicts of interest arise all the time, but the profession has accepted them as part of the norm and done nothing about them. Conflicts of interest must arise in the property centres being set up by solicitors. They are being set up in different parts of the country. and have existed for a long time in Scotland.
§ Mr. Greg Knight (Derby, North)
Does the hon. Gentleman agree that that point is bogus because both the building society and the client have an interest in getting a good title and, therefore, there is no conflict of interest?
§ Mr. Mitchell
There is a conflict of interest in that the solicitor is wearing two hats and fulfilling two different roles. That is clear. The fact that that argument has not been raised as a point to prevent solicitors from getting two sets of fees, makes it a little difficult to accept that argument when it is raised to prevent banks and building societies from conveyancing. I do not accept that conflict of interest argument.
583 I am developing the commitment made to me, on the basis of which I withdrew my Bill. The Lord Chancellor said:the Government — and I think with the assent of the Opposition—entered into certain commitments as a result of that legislation. We were in honour bound, having entered into those commitments, to do what we had promised to do."—[Official Report, House of Lords, 14 January 1985; Vol. 458, c. 825–6.]Part of the Government's promise was to introduce legislation to allow banks and building societies to undertake conveyancing. There is no escaping that. They cannot fudge it. They are honour bound to fulfil that promise.
Clearly the Law Society will carry on a rearguard action, such as is being staged now, and will make a major point of conflicts of interest. In reality, however, it is a minor matter which affects a minority of cases. It is clear that the conflict of interest point was not raised when the position benefited its members—when they received two fees for doing one job. It can be dealt with straightforwardly by the practice rules, by the Office of Fair Trading and by an insistence that where a conflict of interest arises, the solicitor acting for a building society must tell the customer to consult his own solicitor. It is as easy as that to avoid conflicts of interest.
The minor point of difficulty, which I concede exists, does not obviate the principle, and was accepted, so as not to obviate the principle, by the Government when they persuaded me to withdraw my Bill. I cannot understand why it has become such a major point now.
I did not understand the Attorney-General to say that the Government will not allow banks and building societies to act. He reserved his position in view of the argument that we all know is continuing. But in view of the commitments made, if the legislation is not introduced, it would be dishonest, deceitful, mendacious and untrue. The Government will have conned me into withdrawing my Bill on the basis of promises that will not be fulfilled.
I know nothing of the internal workings of the Government, but some press reports have suggested that the Lord Chancellor, having introduced this proposal to persuade Conservative Members not to support my legislation, is trying to renege on his own commitments. I do not say that: the press does. The reports also say that he is trying to hedge round the legislation so that the principle is implemented in such a way as to make it unattractive to banks and building societies. One newspaper this morning suggested that one building society might do the conveyancing for another building society's customers. How ludicrous that would be. It is so comical that it cannot be seen as implementing the principle to which the Government are committed.
The press reports say that the arguments are continuing, but I believe that the Lord Chancellor is a man of honour. Indeed, Gilbert's Lord Chancellor in Iolanthe said:The Law is the true embodimentOf everything that's excellent.It has no kind of fault or flaw,And I, my Lords, embody the Law.Therefore, it is a monstrous slur on someone who embodies all those qualifications to imply that he is indulging in sordid politicking and trying to rat on specific promises made on his behalf to me, on the basis of which I took action which is now irreversible. I do not understand 584 how the press can assert that a man in such a position would behave in that way. It is a monstrous slur on the integrity of the Lord Chancellor. If the assertions are true —I am sure they are not—they would be a slur, too, on the Solicitor-General, who made those promises to me and who might think that, if they are not fulfilled, it is a resigning matter. His word has been betrayed.
§ Mr. Mitchell
We all took his word. I am glad that the Attorney-General has merely reserved his position, because the legislation must come. It must confer the right to banks and building societies to operate in a way that is attractive to them, and it must widen the range of choice of the consumer. I look forward to that promise being fulfilled unalloyed, unadulterated, unweakened and in its entirety.
For too long house purchase has been a log jam, and the purchaser has been overcharged for conveyancing. That log jam was broken by the House Buyers Bill. Drastic changes resulted from the Bill, and I am delighted with what is happening in the house-buying market. There are new ideas and initiatives and a surge of action and change. It is estimated that conveyancing costs have decreased substantially by 20 to 30 per cent. That is a direct gain from the Bill. We have seen the attempt to try new initiatives, solicitors advertising, progress towards comprehensive services, solicitors taking up the idea of property centres in Wrexham, Crawley, Berwick and Lincoln on the pattern of the Scottish solicitors, computerisation brought into a sector where it is vital and can make a major contribution, conveyancing plans and packages for solicitors to make the whole operation more simple and straightforward, estate agents looking forward to employing conveyancers, and a whole range of choices and changes. It is a shake-up that directly results from the threat of competition. That threat has to be sustained. We are implementing part of it today in the Bill. The next step is to extend it to banks and building societies.
When this comes, it will be a real change, and the House will have made a contribution. We will have done something in this measure, and through the House Buyers Bill, to help our people in the most genuine, straightforward and necessary way. It has done something more relevant to the lives of people and to improving their lot than most of the other things that we discuss in the House. Therefore, I welcome that part of the Bill and the flood of initiatives that will follow.
§ Mr. Richard Ottaway (Nottingham, North)
I declare an interest as a partner in a firm of solicitors. Before Labour Members jeer, I remind them that I am not part of the Law Society's rearguard action, as I voted for the Bill introduced by the hon. Member for Great Grimsby (Mr. Mitchell) on Second Reading. I also remind him that a substantial number of Conservative Members voted for it.
I welcome the proposals to abolish the solicitors' conveyancing monopoly. It has been described several times today as a monopoly, but I feel that it is more of a cartel. Some 27,000 solicitors and several thousand firms in competition with each other hardly smacks of monopoly. There can be only one test of whether the cartel should be removed, and that is whether it is in the public interest. It has been clearly demonstrated that the Bill's 585 changes will result in cheaper conveyancing. I understand that solicitors' charges have dropped by about 30 per cent. since 1983, and that step is clearly in the public interest.
The proposal is that we have a council for licensed conveyancers and I agree with that. It could not be anything else. The standards of the council will be set by the council. As my right hon. and learned Friend the Attorney-General has described, that is required—under clause 8. The clause goes no further, but I suggest that an exam of a similar standard to the solicitors' conveyancing exam should be a fair test if we are to have fair competition.
While I voted for the abolition of the cartel, I voted for the Bill only on a matter of principle. If the Bill had stayed in the same form as that passed on Second Reading, which I think everyone will agree was pretty ropey, I should have voted against it on Third Reading. The hon. Member for Great Grimsby has made much of the negotiations that he had with my hon. and learned Friend the Solicitor-General in the months after he had obtained a Second Reading of his Bill. It is worth pointing out that the hon. Member got his closure motion by only one vote, so he hardly negotiated from a position of overwhelming authority.
§ Mr. Ottaway
I do not know, but I think that it was about 20 or 30.
The hon. Member hardly negotiated from a position of overwhelming authority, particularly when several hon. Members backed him that day simply on a matter of principle and not for the full force of his Bill.
§ Mr. Austin Mitchell
It is a curious suggestion, if the hon. Gentleman is making it, that commitments of honour can be diluted by an inverse ratio to the size of the majority.
§ Mr. Ottaway
I am not suggesting that. If the test of whether banks and building societies should have this right had been put to the vote, the hon. Gentleman might have had a different result.
Some of the problems that have been described if banks and building societies are allowed to do conveyancing are problems of conflicts. That has been pointed out by the hon. Member for Ipswich (Mr. Weetch) who gave an example of a solicitor today acting for a borrower and a building society at the same time. However, what is being proposed here is slightly different. The lender's lawyer has never acted for both lender and borrower, because the lender is in a position of strength.
In response to the Government's suggestion that we allow banks and building societies to carry out conveyancing, the Lord Chancellor's Department issued a consultation paper that expressed concernthat the dominant position of certain lenders in the housing market might enable them to pursue anti-competitive practices.It relied upon the Competition Act 1980 to protect against some of the unfair practises.
What the paper did not do was consider the suitability of banks and building societies to carry out conveyancing. However, the Benson report did that, and said:We consider, therefore, that even if it were possible to devise a suitable system for licensing and supervising conveyancing by building societies and banks that was not cumbersome and expensive such a development would not be in the public interest.586 After all, we are talking about the public interest. The Benson report was right. I am not satisfied that the Fair Trading Acts could cater for that position. After all, that would be to ignore human nature. A man may go into a building society and ask for a loan, and on the way out be told, "By the way, we offer a conveyancing service." The chap is rather worried whether he will be given a mortgage, and it would require a very strong-willed person to resist the offer of conveyancing.
The real problem is that the banks and the building societies_ would be in a dominant position. With their tremendous financial reserves — £3 billion for the building societies — they will set up high-technology conveyancing shops. While in the short term that would be good for the consumer, it would decimate the solicitors' profession.
The local branch of the Law Society in Nottingham carried out a survey of the impact of banks and building societies carrying out conveyancing. A number of firms of solicitors have branch offices dotted around Nottingham. Many of them offer services in deprived and under-privileged areas. In reply to my asking one firm what would happen if it lost 50 per cent. of its conveyancing work, it said:competition from Banks and Building Societies could seriously affect the service we provide to the public in the area concerned. I give as an example details of percentages at our Bulwell Office; for the nine months to September, 1984,50 per cent. of our work is conveyancing which produces 72 per cent. of our costs; legal aid work accounts for 24 per cent. but the costs from that only amount to 12 per cent.This legally aided litigation work as you would imagine consists of a good deal of matrimonial and criminal work with other civil work included, e.g. accident claims. If the organisations mentioned above were to reduce the level of our conveyancing work then clearly we would not be in a position to provide the service we do now.That is the most important point in the whole issue about banks and building societies.
§ Mr. Weetch
The hon. Gentleman is talking about the cross-subsidy that exists in a solicitor's office. Does he believe it fair that a young couple struggling to buy a house and pay the conveyancing costs should, through a charge like that, subsidise someone who is undergoing a divorce?
§ Mr. Ottaway
I am not suggesting that. We have all agreed that conveyancing charges have dropped. That solicitor was saying that if he lost his work, his business would have to shut down. This is a different matter altogether—he will not be offering any service at all. As the firms of solicitors shut, conveyancing practices will become concentrated in the building societies, and the net result will be a reduction in the level of competition.
The profession is not opposed to the Bill. Those who read the letters columns in the Law Society Gazette in 1984 appreciated that many solicitors did not feel hidebound by the stance of the Law Society but were prepared to go out and get business. Many of them were referring to new technology, software programmes and advertising. Indeed, a new lease of life was given to the solicitors' profession, and the hon. Member for Great Grimsby and the Government are to be congratulated on that.
Ordered,That, at this day's sitting, the Administration of Justice Bill Lords] may be proceeded with, though opposed, until any hour. —[Mr. Neubert.]
§ Mr. Ottaway
The Attorney-General described the miscellaneous provisions at the end of the Bill as covering 587 a rag-bag of issues, as it were, in that they were all good in principle. Clause 53 is designed to reform arbitration law. Many people involved in arbitration in the City believe that the clause is right in principle but wrong in application. Other provisions in arbitration law provide for a default appointment of an arbitrator, whereas the clause provides for appointment by the court.
As Britain is a worldwide arbitration centre, many arbitrations that take place here concern parties overseas. It will be particularly difficult if one must apply to the court for a default appointment of an arbitrator to serve documents overseas. That will slow up the process and provide extra work for the courts.
I may be told that that issue would be better discussed on Report. I mention it now only because, in a speech yesterday, the Master of the Rolls said that perhaps more emphasis would have to be placed on arbitration to deal with the volume of work that is being experienced in the civil courts. Clause 53 will give the courts more work and will hamper the arbitration process, so it does not seem appropriate in the circumstances.
§ 10.3 pm
§ Mr. Robert Maclennan (Caithness and Sutherland)
The Bill, the provisions of which I broadly welcome on behalf of my right hon. and hon. Friends, is a classic example of the deficiencies of our mode of seeking to introduce law reforms — what one might describe as lawyers' law reforms—in that it is limited in extent and deals with subjects some of which are by no means final in their shape and which, by virtue of their incompleteness, will require our attention before long. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) made much the same point when speaking about part I.
The distinguished legal correspondent of the Financial Times today commented on that in connection with the reform of commercial law and in his article almost despaired of the prospects of this country ever having modern commercial law. With respect to the provision of effective amendments to the law governing legal services, the same sort of criticism could be made when one recalls that some of the recommendations of the Evershed committee in 1953, which have commanded widespread support, both among the legal profession and those who represent consumers, still have not been implemented.
The time has come to ask whether we are approaching legislation in these areas in the most effective way. Many of these issues might best be dealt with by a new mode of legislation involving extensive pre-legislative committee hearings, so that a broad measure of consensus could be arrived at, thus avoiding measures of this kind clogging up the legislative machinery of the House. I say this by way of preamble because I am disappointed that the Bill, although long, does not deal with many important matters.
Part I enhances the capacity of the Law Society to deal with complaints against solicitors. This part of the Bill is broadly along the right lines. It is disappointing that the Law Society has not yet received the Coopers and Lybrand report which it initiated. When it does, it may be necessary to look again at the legal framework in which solicitors operate.
Like other hon. Members, I have been struck by the degree of public disquiet at the machinery for making 588 complaints against solicitors. I believe that radical changes are needed. Unless the profession makes the changes itself, the case for an external independent examination of complaints will be strengthened—an examination of the type advocated by the National Consumer Council and a number of other bodies. I have some reservations about that whole hog approach. It would have unfortunate consequences on the organisation of the profession. The Law Society could well become simply a professional trade union, and that would not be in the public interest. Undoubtedly, a larger lay element is desirable, and the Law Society should consider that proposal.
Although I accept the broad framework which has been set out by the Law Society and the Bill, there are some questions about how it will operate in practice. Do the remedies provided fit in with other remedies at law—notably with a damages action for negligence or a solicitor and own client taxation? Let us suppose the Law Society considers that the complaint discloses negligence as well as substandard performance by a solicitor. The wording of the Bill suggests that the client would be advised to take legal action. The legal aid committee might well take a different view and feel that the case did not merit full legal aid.
The Bill's provisions envisage solicitor and own client taxation following a reduction of fees by the Law Society. What is provided is that the bill to be taxed will be the bill as reduced, not as originally presented. If, as a result of taxation, the bill is altered, is the Law Society to alter its determination? That procedure is unlikely to inspire a great deal of confidence. The Bill provides a valuable extension of remedies, but it does not go far enough. There is still no power to award compensation to an aggrieved client.
The Benson committee recommended—perhaps this will be used in terrorem — that a solicitor should undergo some form of compulsory retraining. The Bill does not say anything about the procedures to be exercised by the Law Society. There is a danger that the procedure could be so cumbersome that it would deter potential complainants. The Law Society must address itself to that matter. On the other hand, there is a danger that solicitors will not be able to rely on the procedure. It will be difficult for them to rely upon the independent judgment of the professional purposes committee if its members and staff have already been concerned with the investigation process.
Part II is more complete, and I can give it a more unqualified welcome, notwithstanding the lively and important debate that there has been about the position of banks and building societies. The ending of the property conveyancing cartel, as the hon. Member for Nottingham, North (Mr. Ottaway) put it, is broadly welcomed by both sides of the House.
The movement that has been under way since the House Buyers Bill was introduced in 1983 has had a beneficial effect on conveyancing charges. Whether conveyancing is made cheaper and more efficient will depend not just on the establishment of a new profession but on whether important recommendations contained in the Farrand committee's second report are adopted. For example, it proposed that vendors should be required to supply purchasers with replies to local searches and standard 589 preliminary inquiries with the draft contract. I acknowldege that many of the recommendations are detailed. It would be sensible to give effect to them, but they will require major legislation.
That is a further illustration of the point that I made earlier about the desirability of considering alternative means of giving effect to what the House is likely to regard as desirable after careful consideration. It is a pity when the Lord Chancellor has so little time available that the Bill cannot take further the reform of the provision of legal services.
There are one or two matters which it would be desirable and in the interests of the consumers of legal services to include in the Bill. I hope that the Attorney-General will reconsider the case made most powerfully in another place by Lord Foot for granting legal aid in defamation cases. I do not propose to rehearse the cogent arguments that were put forward at some length. It is possible that we are in breach of our obligations under the European Convention on Human Rights—there is a case pending at the moment which may determine the point —by denying access to courts by refusing legal aid in such cases.
I should like to see public funds provided to pay the costs of determining points of law of exceptional importance. That is one of the Evershed committee's proposals which has long commanded the support of consumers of legal services and lawyers.
The Benson commission proposed that where the death or incapacity of a judge interrupted a trial or an appeal, the costs should be reimbursed. That is a highly desirable proposal, which should be considered. It has already been around for long enough without any action having been taken on it.
It will be easy for the Minister when he replies to the debate to say that there are many desirable things which the Government would like to see happen but that they cannot all be encompassed in one Bill. I accept that that is a procedural block, but I hope that the Government and those responsible for the machinery of law reform will apply their minds to how to bring about such changes without having to wait, in some cases, for decades.
§ Mr. Derek Spencer (Leicester, South)
The hon. Member for Ipswich (Mr. Weetch) and the hon. Member for Great Grimsby (Mr. Mitchell) have seen their legislative offspring legitimated by subsequent adoption by the Government. Notwithstanding its new-won respectability, they seem to have reservations about its status. I hope that they will eventually become reconciled to its position and will not, like disappointed fathers, as they seemed to suggest at one stage, either disinherit it or show their disenchantment any further.
I wish to speak not about that aspect but about part I. I am one of those people who have reported a solicitor to the Law Society. The last time I sat as a recorder at the Old Bailey a case was not ready for trial due to the incompetence of a solicitor. He had been similarly incompetent a month earlier in the same case. On that occasion another judge had granted an adjournment and had ordered him to pay the cost thrown away. After I heard what he had to say in chambers, I once again ordered him to pay the costs thrown away and reported him to the Law Society. I await the outcome of that complaint.
590 I shall say nothing about the individual case, but it highlights a number of problems that can occur. First of all, defending counsel is unlikely to feel that he is in a position to report a solicitor to the Law Society. Prosecuting counsel and the prosecuting solicitor would hardly feel it appropriate to do so. The defendants were only too pleased to see yet again that their case had been adjourned. If a judge is not to report a solicitor, who can? If the matter is not to be dealt with effectively by the Law Society, who can possibly consult the public interest? If at the end of the day the new procedure does not give satisfaction, I might be a more receptive audience to the private Solicitors (Independent Complaints Procedure) Bill tabled by the hon. Member for Battersea (Mr Dubs).
There should be no need for dissatisfaction, provided the new provisions in part I are implemented imaginatively. The Master of the Rolls has power under schedule 1 to appoint to the new tribunal people who are not solicitors. In view of the public misgivings created by the Glanville Davies case, I hope he will not shrink from doing that. If we find that the undoubted improvements embodied in part I of the Bill do not allay public misgiving, we will have to come back to the matter, but I think the time is not yet ripe for that.
There has already been an effect on the level of conveyancing fees. As so often in respect of cutting conveyancing fees, Leicester leads the way. We have heard of fees elsewhere being cut by 30 per cent. My inquiries reveal that in Leicester conveyancing fees have been cut by as much as 50 per cent. That is by no means uncommon. I am sure that the hon. Member for Great Grimsby would like to be able to claim that his Bill was responsible for that. If I could give him credit for achieving that objective, I would assuredly give it. but my researches among solicitors reveal that their view is that it is a change in the rules about advertising that has caused a fall in conveyancing fees. When one of their regular customers comes in wanting to have them act for him in house conveyancing, he says, "You have been my family solicitor for years but I see from reading the Mercury last week that Mr. Jones round the corner can do it for £145. I don't expect you will be charging much more, will you?" That sort of argument is very difficult to reject, and I understand that it has been one of the principal reasons for a fall in conveyancing fees, which the public find so acceptable.
I can say to anyone who is thinking of evaluating the joys of Leicester that not only do we have a large reservoir of owner-occupied housing available; we also have some of the cheapest conveyancing fees in the country.
§ Mr. Ken Weetch (Ipswich)
I oppose the Bill, and in doing so I want to concentrate on part II, which deals with the reform of conveyancing. But before I do that should like to respond to the right hon. and learned Member for Southport (Sir I. Percival) and also to the hon. and learned Member for Leicester, South (Mr. Spencer). They both said, "Since you have lost the issue about banks and building societies, please don't go away and sulk about it." Let me assure them that I intend to do no such thing. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) and I will be back to argue the case. This House is a democratic forum. Although things have gone against us 591 on this occasion, that is not the end of the matter, because in the next Session of Parliament there will be a building societies Bill, and the argument will come up afresh.
When the right hon. and learned Member for Southport says to my hon. Friend and myself, "What you both need to do is to come back to this House with your arguments sharpened to present to us", that is absolutely right. We shall be back to argue that case at a later date, because this is the proper place to do it. I for one accept the challenge: I shall be back.
§ Sir Ian Percival
I take it that the second half of what the hon. Gentleman said is correcting the first half. I certainly did not say, "Don't go away and sulk." I meant to, and did, throw out a challenge: "Come back with the answer about this conflict of interest and it will be very seriously considered."
§ Mr. Weetch
The right hon. and learned Gentleman is as courteous as ever, and I accept that.
I wish to concentrate on part II of the Bill. As the House knows, I have had a specialist interest in conveyancing matters in the 12 years that I have been in this House. I have fought the old monopoly very hard because I quickly came to the conclusion, when I thought about it years ago, that what was needed in this area of legal services was a good dose of free competition, and that the sooner we had it the better. I believed that that would find a responsive echo on the other side of the House, but not in all places, for there is a dichotomy of philosophy. There are many hon. Members who believe in free enterprise and many others who believe in the old restrictive practices that the legal profession had yesterday, and still has today. That is an interesting situation in itself.
Before I come to part II, I want to say that I am not at all satisfied with part I, and particularly clause 1, which centres on the discipline of solicitors. Broadly speaking, I believe that clause 1 has missed a very good opportunity to bring about some valuable and far-reaching reform. That clause has missed the boat.
We should now be looking for an approach that separates professional disciplining of solicitors from the framework of the Law Society. It is no longer a satisfactory state of affairs that the solicitors' own professional body, which can be expected to take a partial approach in these matters, should be the body responsible for adjudicating what are adequate professional services and whether certain actions of professional conduct should be disciplined in the public interest. I shall have a great deal more to say about that in Committee. I do not want to develop the argument at this stage. Let me just say that this part of the Bill is totally inadequate as it stands.
The hon. and learned Member for Leicester, South talked about respectability. The efforts of my hon. Friend the Member for Great Grimsby have achieved respectability. As we are on the theme of respectability, I want to do the respectable thing and choose for the theme of my speech on part II, part of the editorial of The Times of Friday 3 May. One cannot be more respectable than to quote The Times leader in one's favour. It states:with the exception of some aspects of trade union behaviour being subjected to new legal inhibitions, the professions and all those other vested interests carry on largely intact.I wish to oppose part II. Paradoxically enough, in opposing it, I agree with the main aims of the Government, 592 underlying the whole of part II. Broadly speaking, the Government propose to bring more competition to bear on the current conveyancing system, so that house transfer is more cost effective, cheaper and expeditious. In detail, that is to be done by widening the categories of persons who can conveyance property. Having widened the source of supply, prices will eventually come down. That will occur in tandem with encouraging the use of computer technology and structural reform. Those matters are outside the scope of the Bill. Nevertheless, they are widely understood.
Let me concede at the start that in trying to bring that about, the Government have had a difficult task. Such legislation inevitably has to strike a balance between protection and competition, between the old world of legal professionalism and the new opportunities of beneficial commercialism. Unfortunately, the Government have struck the balance in the wrong place. The Bill has too much of the old world and not enough of the new, so much so that it offers very little reform at all.
Let me analyse why that is so. I was not trained as a lawyer; I was trained as an economist, and I look at the problems like that. I look at bringing about a reduction in costs and prices for the benefit of the consumer. I have read the Bill carefully. In the first place, it does nothing to create, promote or safeguard any meaningful competitive structure in conveyancing services. In the long run it does not. Quite the contrary. The Bill has done much to reverse the gains painfully made at common law to break section 22 of the Solicitors Act 1974 which, when I was beginning my struggle against it, was section 20 of the old Solicitors Act 1957. While on the one hand it narrowly widens the class of persons who can provide conveyancing services for fee, gain or reward, that means nothing other than allowing a limited number of outsiders to join the club. In return for that largely illusory improvement, there are very real disadvantages.
The most overwhelming disadvantage is that whereas the solicitors' monopoly currently applies to just one small link in the purchasing chain—preparing and drawing up the transfer deed — under the Bill the monopoly provisions will cover the preparation of the contract for sale and all the other ancillary procedures. A few years after I came to the House in 1976, the famous case of the Property Tranfer Association v. the Law Society decided that all ancillary procedures were free from the monopoly and that only the transfer deed, which often amounted to no more than filling in the blanks on a standard form, was covered by the monopoly. Under this loud-sounding nothing of a Bill, the consumer will have cut the monopolistic ropes only to acquire chains. The Benson proposals, widely regarded as whitewash at the time, have come to pass.
Secondly, there is too much professional superstructure in part II. There is too much clutter, too much regulation and not enough simplicity. If the Department of Trade and Industry is following the Bill at all, for God's sake let it step in now and try to make some alterations. The new Council for Licensed Conveyancers is a pale copy of the old Law Society. We have seen it before. Its better half is just down the road in Chancery Lane and it has been responsible for many years for the unjust burden of conveyancing charges which has been a blight on owner-occupiers for far too long. I note in passing that there is to be no common council for all who do conveyancing. A conveyancing council ought to cover all conveyancers, but 593 there are to be separate arrangements for licensed conveyancers and for solicitors, thus ensuring that the new council is not just a carbon copy of the Law Society but a permanent poor relation. No doubt that was the intention from the start. I have no doubt, however, that the new poor relation will soon be aping its professional better and entrenching its own restrictive practices as quickly as possible, as professional councils always do. I have always regarded professional bodies of this kind as, in part at least, conspiracies against the layman.
My third criticism relates to a more basic weakness. The Government have put the cart before the horse. They have created a ton of professional machinery before there is any adequate job description or any settled idea of what conveyancers will be asked to do in the future. Everyone is saying that change is in the air with wider use of computers and information technology and improved procedures. Even more fundamental changes may be on the way. I know that the Government are seriously considering how Departmental practices can be changed to achieve greater expedition in these services. As an eternal optimist, I am absolutely certain that in the course of time this will lead to a technical simplification of the whole process of conveyancing so that the qualification needed will be minimal. The absurdity is that in the Bill the Government have built up a monolith of machinery, with all the bits and pieces that go with it, which technical change will render completely irrelevant within a fairly short time.
My fourth criticism—the crowning irony—is that, having erected this elaborate superstructure to ensure that everyone is properly qualified, the Bill sells the pass even before it gets into part II. Clause 5 actually makes it easier for unqualified people to do the work than was the position previously. Unqualified people can now do the work provided they are employees, partners or employers of those entitled to transfer property.
One of the abiding abuses of conveyancing over a long time has been the fact that one has paid for a qualified solicitor to do the work while up and down the country one gets his clerk instead. I would like to count the number of letters from solicitors' clerks who tell me that they have been doing the job for 10, 15, 20 and 30 years without supervision.
There has never been any case law on this subject. A friend of mine, who will now be called a licensed conveyancer, brought a case but it was stopped half way because one of the parties died. As a result, no case law exists on the record to say whether or not it is legal for an unqualified person to do the job. But I can now tell everyone who is unqualified, "Do not worry. They will no longer catch up with you because it is now legal under clause 5."
Two things have emerged from this. First, the consumer has paid monopolistic conveyancing charges to a solicitor but got the services of ancillaries in return. Secondly, and this is one of the great ironies, although the Law Society has always argued that properly qualified people should do the conveyancing, it never really cared whether Joe Soap did it so long as the qualified people took the profit from the transaction. That accounts for my cynical view of conveyancing over the years.
I am not the only person who suspects this legislation. On 5 April, The Sunday Times carried an article on the Director General of Fair Trading, who is legally charged 594 with looking at competitive conditions, and I know that over the years he has been interested in conveyancing. That report stated:Sir Gordon backed up complaints by the non-lawyer conveyancers themselves that the Bill will not do much to increase competition. This is because the mechanism for licensing conveyancers will be so rigid"—That is the word I have been looking for since rising to my feet. The Bill is not flexible enough—that few non-lawyers will qualify. While he applauds the Bill's aim to protect the consumer he said that this was being achieved at 'the potential cost of erecting barriers which might be high enough to prevent many adequately qualified conveyancers from entering the field'.That is particularly relevant given that conveyancing as a technical practice will become simpler rather than more complicated.
I wish to answer two points that have emerged from the debate. This is a debating chamber, and I listened carefully to what was said. First, scores of people have written to me since I had a letter published in The Times in which I set out my objections to the Bill. I felt that I had to do so because I have supported reform for so long that when it came, and it was the wrong sort, I thought it was incumbent on me to explain myself. I had scores of letters saying, "You are wrong. You have got the wrong end of the stick". The same has been said today, so I shall try to explain myself.
It is said that there already is more competition. I agree. but for how long will it last? The price of conveyancing used to be about 1.25 per cent. of purchase or sale. The fees have dropped. Conveyancing for any size of house can now be £120. I have even seen fees below £100. That is not altogether healthy. There should be a fair price for the job, not a ruinously low one.
I have been told not to worry and that, like spring, competition is in the air and that things will never be the same again. Prices have come down, I admit, but because of factors utterly outside the Bill. The Bill does not safeguard the competitive future. Trying to predict the future is always hazardous, but I believe that present competition is unlikely to last. The scale of charges was abolished in 1972 — the Statutory Instrument was considered in January 1973. When it came in at the end of the last century, the scale of charges was heralded as a competitive miracle. Nobody would be overcharged, it was said, as maximum charges were set down by law. What started as a maximum became a minimum because of restrictive practices and those who went outside the minimum were hammered under the professional rules.
The long-term results of this reform will not be the safeguarding of competition either. I follow changes in the conveyancing world closely, and wonder whether competition really is in the air. Two of the most promising approaches to bringing conveyancing into the 20th century by solicitors have come from groups of youngsters anxious for change and to reduce costs. Good luck to them. I refer to the Homebuyers Group and the Conveyancing Exchange. I have read their literature, learnt their aims, examined their ideas and spoken to some of the people involved. I am impressed by how they have tried to harness the benefits of marketing, attractive packaging and streamlined organisation and advertised benefits for the consumer. That is how the profession should respond to the new position.
What of the Law Society? Apart from the fact that the Bill started in bad faith which has soured my attitude to 595 it, it depresses me. In a debate in the other place the Lord Chancellor, who was talking about clause 1, but who could have been talking about any part of the Bill, because his speech on part II was exactly the same, said that clause 1was demanded by the solicitors' profession itself through the Law Society, which is its accredited representative with my office."—[Official Report, House of Lords, 14 January 1985; Vol. 458, c. 824.)I detect the influence of the Law Society in almost every stage of the Bill. I shall produce chapter and verse in Committee to argue that the consultation that took place with consumer organisations was perfunctory.
The Law Society has not only had a malevolent influence but is, at this very moment, trying to stifle the competition being created. The New Law Journal of 10 May refers to the Homebuyers Group and the Conveyancing Exchange, which represent people who are looking for new ideas, and trying to make an entry into the market in a controlled streamlined and low-cost way. It states:The Homebuyers Group are complaining that they have received no response from the Law Society since submitting details of its scheme over ten weeks ago. This bodes badly for any speedy resolution of outstanding questions.We may talk of competition, but outside there are powerful counterforces. The same counterforces have had a deadening effect on the Bill.
If I have not made an argument against the Bill in the time that I have had at my disposal, it is no one's fault but my own. I sit down, as I stood up—I oppose the Bill and I shall do so, if I am fortunate enough to be selected for the Standing Committee.
§ Mr. Greg Knight (Derby, North)
I give a cautious welcome to the Bill. Perhaps I should say that I have no current financial interest to declare. My interest is based on past experience.
I have some sympathy with the comments on part I by the hon. Member for Great Grimsby (Mr. Mitchell). My only regret is that part I does not extend to other so-called professions, such as estate agents and accountants. Hon. Members may receive many complaints about the behaviour of solicitors, but I am sure that many hon. Members will agree that those complaints are matched by complaints about estate agents and accountants, especially when they have managed to get their hands on a deposit or money belonging to a client from another source and have deducted exorbitant charges from it. I accept that the Bill cannot deal with that, but it is a comment worth making.
The impression given earlier was that part II was the first stage of trying to break down the solicitors' monopoly on conveyancing. It is not a first stage, but a further measure in a long series of events and happenings.
Restrictions on undertaking conveyancing on property for reward were introduced in the early part of the 19th century. My recollection does not go back that far, but I remember speaking to an experienced solicitor in 1967, who related a story about conveyancing in Leicester before the second world war. He was an articled clerk at the time. His principal had a completion to do in Loughborough, which is about 15 miles from Leicester. The completion was in the afternoon, so the solicitor took the morning train to Loughborough, booked into a nearby hotel, had lunch, 596 did the completion in the afternoon, stayed the night in the hotel, and got the train back to Leicester the next day. Of course, the client footed the bill for his journey and expenses, as well as paying his fee.
We have moved a long way since then. When I started as an articled clerk, scale fees were in force. Their effect was that charges were high and profits from conveyancing —there is no need to beat about the bush on this—were also high. But with the abolition of scale fees, an element of competition was introduced. Although solicitors were then free to charge as they wished, although they could not advertise, this started the practice, which has accelerated ever since, where by clients would telephone all the solicitors in an area and find out what their prices were. They would even quote the price obtained from one solicitor to another in the hope that he could meet or undercut it. For at least 10 years, conveyancing fees have been decreasing.
The problem is that, for a long time, many solicitors have used conveyancing work to subsidise other areas of activity. Although I accept that the bill is not the vehicle to put things right, I hope that in due course it will be noted that solicitors are still grossly underpaid for court work. After I was admitted in the early 1970s, I remember clearly a man coming in off the streets, bringing with him a summons for speeding, and asking me whether I would represent him. His family solicitor had said that he did not do court work, which was unprofitable; he did only conveyancing. To some extent, that is still the case today. Many solicitors are not paid an adequate return when undertaking court work, especially court work that is paid for by the state under the legal aid scheme. Far too many solicitors still see conveyancing as a means of subsidising other work. I hope that that will not continue.
The greater freedom of recent years, whereby solicitors are allowed to advertise, has given a further impetus to competition. I do not share the views of the hon. Member for Ipswich (Mr. Weetch), who said that the Bill had done nothing to lower solicitors' costs. Of course it has not. It is still a Bill, and not yet an Act of Parliament. History will show that his conclusion on this point was wrong. If, as I hope, the Bill is enacted, the setting up of licensed conveyancers will inject an additional element of competition. I hope that it will do so without sacrificing consumer protection.
It is right to sound a warning. We are talking about protecting the public and ensuring that they get a reasonably priced service and a job done properly. After all, buying one's home is probably the biggest transaction in one's life. It is not correct to draw the analogy of a shopper going from one supermarket to another and buying a tin of beans at the lowest price. We are talking about a transaction that requires skill, judgment and ability, and those who seek to dismiss the fact that those who carry out conveyancing must have some training and expertise are making an incorrect judgment.
I notice that many of the detailed safeguards are left to be dealt with by rules to be made by the Council for Licensed Conveyancers, with the approval of the Lord Chancellor. It will be important to ensure, for the protection of the public, that conveyancers are both experienced and qualified to carry out the work, and I am concerned to see that this is what happens. Will my right hon. and learned Friend tell the House whether the final scheme will ultimately come back to the House for parliamentary approval? I hope that that is to be the case.
597 I have serious reservations about banks and building societies being allowed to undertake conveyancing work. The hon. Member for Great Grimsby, who unfortunately is not here, and the hon. Member for Ipswich have said that we should not be concerned about this because many solicitors already carry out work for their client and for the building society at the same time. The fact that a solicitor may be getting two fees on what is essentially the same transaction does not necessarily mean that there is a conflict of interest.
The danger in allowing banks and building societies to undertake conveyancing work is that their prime aim is to 598 see that a loan is taken out at the rate of interest that they are charging. If someone is employed full-time for a bank or building society, the interest that he is looking after on its behalf will conflict with the interest of his client. The client needs to be advised not only as to whether good title can be deduced to the property, but on whether he can afford to take out a loan of that size, and whether the property is what he wants, and all sorts of ancillary questions. There is a real danger of a conflict of interest if banks and building societies are allowed to carry out that work.
With those reservations, I welcome the Bill.
§ Mr. Alfred Dubs (Battersea)
I listened carefully to the Attorney-General when he dealt with part I. I thought that he was altogether too full of praise for the Law Society. His attitude was so uncritical that he described a Law Society rather far removed from the experience of many hon. Members and members of the public. The Law Society is obviously aware that it is the subject of a great deal of public criticism. That must be why it commissioned the Coopers and Lybrand report. Therefore, I wonder why we are dealing with legislation instigated by the Law Society to make changes to the methods by which complaints are looked at, and the powers of the Law Society in relation to that.
It is likely that the further work that Coopers and Lybrand is carrying out will overtake what we shall do through the Bill. We may wish that we had not embarked on part I until the investigation carried out on behalf of the Law Society has been completed. Would it not be better to wait for the Law Society to complete this process before deciding on reforming legislation on the complaints procedure?
I cannot help feeling that it might be better to drop part I and await the results of the full investigation by Coopers and Lybrand, and then decide how to proceed. I do not suppose that the Attorney-General will accede to that request, but he must agree that there is at least some logic in it, as he may find it embarrassing to put this legislation through and find it overtaken by events.
I would have thought that the Law Society did not have that impressive a track record in this area. A few months ago I introduced a Bill under the ten-minute procedure to deal with complaints against solicitors and to set up an entirely independent system. The publicity that the Bill attracted resulted in my being swamped by an avalanche of letters from people throughout this country and abroad. They were concerned about how the Law Society had handled, or failed to handle, their complaints.
Although I am sure that some of the complaints had little or no foundation, others appeared to be compelling in their criticisms. They came from the rich and the poor and from those whose very lives had been shattered by their experiences. They had an enormous sense of grievance and injustice. It made me feel that the results of the survey, which was quoted earlier, were amply backed by those letters. Quite unusually, not one person wrote to me complaining about or disagreeing with my stand in the Bill. The measure was approved by the House, but it is now stuck in the system— as is the fate of so many private Members' Bills introduced under that system.
However, there was one rather amusing by-product. Sir David Napley, an eminent member of the legal profession and a past president of the Law Society, gave a lecture in February this year for the 1985 Conkerton memorial lecture at the University of Liverpool. It was abbreviated in the Law Society's Gazette on Wednesday 20 March. It is the only answer from anyone to do with the Law Society to the request for an independent method of dealing with complaints.
Sir David Napley said:The latest attack on the profession comes from some left-wing Member of Parliament.I take that as a compliment. He went on: 600He has promoted a Private Member's Bill designed to take the powers to deal with complaints against solicitors away from the profession and into the hands of a statutory independent body.That is accurate so far. He then said—and he goes on the attack:Would his time not be better spent in promoting such a body to deal with the public's complaints against Members of Parliament?He is talking about all of us, including you, Mr. Deputy Speaker. He continued:Here is a body of people, of whom, on entering politics, no training, skill, learning or expertise is required; who are not required to demonstrate or maintain particular standards of integrity; who are subject to no disciplinary process for the management of either their constituents' affairs, or the public generally.In other words, if it is impossible to answer the case against the Law Society, why not attack the people who are making it and have a good go at Members of Parliament? We are pretty thick skinned, so that does not really matter. All is fair in this activity.
However, Sir David went on to say:One recognises that the affair of Glanville Davies and the mistakes which were made poured ammunition into the laps of our enemies.He can say that again:But that apart the profession's record for integrity, probity and ethical conduct generally stands very high. Just as one swallow does not make a summer, so one storm does not make a winter.I suggest that there he has pretentions to enter the world of literature. He continued:The professions' record for doing the right thing should, when they are attacked, be compared by the public with the politicians' record for doing the wrong thing.No doubt our debate this evening will attract similar attacks.
I welcome the fact that part I contains some improvements in the methods of investigating complaints and the public being given redress. In particular, I welcome the provision for the repayment of fees. Nevertheless, I want to make six criticisms of the proposed system. The first has been mentioned by other hon. Members, but I make no apology for referring to it again. It is that the Law Society inevitably must have a conflict of interest between its duty to defend the profession and its duty to help members of the public when they have a sense of grievance against the profession. I do not see how that conflict of interest can be reconciled, and it certainly is not reconciled in part I.
Secondly, I regret that the powers given to the Law Society in part I are permissive. The society will still have the option of deciding not to proceed with a complaint, and it may take that decision on very wide grounds indeed.
Thirdly under the Bill—this point has not been made so far—the Law Society is given no general obligation to help the complainant. It does not have that obligation now, and the society's booklet is not particularly helpful. When writing to me about the matter generally, people have commented time and again that they feel that the Law Society has not helped them.
Complaining against a member of a profession is difficult, because the average person does not have the necessary skill or knowledge and the Law Society can too easily dismiss a complaint. If the society is to be left with this responsibility—I would prefer it not to be left with it—it should accept a general responsibility to give advice and help to complainants.
601 Fourthly, the Bill still leaves too many points at which complaints will be handled, if they are handled at all. I should prefer to have one focus for complaints so that the average person may know that if he or she goes there, the complaint, under whatever heading it might be categorised, will be investigated.
Fifthly, I regret that there is no provision for an arbitration scheme dealing with negligence when the sums involved are relatively small. My Bill suggested £2,000. It is too difficult and costly for the public to go to law to try to sue solicitors for negligence when the sums involved are small. They may be important to the people concerned, but they can be described as relatively small in the context of claims of this type. the procedure is too cumbersome when it permits the public simply to be told, "You have the right only to go to court." A simple arbitration scheme would be beneficial.
Sixthly, the Law Society should have a general responsibility to be more forthcoming about the complaints that it receives and what it does with them. The council's report for 1983–84 contains, at page 21, a brief mention, under the heading "Professional Purposes Committee," of the number of inquiries and complaints received. The Law Society has a duty to us and the public to be more forthcoming about the nature of complaints, the way in which they were handled and the outcome.
Although I am no supporter of the present method of dealing with complaints against the police, at least the Police Complaints Board—the successor body to which will, I am sure, do the same—analyses complaints and gives some information about what is going on. The law Society should do likewise, otherwise we shall continue to argue in the dark, as it were, not fully knowing the nature or outcome of complaints.
I would prefer, however, an independent system. I am not certain that we shall manage to achieve that by tabling amendments in Committee. At the very least, the Law Society should be more responsive and sensitive to the criticisms that have been expressed, and I hope that some of the points that I have made will find favour with the Minister.
§ 11.8 pm
§ Mr. William Cash (Stafford)
I welcome the Bill, with some reservations. I shall confine my remarks to part II, which deals with licensed conveyancing, and at the outset I declare my interest. I am a solicitor, and for about 10 years I have been a legal adviser to the Institute of Legal Executives. I played some part in the preparation of evidence to the Farrand committee. I am also a legal adviser to the Society of Company and Commercial Accountants Limited.
The Institute of Legal Executives and its members have played a significant role in the practice and development of the law for decades. It can trace its origins back as far as the 1890s. For almost 100 years, by competent practice, experience and examination, members of the institute have been involved in and engaged in the conveyancing of land in solicitors' offices. The institute was represented on the Farrand committee. For decades it has provided high standards of education, training and examination. The institute welcomes the Bill in principle and Its general objectives, but hopes that in Committee it will be amended in a number of respects.
Part II will allow persons who are not solicitors to convey land. The protection of lay members of the public 602 seeking advice from the new licensed conveyancers will depend upon the balance which the Bill strikes between the virtues of competition—but not a free-for-all—and the requirement of competence. The more home owners there are the better, but they must be sure that the purchase of their homes is properly conducted and with effective and full title. Conveyancing is not by any means as simple a transaction as some advocates of licensed conveyancing may suggest.
Part II provides for the establishment of a council for licensed conveyancers. Of concern, however, is the lack of criteria to be laid down by or through Parliament as to what the standards of competence and professional conduct of the licensed conveyancer should be in order to secure adequate protection for the consumer. Should this be left simply to the council and the Lord Chancellor under clause 34, as the Bill provides, or should Parliament retain more direct control over the rules, prescribing standards of training and education by way of statutory instrument?
The radical nature of part II is perhaps overlooked. The house buyer and, at present, purchasers of other interests in land, will be significantly at risk if the standards are found to be inadequate. Insurance will be no compensation, if things go wrong, for those who have lost their home. I am not suggesting that things do not go wrong from time to time under the present arrangements, but with this significant departure from the general rule that only solicitors may convey land. I think that public confidence must be maintaned in the new conveyancers or the Bill will fail in its main objectives.
A similar argument applies to the setting up of the disciplinary committees under clauses 20 and 21, to the code of conduct to be provided under clause 16, to the provision for indemnity and compensation under clause 17, to the accounts which are to be provided for under clause 18 and to interest on client's money under clause 19.
I accept that there must be a degree of flexibility and that it would be unnecessary for every aspect of standards and conduct to be tightly regulated by Parliament, but some retention of control, even as a long stop, is required. I have in mind provisions similar to those in section 27 of the Insurance Brokers (Registration) Act 1977, which reserves to the Secretary of State, after consulting the Insurance Brokers Registration Council, power to approve and vary by statutory instrument, subject to the annulment procedure, rules relating to the code of conduct and other matters such as the method of running bank accounts and the holding of moneys. The making of the rules under that Act is not by way of statutory instrument, but the rules come into effect only when approved by order of the Secretary of State, by statutory instrument.
It will not do for persons to argue that in practice this will not amount to much control. The scrutiny of such instruments in draft is available to the House and may be enforced, especially if the rules are pubished in draft before hand for consultation. Adopting a system along those lines will help to avoid unnecessary mistakes, especially in the initial stages of the development of the profession.
The Institute of Legal Executives already has in place a syllabus and well-developed and tried examinations. It is to be hoped that this will be found to be the most suitable course of study available to those who seek to acquire and develop the professional skills which they will be, or should be, required to have. The quality of service 603 properly to be expected of a licensed conveyancer ought to be that at least of the average of his class, including properly qualified solicitors and fellows of the Institute of Legal Executives.
I am puzzled about why intervention by the council in a licensed conveyancer's practice is apparently unrelated to tests of competence. I accept that there are provisions to control accounts and money under clauses 18 and 19. However, undue delay under schedule 4, paragraph 3 is no more important than incompetence or negligence, and I do not see why intervention by the council should be so selective. Why should not failure to comply with any of the rules lead to intervention?
I notice that under clause 18(4) only so-called "qualified" accountants would be qualified to give accountants' reports on licensed conveyancers' accounts. Licensed conveyancers will often not be limited liability companies, and I should like an assurance that there will be no discrimination against members of the Society of Company and Commercial Accountants by a denial to those of them who are in public practice of the opportunity to make reports on the accounts of licensed conveyancers.
It is ironic that, unsupported by European Community law or anything other than apparent convenience, a provision is included in the Bill which specifically enlarges the freedom of choice to seek professional advice from the legal profession, but which at the same time restricts the freedom of licensed conveyancers to choose their accountants from any firm other than one whose members come from one of the chartered bodies, and a limited range of other authorised accountants, by employing a formula for selection derived from company legislation which will not apply to many, if not most, licensed conveyancers. I should be glad to have an assurance that such discrimination will not be enacted.
Finally, I should be pleased to receive an assurance from my right hon. and learned Friend the Attorney-General that banks and building societies will not be allowed to provide conveyancing services.
In most other material respects I welcome the Bill and support it.
§ Mr. John Morris (Aberavon)
I am sure that I shall be encouraged by both sides of the House to curtail my remarks. I have little to add to what my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) said. I am grateful to the Attorney-General for his clarification of the Bill.
Part I which relates to the discipline of solicitors is welcome as far as it goes. The tragedy is that it does not go far enough. There is enormous public interest in the profession and a substantial amount of taxpayers' money — a subject warm to the hearts of Conservative Members—is infused into the profession year by year.
The Law Society is the progenitor of these proposals. I ask myself whether they represent the Law Society's thinking now or more accurately its thinking 18 months ago.
The impression I have is that, in addition to the fact that the proposals contained in the Bill are inadequate, the timing is inopportune, because since the Lord Chancellor won a place in the legislative timetable — I suspect sometime last July—for one of his little ewe lambs, 604 matters have moved forward. We have had the interim paper commissioned by the Law Society from Coopers and Lybrand. I shall not weary the House by retailing the nuggets of information that have been revealed from that report. It is clear, however, from a perusal of paragraph after paragraph, that the majority view of people and organisations which have been interviewed by Coopers and Lybrand is that a radical rather than a cautious approach is required.
There is a substantial view that whatever process of investigation of complaints is set up, it should be seen to sufficiently independent of the representational role of the Law Society. That is the point which remains unsatisfied.
Without repeating the points that have been made time after time in the debate, I must pose again the question that will still be asked by the general public—how can a body like the Law Society, which has as its first and bounden duty to look after the professional interests of its members, have an adjudicatory role regarding complaints against its members?
Those roles are incompatible. The public will never be satisfied unless and until there is a division between the trade union function and the investigatory function of the Law Society. One of the matters Coopers and Lybrand pinpoints is how different are the arrangements in the medical profession, for example, where there is a division between the investigative and adjudicatory role and the representational role.
These proposals are untimely. Circumstances have changed. The proposals will satisfy no one. We will be coming back before many more years to set up yet another piece of machinery. Given that the Law Society maintains its concern and has commissioned at great expense Coopers and Lybrand to investigate certain aspects of its position, I wonder whether it is yet too late in the day for this part of the Bill to be withdrawn, for there to be more reflection and for us to have before us a more stable arrangement under which justice could be seen to be done regarding investigation on the one hand and the representation of members on the other.
I cannot see how both functions can be carried out by the same body in such a way as to satisfy the basic criterion of justice being seen to be done. Therefore, the proposals are inopportune. They will be short-lived and as sure as night follows day we will be returning within a matter of years to discuss more stable, more permanent, more effective and more acceptable proposals to ensure that the concern which undoubtedly exists about complaints is properly met. That is my prophecy, and I stand by it.
As regards licensed conveyancers, my hon. Friends the Members for Great Grimsby (Mr. Mitchell) and for Ipswich (Mr. Weetch) can feel proud of the fact that their efforts have resulted in the monopoly being broken. I set out my views in the debate on the Bill tabled by my hon. Friend the Member for Great Grimsby. My interest is to ensure that house transfers are made cheaper and simpler. No doubt my hon. Friend is pleased that one of his ambitions has been achieved.
The hon. and learned Member for Leicester, South (Mr. Spencer) pointed out that advertising in itself and the abandonment of the tariff have brought down costs. With the aid of those two factors and perhaps the catalyst of my hon. Friend's activities, we have gone a great deal of the way to make house transfer cheaper and simpler.
We are only beginning on this road. As in so many instances of law reform we have seen what has happened 605 in Scotland. As I understand it, solicitors are now allowed to set up property centres. They will undoubtedly move more and more into that field. We shall see whether solicitors enter it or whether the Government eventually endorse the commitment repeatedly made by the Solicitor-General in the House, and in particular on 16 December last.
But whether solicitors enter into the property field and the property shop, or whether the provision is eventually extended to banks and building societies, my prime concern, as I said on the Second Reading of my hon. Friend's Bill, is that the conflict of interest remains. It is not a point that is canvassed in the interests of solicitors; it is a point to be canvassed on behalf of the consumer. Having said that, I welcome the work that has been done by the National Consumer Council to try to resolve that problem. The difficulty it faced was in preparing its work in a vacuum. Until one knows the Government's proposals it is difficult to reach a proper judgment on whether the issue is resolved or not; but it is an important issue.
I praise what has been done already to make house transfers cheaper. I welcome the breaking of the monopoly. But on the most important commercial transaction affecting most people in the land, it is of the utmost importance that as consumers they are well served. I look forward to seeing how the Government deal with that question. I understand that the consultations have been about method. Many of us were not entirely clear about what the Attorney-General said. I am sure that the Solicitor-General will want to add something to make it clear. There have been conflicting reports in the newspapers. It is the Government who made the commitment, and we shall be interested in seeing and studying the results of the battle that is going on between the Lord Chancellor on the one hand and Industry and Environment Ministers on the other.
One of the results of the deliberations in the other place has been the dropping of the original clause 43. The purpose of the clause was to deprive those who sought the help of the courts in judicial reviews; they would have lost their right of appeal. In the other place their Lordships rendered signal service, as they did the other day in regard to the Attorney-General's reference on sentences.
The two proposals emanating from the Lord Chancellor's Department have lacked friends, therefore one wonders at the judgment of those in the Department. These are not party political issues but issues that have been canvassed and found wanting after considerable deliberation.
We shall look closely at the proposals concerning legal aid. The Bill has not, however, dealt with the funding of law centres and their plight. The Lord Chancellor tries to wash his hands of the law centres. He has stated that he has no statutory authority to fund them. With the limitation of expenditure by local authorities, we fear the closing down of the law centres; certainly we shall not see the expansion that many of us would like to see. The battle will continue as to who is to fund the law centres, whether it is the urban aid programme, the Lord Chancellor's Department or some other source. If Ministers are unwilling to take over the sponsorship of existing and future law centres, we shall return to that ' matter in Committee. I hope that we shall be able to get over the hurdle which seems to depress the Lord Chancellor and deprive him of the will that the needs to ensure that law centres are extended.
606 I could have gone on for a long time, but I think that I have canvassed some of the main issues that cause concern to me. In due course we shall return to them in more detail in Committee.
§ The Attorney-General
I should start with the points that were made by the hon. Member for Great Grimsby (Mr. Mitchell). I notice that his ally in practically every other way, the hon. Member for Ipswich (Mr. Weerch), did not share those expressions of annoyance and irritation, and even had a feeling of being let down.
Much time has been spent on what is not in the Bill, for example, the position of employed solicitors. Reference has been made not only to the letter written by the Solicitor-General but to the written answer by my hon. and learned Friend on 17 February. It is important that I should spend a moment or two going through what was set out in that long written answer to see what has been achieved.
We established the Farrand committee. The com-position was agreed with the hon. Member for Great Grimsby, and, I think, the hon. Member for Ipswich, too. There were two limbs in the terms of reference. Farrand reported on time in September, which was very quick. The second limb was the report in January this year. Both reports were published. We said that we would bring forward legislation in the 1984–85 Session, and here it is in the Bill.
The second report, which was in great detail, is now being carefully considered. We said that we would discuss with the Law Society the scope for amending its rules against advertising, and advertising is now permitted, and widespread. We said that we would institute a wide-ranging review of the system of house transfer, seeking to identify ways to simplify and speed it up. That report was published today by the Department of the Environment. We said that we would speed up the extension of land registration and make additional manpower available, and that is well in train. Therefore, we have done a great deal on those matters.,
I have been asked not only by the hon. Member for Great Grimsby, the father of this part of the legislation, but by the right hon. and learned Member for Aberavon (Mr. Morris), about part II. The only way that I can make clear what the Government's and my view is, is to repeat what I said about three hours ago. It remains our intention to legislate in the next Session with regard to the position of employed solicitors working for banks, building societies and other institutions. That obviously means estate agents and such like. The form of that legislation will take into account the need to protect consumers against prejudice resulting from any conflict of interest and will be drafted in the light of our recent consultations on that subject. That is all that can be said.
I read again today the right hon. and learned Gentleman's powerful and effective speech on Second Reading of the private Member's Bill, in which he expressed the view that the Government clearly have in their mind, in saying that we have not yet reached a decision although we undertake to legislate in the next Session of Parliament. With respect, that is as far as we can go.
It is our duty to take account of the need to protect the consumer. Its importance was very much stressed by my right hon. and learned Friend the Member for Southport 607 (Sir I. Percival). But we shall legislate in the next Session. We are taking full time to consider, in the light of what we have learnt, so that we can see exactly what form it should take. There is no need for those decisions to be rushed because the vehicle for legislation will be available next year, and we want to get it right. I am sure that the anxieties that have been expressed this evening are deeply felt.
The hon. Member for Newcastle upon Tyne, East (Mr. Brown), who spoke from the Opposition Front Bench, stressed the need to have an entirely independent tribunal. It seems that various parties have been peering into crystal balls to foretell what Coopers and Lybrand will recommend. I do not know what its recommendation will be. As far as I know, it has not even reported to the Law Society as yet. If it recommends an entirely independent tribunal, it will do so against the background of the Government having a completely open mind. A fair amount of work would be involved as there is a great deal of inter-relation between the courts—negligence actions can come into court—and a professional body that is bound to be regulatory and to enforce its own rules. If the consultant's report contains the recommendation that there should be an independent tribunal, the Government will maintain their open mind.
It has been suggested by several of those who have participated in the debate that we are wasting our time with part I, as we may have to throw it overboard in the light of Coopers and Lybrand's recommendation. It would please me more than almost anyone else—I shall have the conduct of the Bill in Committee—if I could get rid of part I. Its consideration in Committee will obviously take a long time. However, I cannot do that. Even if we assume that Coopers and Lybrand will produce such a recommendation and that the mechanics can be properly formulated, as I am sure they can, it will take some time to find the right vehicle to implement it. If we abolish part I, we shall not have the less important improvements that will flow from it. Surely it is better to, have them than to have nothing. Even if we have to make changes by legislating again for an independent tribunal, we shall not have wasted our time in Committee by sending to the House a Bill which provides a measure of improvement, if not the great improvement that some believe the independent tribunal would provide. I am entirely open-minded on the issue, and so are the Government.
The hon. Member for Great Grimsby is especially concerned about employed solicitors—I feel that I have dealt with that matter to the fullest extent possible—and asked me to take up the issue of building societies making use of licensed conveyancers. The Government intend to table an amendment to the Bill that will facilitate the use of licensed conveyancers by building societies in the same way that societies currently use a panel of solicitors. Every building society has provisions within its rules which allow it to use solicitors. The amendment will ensure that the societies' rules can be changed quickly and easily. I hope that I have met the hon. Gentleman's point satisfactorily.
The hon. Member for Great Grimsby was interrupted in the middle of his speech by the hon. Member for Ipswich. He told us that he intended to raise, on the next page as it were, the question of the solicitor who is acting for the purchaser and then acts for the building society. 608 First, the solictor is not employed. The conflict of interest that has always concerned us arises when the employed solicitor has an overriding duty to his employer. That is a problem that we must overcome when we introduce legislation next year. If the solicitor is not employed, he will not have a duty to an employer. Much more important —this is a technicality on which I have been briefed—a solicitor does not act for the building society until the terms of the loan have been agreed. He is thus not acting for both sides when their interests may be in conflict.
My hon. Friend the Member for Nottingham, North (Mr. Ottaway) spoke of the negotiations that I have discussed and pointed to the huge powers that the banks and the building societies have upon issues that involve conflicts of interest.
The hon. Member for Caithness and Sutherland (Mr. Maclennan) criticised the commercial law, but the Commercial Courts have been so successful as to be almost embarrassing. As the hon. Member for Newcastle upon Tyne, East knows, a great many contracts made outside the United Kingdom, in which neither party is British, now specify that the contract should be subject to English law so that the parties can use our splendid Commercial Court system. This has been something of an embarrassment, in that there are now fairly serious delays as a result of the success of the system.
The hon. Gentleman said that part I was broadly on the right lines but that we might have to look at it again in the light of the Coopers and Lybrand recommendations. I think that I have said all that I can on that aspect.
My hon. and learned Friend the Member for Leicester, South (Mr. Spencer) gave an interesting illumination of why conveyancing fees had gone down, particularly in his area. I can almost see the effect on the old family solicitor in his black coat and striped trousers of the comment, "Young Mr. Jones down the road will do it for £140." I am sure that that is a very effective weapon.
The hon. Member for Ipswich made it clear in his recent letter to The Times that he intended to oppose the Bill. He has said that he will be back again to argue the case, and I welcome that. I emphasise to the hon. Member for Newcastle upon Tyne, East and to the whole House that we are not in any way seeking to hold up employed solicitors to protect solicitors. We are doing this because we are concerned about the conflict of interest and we welcome any help from anybody. My door really is always open if anyone wants to come and discuss an effective way of removing the risk of conflict of interest. For example, there is the kind of suggestion made by my hon. and learned Friend the Solicitor-General in his letter to the hon. Member for Great Grimsby.
The hon. Member for Ipswich went on to suggest that the tribunal was too much an in-house tribunal. I remind the House that the Solicitors' Disciplinary Tribunal, as opposed to the one that deals with less serious offences, is entirely appointed from members designated by the Master of the Rolls, one third lay people and two thirds from the solicitors' profession.
The hon. Member for Ipswich also said that the Bill did nothing to create a competitive structure, that it was too rigid and cluttered and lacking in simplicity. Interestingly, however, that part of part II was based entirely on the recommendations of Professor Farrand and his committee, which was widely representative of various consumer bodies, including the Consumers Association and the National Consumer Council and a number of very 609 interesting people. That committee's report set out the very terms that we have put into part II and the work of that committee was entirely approved and agreed by the sponsors of the original House Buyers Bill.
There is one thing that one can always say about the hon. Member for Ipswich. There is no way in which his sincerity on this can ever be doubted.
My hon. Friend the Member for Derby, North (Mr. Knight) wanted me to undertake that the final scheme would be submitted for parliamentary scrutiny. I am afraid that I cannot give that undertaking, but there is the safeguard that all the rules made by the council must be approved in terms by the Lord Chancellor.
The hon. Member for Battersea (Mr. Dubs), who succeeded in introducing a Bill which then got locked up somewhere, perhaps in the drains of the House, asked me again and perhaps more clearly than anyone else what will be the position if Coopers and Lybrand says that we have to go down a different route, and suggested that we should drop part I and wait for that report. I should love to do so, but I believe that there are advantages and improvements in part I and it would take some time to work things out even if such a recommendation were made by Coopers and Lybrand. Everyone seems so sure that that will be the case, but I certainly do not know what Coopers and Lybrand are going to say and I do not think that anyone else knows either.
I agree about the conflict of interest between the defence of the profession and the individual, but we must make it clear, as did the right hon. and learned Member for Aberavon, that there is no duty on the Law Society to defend the solicitor. It has a duty to defend the profession, and that should be done by enforcing the rules on conduct. That is how the profession is properly defended.
610 The hon. Gentleman's six points were extremely well thought out. Most of them require no legislation, and I shall personally ensure that they are drawn to the attention of the president of the Law Society.
I have already spoken about the rules and how they can be enforced and, indeed, tightly controlled by the Lord Chancellor. I notice that the right hon. and learned Member for Aberavon and his Front Bench colleagues could not resist twisting my tail about clause 43. That is not in the Bill, and it will not go in, but I suppose it was an opportunity which was much too good to resist. We need no longer worry about that.
I thank all hon. Members who have participated in an extremely interesting debate which went completely across party lines. I look forward to the Committee and to seeing as many of those hon. Members as possible with me. In the meantime, I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second Time and committed to a Standing Committee, pursuant to Standing Order No. 42 (Committal of Bills).