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Westminster weekly update: No deal technical notices and justice oral questions

16 October 2018

Last week, the government published a further 28 Brexit no deal technical notices on professional services, which includes contingency plans for EU lawyers practising in the UK.


Last week, the government published a further 28 Brexit no deal technical notices on professional services, which includes contingency plans for EU lawyers practising in the UK. You can read our reaction to this technical notice. There were also notes on existing free trade agreements, sanctions policy, structuring businesses, and consumer rights.

The Law Society were mentioned three times in Justice oral questions as MPs called for the restoration of legal aid for early advice and an independent review of the criminal legal aid system.

The Law Society's deep concerns regarding the erosion of legal professional privilege and on the presence of police officers during legal consultations were raised during the Second Reading of the Counter-Terrorism and Border Security Bill in the House of Lords.

This week began with Lydia Challen, a member of the Law Society's Tax Law Committee, who gave evidence yesterday to the House of Lords Economic Affairs Sub-Committee.

While developments on Brexit will take the headlines this week as negotiations continue, the Law Society will also be looking at the Mental Capacity (Amendment) Bill and the Courts and Tribunals (Judiciary and Functions of Staff) Bill which will both continue their progress in the House of Lords.

This week in Parliament

Monday 15 October

House of Lords

  • Mental Capacity (Amendment) Bill [HL] - Committee Stage (day 2)
  • Finance Bill Sub-Committee – oral evidence session with Lydia Challen, Member of the Law Society's Tax Law Committee; Malcolm Gammie QC, Chair of the IFS Tax Law Review Committee; and Jason Collins, Partner at Pinsent Masons

Tuesday 16 October

House of Commons

  • Westminster Hall debate on housing and home ownership (Neil O'Brien MP)
  • Business, Energy and Industrial Strategy Committee oral evidence session on corporate governance and delivering on fair pay
  • Business, Energy and Industrial Strategy Oral Questions

House of Lords

  • Courts and Tribunals (Judiciary and Functions of Staff) Bill [HL] - Report Stage

Wednesday 17 October

House of Lords

  • Debate on the recent report from the EU Committee on 'dispute resolution and enforcement after Brexit'

Last week in Parliament

Tuesday 9 October

House of Commons

Justice oral questions

Justice Oral Questions that took place in the House of Commons on Tuesday.

There were three mentions of the Law Society during the session:

  • Yasmin Qureshi MP (Shadow Minister for Justice) asked whether the Minister would 'agree to a call from the Law Society for an independent economic review of the long term viability of the criminal legal aid system?'

  • Bambos Charalambous MP (Lab, Enfield Southgate) said 'recent research published by the Law Society found that people who did not receive early advice were 20% less likely to have had their issue resolved than those who do.' He asked, 'will the minister commit to reintroducing legal aid for early advice?'

  • In response to Bambos' question above, Lucy Frazer QC MP (Parliamentary Under Secretary of State at the Ministry of Justice) noted that she had read the Law Society's research with interest; cited her recent meeting with the Law Society; and stated that the government was carrying out a review of legal aid that would report by the end of the year.

Summary of relevant questions:

What steps the government is taking to modernise the court system (Kevin Hollinrake MP; Con, Thirsk and Malton).

  • Lucy Frazer QC MP stated that the government were allowing people to make applications online, with the result that half of all divorce petitions are now handled online.

  • She stated that more use was being made of technology, for example by allowing vulnerable witnesses to give pre-recorded evidence.

  • She also highlighted that small claims amounting to less than £10,000 could be started online, defended online and in some cases could lead to a settlement before the claim reached the court.

  • Kevin Hollinrake MP asked the Minister whether she would look into establishing a financial services tribunal to provide a dispute resolution mechanism for small businesses in disputes with their bank. In response, Lucy Frazer QC MP noted the APPG on Fair Banking's report on this issue; stated that she had discussed with the Economic Secretary to the Treasury the FCA's consultation on the expansion of the role of the Financial Ombudsman; and said she would consider the independent review of complaints being carried out by Simon Walker.

  • Lucy Powell MP (Lab Co-op, Manchester Central) highlighted the importance of improving BAME diversity in juries and amongst judges, and Lucy Frazer QC MP added that consideration should also be paid to the diversity of the legal profession.

  • In response to Yasmin Qureshi MP's question as to whether the government would agree to the Law Society's call for an independent economic review of the long term viability of the criminal legal aid system, Lucy Frazer QC MP stated that a review of legal aid was being carried out which would report by the end of the year.

What steps the government is taking to improve the court experience for victims and witnesses. (Tom Pursglove MP; Con, Corby).

  • Edward Argar MP (Parliamentary Under Secretary of State at the Ministry of Justice) cited the government's Victims Strategy that was published in September, and stated that the strategy aims to use body worn cameras to reduce the number of times a victim needs to make a statement, and to reduce the number of people who have to hear a statement.

  • Ruth George MP (Lab, High Peak) asked what support the government was providing to Litigants in Person (LiPs), particularly for employees who will be forced to represent themselves in court following changes to the small claims limit in the Civil Liability Bill. Edward Argar MP responded that the government was spending over £6m on support for LiPs.

What his Department's policy is on Law Centres (Virendra Sharma MP; Lab, Ealing Southall).

  • Lucy Frazer QC MP stated that the government was supporting Law Centres with legal aid contracts, and that Law Centres would be engaged as part of the LASPO review.

  • Virendra Sharma MP stated that cuts to legal aid had forced the closure of a number of Law Centres, resulting in advice deserts in some parts of the country. He asked the government whether they would provide new funding to Law Centres in parts of the country with the greatest unmet legal need.

  • Lucy Frazer QC MP's response was noncommittal, stating that the LASPO review would look at how advice is provided to those who need it most.

Topical Questions:

  • Bambos Charalambous MP cited the Law Society's recent research which found that people who did not receive early advice were 20% less likely to have their issue resolved than people who did, and asked the Minister whether she would commit to reinstating legal aid for early advice. In response, Lucy Frazer WC MP noted that she had read the Law Society's research with interest; cited her recent meeting with the Law Society and other solicitors that the Society brought along to the meeting; and stated that the government was carrying out a review of legal aid that would report by the end of the year.

  • Shadow Lord Chancellor Richard Burgon MP stated that the Ministry of Justice had faced the deepest cuts of any government department, amounting to 40% or £800m, and asked the Lord Chancellor to confirm whether these cuts would no longer be going ahead in light of the Prime Minister's recent comments that austerity is over. The Lord Chancellor stated that the department would continue to recruit more prison officers and would continue to invest in court reform.

  • Gloria de Piero MP (Lab, Ashfield) asked whether the government agreed that people who were convicted of murdering or attempting to murder their spouse should be barred from receiving any financial benefits from joint assets (this was the subject of a Guardian article today). Lucy Frazer QC MP noted that the Matrimonial Causes Act states that the conduct of parties in a divorce can be taken into account during divorce proceedings.

  • Tom Pursglove MP asked about the steps the government would take to ensure that the legal process of divorce does not exacerbate conflict. Lucy Frazer QC MP responded by citing the government's consultation on family conflict in no fault divorces.

  • Stuart McDonald MP (SNP, Cumbernauld, Kilsyth and Kirkintilloch East) asked the government about the steps being taken to reduce the average 42 week waiting time for hearings in front of the immigration and asylum first tier tribunal. In response, Lucy Frazer QC MP noted that the government has recently appointed a number of new medical members to the tribunals.

  • Chair of the Justice Select Committee Bob Neill MP (Con, Bromley and Chislehurst) asked whether the government would consider changing the statutory retirement age for judges (currently set at 70). The Lord Chancellor David Gauke MP responded by acknowledging the argument that raising the retirement age could cause people to apply for judicial posts later in life, but said he would continue to look at the evidence.

House of Lords

Counter-Terrorism and Border Security Bill - Second Reading

The Counter-Terrorism and Border Security Bill had its Second Reading in the House of Lords. The Law Society briefed selected peers on its main concerns around the erosion of legal professional privilege and the right to consult a lawyer in private.

The Law Society was mentioned twice during the debate:

  • Lord Faulks (Con) cited the 'powerful points' made by the Law Society about the erosion of legal professional privilege at border interceptions, and argued the Bill could be improved in this respect.

  • Lord Kirkhope of Harrogate (Con) referenced the Law Society's deep concerns about the 'serious matter' of the Bill's provision to allow an officer to be present during a legal consultation between a detainee and their lawyer.

Baroness Williams of Trafford, speaking for the government, said:

  • She was pleased that the Bill implemented a recommendation made by the former independent reviewer of terrorism laws by introducing a statutory ban on the admissibility in criminal trials of verbal admissions made during an examination at a port under Schedule 7 to the Terrorism Act 2000.

  • The powers afforded by Schedule 3 (which includes the provisions allowing for the seizure and examination of privileged material, and for an officer to be present during a detainee's consultation with their lawyer) will be subject to a number of checks and balances to ensure that they are not used in an arbitrary fashion.

  • The important safeguards on the face of the Bill will be augmented in a statutory code of practice, and she promised the House that the government would publish a draft of the Schedule 3 code of practice ahead of consideration of Part 2 of the Bill in Committee.

  • In her summary, she stated that there would be an opportunity to explore the Shadow Security Minister Nick Thomas-Symonds MP's proposal for the creation of a regulated panel of lawyers for use in border detentions (similar to the criminal duty solicitor scheme) at Committee stage.

Lord Rosser responded for the Opposition:

  • He said Labour broadly supports the Bill, although they will seek amendments on certain provisions.

  • He stated that the government's opposition to an amendment at Report Stage in the House of Commons that would require the government to make continued participation in the European Arrest Warrant (EAW) a Brexit negotiating objective was concerning.

  • He raised concerns about legal professional privilege, and the provision for an officer to not only watch, but also hear, legal advice being given to a detainee.

  • He noted that the Shadow Security Minister had proposed the creation of a regulated panel of lawyers for border stops in order to overcome government concerns about criminal information being passed on through a lawyer, and asked what the government's position was on this proposal.

  • He raised concerns about the lack of debate, engagement and consultation on the Bill, citing the late introduction of significant amendments in the Commons which prevented proper scrutiny. These concerns were also raised by a number of other peers during the debate.

Summary of other relevant points made during the debate:

  • Baroness Hamwee (LD) noted that the House had previously made clear its view of the importance of access to a lawyer and the confidentiality of the relationship between a client and his lawyer as to both advice and material, and asked why the existing protections against dodgy lawyers are insufficient.

  • Lord Thomas of Gresford (LD) claimed that existing protections against rogue lawyers are sufficient, stating that they amount to only a tiny minority and that those caught would be sent to prison and struck off or disbarred. He said he would support Labour's proposal for a regulated panel of lawyers for border detentions.

  • Lord Thomas of Gresford also pointed out that the process of interrogation between a lawyer and their client helps to ensure that the facts are brought to light and the correct judicial outcome achieved. He said this depends on a legal consultation remaining confidential, and thus there is a public interest in maintaining legal privilege.

  • Lord Kennedy of Southwark (Lab Co-op) noted that the recent judgment in the case of SFO v ENRC had upheld the importance of legal professional privilege to maintaining the rule of law, and gave his support to the Shadow Security Minister's proposal for the creation of a regulated panel of lawyers.

Wednesday 10 October

House of Commons

Procedure Committee oral evidence session on exiting the European Union and scrutiny of delegated legislation

On Wednesday, the Commons Procedure Committee held an oral evidence session on the scrutiny of delegated legislation in the Brexit withdrawal process, with Department for Exiting the EU Ministers Suella Braverman MP and Robin Walker MP.

During the session:

  • Implementation and scrutiny of EU Directives: Braverman stated that during the post-Brexit implementation period, the UK would continue to implement EU laws, regulations and laws.

  • Exit date: Braverman stated that, in order to provide a legal basis for the continued application of EU law in the UK during a transition period, the EU (Withdrawal Agreement) Bill would extend the application of the 1972 European Communities Act to last until the end of the transition period on 31 December 2020.

  • Sunset clause: Braverman stated that the EU (Withdrawal Agreement) Bill will extend the 'sunset clause' whereby the government will be able to amend deficiencies in retained EU law from 29 March 2021 to 30 December 2022. She stated that this was to ensure that the government would have adequate time to correct the post-Brexit statute book.

  • Future relationship: Braverman stated that the 'future framework' text in the Withdrawal Agreement will not be a binding treaty of the future UK-EU relationship. She stated that the future relationship can only be officially negotiated once the UK had formally withdrawn from the EU.

  • Financial contributions: Braverman asserted that, although the UK would make commitments to honour its financial contributions in the Withdrawal Agreement, the UK had ensured that the Agreement contained a 'duty of good faith' clause. She stated that the UK interpreted this as the EU's willingness to negotiate a comprehensive Free Trade Agreement (FTA) during a transition period.

Treasury Select Committee oral evidence sessions on economic crime

The Treasury Select Committee have been taking oral evidence as part of its inquiry on economic crime, including in two sessions last week. In these sessions the Committee have considered the anti-money laundering, counter-terrorist financing and sanctions regimes.

The witnesses for Tuesday's session were:

  • Colin Bell, Group Head of Financial Crime Risk, HSBC
  • Stephen Jones, CEO, UK Finance.

At this session:

  • Legal profession and AML: Labour MP Rushanara Ali asked for the witnesses' view about the role of the legal and accountancy professions, and their contribution to dealing with the risks around money laundering. Ms Ali specifically asked if there was sufficiently joined-up working across the sectors, and if more pressure could be applied and more work done at the regulatory level to ensure that 'they step up to the plate'.

    • Colin Bell said the statistics showed the vast majority of suspicious activity reports came from banks, adding 'almost self-evidently, more could be done by other parts of the regulated sector in terms of reporting.' He went on to say fighting financial crime effectively would involve having 'a consistent view and consistency capability across the whole of the regulated sector, not just in terms of standards and a consistent view of how we think about risk.'

    • Stephen Jones said collaboration between regulated sectors, including between public and private was critical to winning this battle - for example the Joint Money Laundering Intelligence Taskforce and Joint Fraud Taskforce. He added that the Criminal Finances Act did not take the opportunity to make it easier for banks to share information with other sectors, like legal and accountancy.

The witnesses for Wednesday's session were:

  • Rena Lalgie, Director, Office of Financial Sanctions Implementation, HM Treasury
  • Simon York, Director, Fraud Investigation Service, HM Revenue and Customs
  • Alison Barker, Director of Specialist Supervision, Financial Conduct Authority (FCA).

At this session:

  • Supervision of professional bodies: Responding to a question from chair Nicky Morgan MP, Alison Barker said the FCA had recently taken on responsibility for Office for Professional Body Anti-Money Laundering Supervision (OPBAS) and was looking to bring together and oversee the supervision of professional bodies in the accountancy and legal professions 'to get greater consistency in that area,' which was identified by the national risk assessment as an area needed to be worked on.

    • In a later answer to Ms Morgan, Ms Barker said one of OPBAS' key objectives was around improving intelligence sharing among the professional bodies and the professional bodies' members, adding: 'We want to see increased intelligence sharing from the accountancy and legal sectors as well, so encouraging them to utilise the information-sharing platforms that exist.' She also said they had held roundtables where they've brought parties together to start facilitating and convening this.

Friday 12 October

Government

Government publish further no deal technical notices

The government has published a further 28 technical notices setting out what will happen in the event of a no deal Brexit.

Of interest to the Law Society, the government has published notices on professional services, existing free trade agreements, sanctions policy, structuring businesses, and consumer rights.

You can read the full list of papers. The government have said they have no plans to publish further technical notices.

Summaries of these papers are included below:

Providing services including those of a qualified professional if there's no Brexit deal

  • The MRPQ Directive will no longer apply to the UK and there will be no system of reciprocal recognition of professional qualifications between the remaining EEA states and the UK

  • The UK will ensure that the professionals arriving from the UK from the EEA after the exit date will have a means to seek recognition of their qualifications. However this will different from the current arrangements. Specific mechanisms and functions linked to EU membership such as automatic recognition, or temporary access to regulated activities on the basis of declaration will no longer be applicable.

  • Government will work with regulatory bodies to ensure the future system for the recognition of professional qualifications works across the UK. The government will share details of the new procedure in due course and applicants should contact the relevant regulators.

These changes will mean:

  • EEA professionals who are already established and have received a recognition decision in the UK, this recognition will not be affected and will remain valid.

  • EEA professionals who have not started the application (including UK nationals holding EEA qualifications) for a recognition decision in the UK before exit day will be subject to future arrangements which will be published before exit day.

  • EEA professionals who have not started the application (including UK nationals holding EEA qualifications) who have applied for a recognition decision and are awaiting a decision on exit day will, as far as possible, be able to conclude their applications in line with the Mutual Recognition of Professional Qualifications Directive .

  • Individuals with UK qualifications seeking recognition to offer services in the EEA should check the host state national policies. The EU Commission has stated that decisions on the recognition of UK qualification in the EU countries before exit day are not affected.

Lawyers Establishment Directive and Lawyers Services Directive

  • Both the above Directives will not apply to the UK and there will no system of reciprocal arrangements under which EEA lawyers (including UK nationals holding EEA qualifications) can provide services and establish on a permanent basis.

  • The UK will revoke the implementing legislation and EEA lawyers will be treated in the same way as other third country lawyers.

The technical notice specifically outlines the following implications:

  • EEA lawyers who are already admitted on exit day will be able to continue to practise under that title and provide regulated legal activities (no action is needed).

  • EEA lawyers who have applied for admission to the England and Wales or Northern Ireland legal profession before exit day and are awaiting a decision on exit date, will, as far as possible, be able to complete their recognition process under pre-exit rules.

  • Registered European Lawyers (REL) status will cease on exit date. From then EEA lawyers will be treated in the same way as other lawyers qualified in any other third country jurisdiction.

  • Existing RELs will need to consider whether they intend to provide regulated legal activities. If so they will need to take steps to transfer into a UK profession to continue to providing those services and should contact the regulator.

  • Employers of RELs and other EEA lawyers will need to consider whether their employees will provide regulated/reserved legal activities. If so they will need to take steps to make sure their employee can continue providing those services by transferring to UK profession or working under supervision of a lawyer qualified to undertake those activities. Employers should contact the regulator.

  • EEA lawyers who own or manage legal businesses in E&W or NI will need to consider their business model is compliant with the relevant regulatory rules, once REL status ceases and should contact the regulator.

Existing free trade agreements if there's no Brexit deal

  • The UK currently participates in around 40 free trade agreements with over 70 countries as part of its EU membership. This makes up approximately 12% of the UK's total trade.

  • In the event of no deal, the UK would look to secure bilateral UK-third country agreements on exit day 'or as soon as possible' thereafter that would replicate these existing EU agreements.

  • Whilst the UK intends for these deals to be identical to the replaced EU agreements, there may be differences in the use of preferences. The Trade Bill requires the government to publish a report on any significant changes before new free trade agreements are ratified.

  • If these are not in place for exit day, trade would be undertaken on a 'Most-Favoured Nation' (MFN) status, also known as 'WTO terms' until new arrangements were put in place.

Sanctions policy if there's no Brexit deal

  • Currently, the UK is legally required to implement and enforce sanctions regimes agreed by the UN Security Council and the EU. It implements sanctions through EU regulations and associated UK domestic legislation.

  • In the event of no deal, the UK would continue to implement UN sanctions and will carry over all EU sanctions at the time of departure. It will then implement sanctions through new legislation made under the Sanctions and Anti-Money Laundering Act 2018 (the Sanctions Act), which provides the legal basis for the UK to impose and update sanctions domestically.

  • The bulk of this legislation should be put before Parliament prior to March 2019, with sanctions not addressed during this period continuing under retained EU law as set out in the EU (Withdrawal) Act.

Structuring your business if there's no Brexit deal

  • The current rules for how companies and legal entities operate within the Single Market and operate across borders is set out in EU rules and regulations. These are reflected in UK law through the Companies Act 2006 and subsequent regulations.

  • UK companies: UK companies operating within Europe will become third country businesses with relation to the EU. It argues that restrictions may be more significant for branches or representative offices rather than subsidiaries which have their own legal identity and are incorporated in the respective EU member state. UK businesses and citizens are advised to seek professional legal advice or contact their local government for further information.

  • EU companies: Companies registered within the European Economic Interest Groupings and European Public Limited-Liability Companies frameworks will no longer be able to organised as such, given that the UK will no longer be an EU member state post-Brexit. However, the government will attempt to ensure European Public Limited-Liability Companies are automatically converted to a new UK corporate structure so that they maintain a clear legal status. European Economic Interest Groupings are encouraged to transfer their official address to another EU member state. EU companies operating branches in the UK will become subject to the information and filing requirements of other third country companies. These requirements are described as 'minimal' and further information is available here.

  • Third-country companies: For companies incorporated outside the EU operating as a branch within the UK, the regime will remain relatively similar given they already operate as third country businesses in relation to the EU. In the UK these companies are subject to the overseas companies regime and their requirements will not change.

  • Mergers: Cross-border mergers involving UK companies will no longer be able to take place under EU Directive 2005/56/EC. Also, mergers that do not complete prior to exit day will not be required to take effect by EU member states.

  • Individuals: There will be no changes to who can be an owner, senior manager or director of a UK company as the UK does not apply any nationality restrictions. However, UK citizens may face restrictions on their ability to own, manage or direct companies registered in the EU depending on the industry and member state in question. UK investors in EU businesses may face restrictions on the level of investment they can hold in certain sectors and member states.

Consumer rights if there's no Brexit deal

  • Currently, EU consumer protection legislation ensures that EU consumers are protected by similar protections and safety standards across all EU member states. This is supported by the cross-border consumer enforcement framework and civil judicial cooperation framework.

  • In the event of no deal, the government is looking to ensure that UK consumers will retain their current protections by amending law under the EU (Withdrawal) Act.

  • UK consumer protection and cross border enforcement: There may be an impact on the extent to which UK consumers are protected when buying goods and services in the remaining Member States. UK consumers will also no longer be able to use the UK courts effectively to seek redress from EU based traders, and if a UK court does make a judgement, the enforcement of that judgement will be more difficult as we will no longer be part of the EU. In addition, there will no longer be reciprocal obligations on the UK or EU Member States to investigate breaches of consumer laws or take forward enforcement actions. UK consumers should not see any immediate differences in protection between UK law and that of EU Member States as UK and EU law is highly aligned. However consumers should always check the terms of consumer protection offered by the seller, and the Member State the seller is located in, to confirm if the level of protection is different from the UK level of protection. UK consumers would need to seek redress through the courts of that state rather than UK courts.

  • Alternative Dispute Resolution and Online Dispute Resolution: The obligations around Alternative Dispute Resolution for businesses will not change as a result of a no deal. However, UK-based Alternative Dispute Resolution organisations will no longer be required to act in cross-border disputes. UK competent authorities, who approve Alternative Dispute Resolution providers, will no longer be required to report to the European Commission on the status of their Alternative Dispute Resolution activity. Consumers may no longer be able to use Alternative Dispute Resolution organisations to resolve their cross-border disputes. Businesses and consumers will no longer be able to access and use the Online Dispute Resolution platform.

Question or comments? Contact the Public Affairs team at parliamentary@lawsociety.org.uk

Tags: Westminster weekly update | European Union | legal aid | Brexit | criminal legal aid

About the author

Alexandra Cardenas is Head of Public Affairs and Campaigns at the Law Society. Public Affairs manages the relationships with parliament and government. She is a dual qualified solicitor in England and Wales (2014), and Colombia (2002). Prior to the Society, she practised as a human rights lawyer and worked at Macmillan Cancer Support and Animal Defenders International.

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