To download all the Frameworks, click here.
These define our operating parameters, setting out the process which will be followed in the relevant instances e.g. the Compensation Fund Operating Framework sets out the rules which the CLC applies in managing its compensation scheme.
To view the printable PDF version, please click here.
Purpose of Framework
The purpose of this framework is to ensure that consumers have confidence in the way bodies owned or managed by Non-Authorised Persons – i.e. someone who is not a lawyer and so is not authorised by an Approved Regulator to provide a reserved legal activity such as conveyancing, probate, litigation or advocacy - deliver services regulated by the CLC. To achieve this, the CLCwill only license bodies able and willing to act in a principled manner and deliver the CLC Code of Conduct’s Outcomes by complying with its Overriding Principles:-
Overview of Framework
This document sets out:
Terms used - words presented in bold italicised font – such as Authorised Persons, Approved Regulator and Overriding Principles above - are defined in the Glossary of Terms provided at the rear of the CLC Handbook. Please refer to these definitions where you need clarification.
CLC Handbook - references are made to the CLC’s Code of Conduct, Licensed Body, and Conflicts of Interest Code; these are found in the CLC Handbook (available on the CLC website) and should be read in conjunction with this Framework.
2.1 The 2007 Act removed restrictions on the management and ownership structures of traditional legal services firms. Non-Authorised Persons (non-lawyers) are now able to be owners of legal services providers and such firms are now able to provide other services alongside legal activities. For instance:
2.2 Combining businesses in such a way might allow overhead savings to be made, enhance career progression opportunities for Non-Authorised Persons - providing skills such as strategic leadership, management, human resources, finance and IT, essential to a well-run business - and offer clients the opportunity to source a range of different services from one provider (a one-stop shop).
2.3 We use the term licensable body to mean a business which is applying to become a CLC Licensed Body. 'Alternative Business Structure' is a widely recognised term, but it s not used in the main body of the 2007 Act text. Therefore we use the term 'Licensed Body' when referring to the licensing of such structures.
2.4 A Licensed Body may take the form of:
2.5 It may be constituted as a partnership, a Limited Liability Partnership, or Limited Company. The structure and business model is of the body’s choosing.
2.6 A licensable body can be partly or wholly owned by a Non-Authorised Person(s) and it can provide both legal and non-legal services. Provided that one manager, the Head of Legal Practice (HoLP), is an Authorised Person it can otherwise be managed by Non-Authorised Persons. NB. If the HoLP is not authorised to deliver the particular legal service the body provides there must be another Authorised Person who is so authorised.
2.7 As a Licensing Authority regulated by the Legal Services Board the CLC is able to license and regulate ABS providing conveyancing, probate, litigation and advocacy* services with a range of other services.
*Applicable should our application to regulate litigation and advocacy prove successful.
The licensable body must have:
3.2 Legal services must be provided or supervised by Authorised Persons licensed by an Approved Regulator, such as the CLC or Solicitors Regulation Authority. Any non-reserved legal activities must be provided or supervised by appropriately experienced and/or qualified persons.
3.3 A Licensed Body must have professional indemnity insurance in place which complies with the minimum requirements of Article 3 IMD and the CLC’s PII Policy Wording.
3.4 If the CLC is not satisfied by the conditions and cover provided by the authorised insurer, the body will be required to take out a supplemental policy so that the professional indemnity complies with the minimum requirements of Article 3 IMD and the CLC’s PII Policy Wording.
3.5 No body may provide legal services regulated by the CLC unless and until it has Professional Indemnity Insurancewhich complies with these requirements and has produced evidence of insurance to us. NB. A body may increase the level of indemnity cover above the minimum required under Article 3 IMD and the CLC’s PII Policy Wording.
3.6 The CLC maintains a Compensation Fund for the purpose of making discretionary payments to persons who have suffered loss as a result of negligence, fraud or dishonesty or a failure to account, by a CLC-regulated body. Each body licensed by the CLC is required to make a contribution to the Compensation Fund. The fee payable is a percentage (as determined by the CLC and approved by the LSB) of the turnover (or estimated turnover) of that body. The income received is applied solely for the purpose of maintaining, managing and administering the Fund.
3.7 The CLC requires each body to pay an annual regulatory fee. The fee payable is a percentage (as determined by the CLC and approved by the LSB) of the turnover (or estimated turnover) of that body. The income received funds the regulatory activities of the CLC, but not any costs attributed to the Compensation Fund.
3.8 A body which is able and willing to meet all of these requirements can apply to become a CLC Licensed Body.
3.9 We cannot accept applications from Special Bodies.
4.1 Applications must include:
There are many ways a person can hold a material interest* – please ensure you reference the CLC Handbook Glossary of Terms.
4.2 We would prefer to receive applications electronically (in Microsoft Word format), but hard copy applications by post are also welcome.
Licence Application Data
4.3 Full and frank information disclosure is needed to help us determine if:
4.4 We require the following information:
NB. The requirement for accounts for the 3 years immediately preceding an application applies to companies which own (10% or more) of the licensable body.
Governance and Management Arrangements
4.5 The CLC Code of Conduct and the underpinning Conflicts of Interest Code make clear our requirements regarding the prevention, identification and mitigation of such conflicts. All bodies regulated by the CLC must comply with these requirements in order that Clients receive high standards, and independent, service.
4.6 The CLC Licensed Body Code explicitly requires that Non-Authorised Persons with a material interest must not be allowed to exert improper influence. Licensed Bodies and the Authorised Persons within them must always support the constitutional principle of the rule of law and act in the best interests of their Clients. Licensable bodies must be able to demonstrate that they have in place arrangements enabling this.
4.7 To be licensed a licensable body must employ at least one Authorised Person who is authorised to provide each of the Reserved Legal Activities the body proposes to deliver. If these persons are not managers we will need to be satisfied that the body’s arrangements take this into account.
4.8 Given the importance of the roles of the HoLP and HoFA we will be looking for skilled individuals suited to the business needs of the body. We set no specific requirements in this area other than the HoLP should be an Authorised Personand a recommendation that the HoFA should have accountancy experience and/or an accountancy qualification.
4.9 The suitability of the proposed candidates will be judged according to the body’s size and risk profile. For example, it may be acceptable for the HoFA of a small firm not to have an accountancy qualification. In such instances, accountancy experience would be acceptable.
4.10 Only those bodies with appropriate arrangements will be licensed. Examples of high-level good practice of risk management and business arrangements are provided in the CLC Handbook, Management and Supervision Guidance.
4.11 Our licensing terms are clear in their requirement that the interests of the public and of Clients must be protected. It is therefore very important that a Licensed Body employs only those persons it is confident will act in a manner compatible with these interests.
4.12 It is for the body to determine the most appropriate arrangements for it to be confident of the fitness and probity of its employees. This may take the form of an employment contract clause which requires employees to declare an issue to the body, a self-declaration form (which is completed when an offer of employment is made and on an annual basis thereafter), a Disclosure and Barring Service (DBS [criminal history]) check, or other system. The body may target particular roles which it considers more important in this regard than others e.g. those handling Client monies may be subject to a DBS check whilst other employees are required to declare any fit and proper issues.
4.13 The Legal Services Board (LSB) maintains a list of all persons disqualified from roles in Licensed Bodies. The list is available to view on the LSB’s website for you to check against your employees, or proposed employees. The list is available to view on the LSB’s website: http://www.legalservicesboard.org.uk/
4.14 You must not employ any listed person in the role in respect of which they are disqualified. To do so is a significant breach of your regulatory responsibilities and is likely to result in the body’s licence being suspended and/or revoked.
4.15 We consider the qualifications and experience of the Licensed Body’s employees to
be a matter for the body itself to decide. It is the licensable body’s duty to ensure it has the appropriate individuals in place to ensure the regulatory requirements are met and that the rule of law is supported.
Business Plan and financial projections
4.16 The Business Plan must cover the 3 years from when the body could reasonably expect to be licensed (90 days after the CLC has received a complete application). An applicant will need to demonstrate they have critically examined their:
Access to Justice
4.17 An applicant must be able to demonstrate that licensing the body would improve access to justice i.e. recognition of, and response to potential and actual, consumer needs. This may take the form of provision of a greater range of services and methods of accessing these services, lower prices, extended opening hours, accessibility, online provision, or other factors. It is up to the individual applicant as to how they define access to justice and how they demonstrate they will improve it.
4.18 We anticipate that an application will be refused because of access to justice considerations only in exceptional circumstances.
4.19 You may wish to provide examples of how you actively promote the CLC Outcomes, e.g.:-
4.20 Provision of supplementary information will be welcomed and judged favourably by the CLC as long as it is pertinent to your application. Please do not provide irrelevant material as this is likely to unnecessarily prolong the application determination period time.
Any other info
4.21 We require the declaration of ‘any other information that could reasonably be expected to have a bearing on their being fit and proper’ with regard to Non-Authorised Persons with 10% or more material interest, HoLPs and HoFAs. This could include:
Material Interest Details
4.22 The holding by a Non-Authorised Person (i.e. non-lawyer) of a material interest in a Licensed Body is subject to the CLC’s approval. A licence will not be granted until we have approved all Non-Authorised Persons with a material interest. A licence application must identify all Non-Authorised Persons who own or are expected to own such a material interest in the body when the licence is issued. All Non-Authorised Persons with a material interest will be subject to the fit and proper test and must consent to the CLC sharing the information with other bodies for verification purposes.
4.23 The material interest declaration refers both to the actual or proposed material interest (10% or more) and/or any of that person’s associates with a material interest of 3% or more. The type of interest concerned must be identified. Failure to fully and truthfully to declare this information when aware of the facts is a criminal offence making the declarer liable on summary conviction to a fine. There are a number of different ways in which a Non-Authorised Person can have a material interest.
4.24 It is very important that a body providing legal services is able to meet its regulatory responsibilities. Having an accurate picture of those who control Licensed Bodies is an important part of the CLC recognising any risks to this. Therefore all non-Authorised Persons’ material interest must be declared as they are subject to our approval.
4.25 If any of these details look likely to change – e.g. the identity of an owner, or the nature or value of their interest - whilst we are determining the licence application, the applicant must notify us of this within 7 days of the proposal. If the applicant had no knowledge of a change which has taken place they must notify us within 7 days after they are made aware. It is a criminal offence not to identify a non-Authorised Person who has, or expects to have, an interest in the event a Licensed Body licence is issued to the applicant. If such a breach were to occur, the breach and the fine would be likely to be taken into account as part of the determination of the licence application. However, it is a defence for a person charged with such an offence if they are able to show that they had no knowledge of the duty to notify.
4.26 You must inform all Non-Authorised Person with a material interest that the Licensed Body application process requires them to be identified and that they will need to undergo a fit and proper test, which includes a Criminal Record Bureau Check. You must obtain from them a completed and signed fit and proper declaration form. You must advise them that they may need to provide us with information/documents to inform our licence application assessment (or during the duration of the licence if we become concerned by their material interest). You should also explain that provision of false or misleading information is a criminal offence liable on summary conviction to a fine and on conviction on indictment to a term of imprisonment.
4.27 The fit and proper test helps inform our assessment of improper influence i.e. whether the Non-Authorised Person’s material interest would compromise the delivery of the CLC Code of Conduct’s Outcomes or could cause Authorised Persons to be unable to meet their regulatory duties.
5.1 These arrangements apply to bodies licensed by the CLC as a Recognised Body on the date it is authorised as a Licensing Authority but which, because they are owned or managed by persons who are not Authorised Persons, need to become a Licensed Body by the date specified by the CLC.
5.2 We will provide these bodies with the information we currently hold on them, requiring them to verify or amend it as appropriate. Relevant data to fill any information gaps must be provided. These bodies must appoint their Heads of Legal Practice and Heads of Finance and Admin; and declare Authorised Persons with material interest and their associates.
5.3 These applications will be fast-tracked as they have a track record with us. We are familiar with the structures, systems and controls of these bodies; and have carried out monitoring inspections on them (often over a number of years). A current CLC Recognised Body which applies to become a CLC Licensed Body will receive notification of the CLC’s determination within 42 days of receipt of their completed Licensed Body application. The application will be assessed and determined using the same criteria as new applicants.
5.4 Should there have been significant changes to ownership we will extend the 42 day determination period to 90 days to ensure we are confident of capturing any risks to the Code of Conduct Outcomes the new owner(s) may present. Any additional work we have to undertake will increase the application fee payable (see paragraph 7.5).
6.1 An ABS already licensed by another Licensing Authority which is seeking instead to be licensed by the CLC will need to complete the licence application as required by all applicants. An applicant which has had its Licensed Body licence revoked by another Licensing Authority will not automatically be excluded from applying for a CLC Licence. However, the licencerevocation will be a relevant factor in our determination of the application. Where we have revoked a body’s licence we will not accept an application if it is made within 12 months of the licence revocation, unless there are exceptional circumstances. We will need to be fully satisfied that the issue which triggered the revocation has been addressed and the remainder of the application would need to evidence that all CLC licensing requirements are met in full.
7.1 The standard licence application fee is broadly reflective of a range of key factors including cost, size and risk profileof Licensed Bodies.
7.2 The applicant will be charged the cost to the CLC of processing a standard application. On the basis that the standard application will take 2 days to process the fee for a first time Licensed Body application is £1200.
7.3 We reserve the right to require further information and/or statements should we see reasonable grounds to do so. We also reserve the right to charge additional amounts for more complex applications .
7.4 The CLC will use external advisers where it feels that it is necessary, more appropriate or more efficient to consider parts of the application (e.g. to deal with technically complex, unusually data intense, poorly prepared or urgent applications). It will ask the applicant to pay for the work performed.
7.5 We anticipate there will be less resource required to process an application from a Recognised Body which is currently regulated by the CLC than from an entity which we have not previously regulated. We shall therefore require payment of a lower standard fee of £600 for such applications. We reserve the right to charge an increased fee (based on an hourly rate of £80) on an hourly basis where the time we need to spend in assessing the application exceeds 2 days (e.g. where there have been significant ownership changes or incomplete information has been provided).
7.6 We reserve the right to review the fee schedule and to vary the fee methodology as appropriate.
7.7 The applicant will be required to pay for the data verification (including Criminal Record Checks) which needs to accompany the application. This will be carried out by a provider accredited by the CLC. As the extent of verification of fit and proper data varies according to the role, so does the cost, which is currently in the range £85-£120. We shall notify applicants at the time of making their application of current prices. You may be able to claim back the Value Added Tax from these costs if VAT-registered. We may carry out additional checks if we believe it is appropriate to do so and shall charge the applicant the cost of doing so.
7.8 We anticipate that licence modifications/removal of conditions requests will take no more than 4 hours to determine. The standard application fee for such requests will be £320. We reserve the right to charge additional amounts for particularly complex applications which take longer than this to determine. These will be charged at £80 per hour.
7.9 Should a Licensed Body apply to change the individual person occupying the role of HoLP or HoFA the standard application fee will be £240. This is based on the assumption that such requests will take no more than 3 hours to determine. We reserve the right to charge additional amounts for particularly complex applications which take longer than this to determine. The applicant will be required to pay for the data verification which needs to accompany the application.
7.10 The annual Regulatory Fee will be determined each year. The current rates are set out in the Fees Rules 2010 at www.clc-uk.org.
7.11 Compensation Fund contribution to be determined each year. For the period 1 November 2010 to 31 October 2011, there is a nil contribution
8.1 We will aim to acknowledge receipt of your application within 7 working days. If your application is incomplete we will return it to you identifying those elements which are missing or have not been properly completed.
8.2 Provision of any false, misleading or incomplete information is likely to delay consideration of your application and if material will result in the application being rejected. If the CLC becomes aware after granting a licence that a body, a person with material interest or a manager of that body, has provided false or misleading information the licence may be suspended or revoked.Data Verification
8.3 The HoLP, HoFA, persons with material interest and all Managers must sign their declarations to confirm the information they have provided is correct. Information provided will be kept secure and used only for these purposes.
8.4 We shall carry out such checks as we consider necessary to verify the information you have provided. For the Non-Authorised Persons with material interest, Non-Authorised Person Managers, the HoLP and HoFA, this will include checks of the fit and proper declarations e.g. credit, insolvency, and insurance. We will obtain Standard Disclosure and Barring Service (DBS, previously the Criminal Record Bureau) checks of unfiltered cautions and convictions for the HoLP and HoFA and those with a material interest (this may include associates – see item 8.6). We reserve the right to request a Basic Disclosure and Barring Service check (covers unspent convictions only) for a manager or Authorised Person. The applicant will be required to pay for these checks (see paragraph 7.7). We have information-sharing agreements with other regulatory, professional and data verification bodies to aid the verification. The information will be shared in accordance with data protection legislation.
8.5 We will check the disciplinary records of Authorised Persons with their relevant Approved Regulator. Where this identifies issues we may verify the fit and proper declaration data and charge the applicant accordingly.
8.6 Verification of information on all associates is unlikely to be either practical or proportionate. Only where there are concerns about an associate, particularly significant influence or control concerns, will we seek additional, information or require information to be verified.Licensing Approach
8.7 All Approved Regulators of legal services providers must act in a way which is compatible with the regulatory objectives. Therefore the Overriding Principles and Outcomes of our regulatory arrangements are devised to support them and a body’s licence application will be assessed in light of these; on receipt of the application and validation of relevant data we will carry out an assessment of the risks posed to delivery of the Outcomes and compliance with the Licensed Body Code if we approve the application for a licence.
8.8 All interested parties will be signposted to the electronic version, or provided with a hard copy of, the CLC Handbook so they are aware of the regulatory responsibilities of a Licensed Body and those involved with it.
8.9 We will assess the application to determine the body’s capability and capacity to deliver the CLC’s Code of Conduct’s Outcomes and to meet the CLC’s Licensed Body Code. Please see the CLC Handbook.
8.10 This will be determined by an assessment of the following factors:
8.11 We will consider the following factors in determining the suitability of declared Non-Authorised Persons with material interest:
d) Whether they have been disqualified by a Licensing Authority from acting as an HoLP, HoFA, manager or employee of a Licensed Body;
8.12 We will consider the following factors in determining the suitability of the proposed HoLP:
Any concerns identified by the fit and proper test;
8.13 We will consider the following factors in determining the suitability of the proposed HoFA:
8.14 We will consider the following factors in determining the suitability of the proposed Managers:
8.15 Where the beneficial owner is a corporate body the fit and proper test will broadly reflect the approach taken in respect of Licensed Body applications. This may include governance arrangements, financial arrangements and application of the fit and proper test to its Directors. This test may also be applied to the owner(s) of a corporate body.
8.16 We will approve a person’s material interest where we are satisfied that it would not present a risk to the Code of Conduct Outcomes or Authorised Persons’ duties and the person is otherwise considered a fit and proper person to own that interest. Should we approve a Non-Authorised Person’s material interest this will be taken to mean that we have also approved any lesser material interest they have in the body.
8.17 Where we consider a Non-Authorised Person’s material interest presents a risk we will seek to impose conditions on that interest. Where we consider a risk too significant to be mitigated by conditions we will object to the interest. In both cases we will issue a warning notice to both the applicant body and the investor specifying the reasons for our intended measure. The notice will state the reasons for our determination and, if we propose to issue a licence subject to conditions, their nature.
Licence Application Determination
8.18 All of our regulatory arrangements seek to promote the regulatory objectives. Our Code of Conduct identifies positive Outcomes which all licensees must deliver through compliance with a number of Overriding Principles of behaviour. All applications will be assessed against the body’s capability and capacity to deliver on these responsibilities.
8.19 If we are not completely satisfied that the body will deliver the Outcomes, we may issue a licence subject toconditions or may refuse the licence application.
8.19A We shall refuse the licence application if the laws, regulations or administrative provisions of a third country governing one or more natural or legal persons with which the body has close links, or difficulties involved in the enforcement of those laws, regulations or administrative provisions, prevent the effective exercise of their supervisory functions.
8.20 Provision of adverse information concerning an individual does not necessarily preclude our approval of them. We will assess the information provided against the individual’s proposed role and against the circumstances e.g. the individual may be able to satisfy the CLC they have learnt from the identified event. Our determination will depend upon the nature of the information provided and whether this puts at risk compliance with the body’s regulatory responsibilities. For instance, we are likely to disregard spent convictions for less serious offences, provided they are not dishonesty or fraud related. We consider that dishonesty or fraud related convictions are likely to present too great a risk to delivery of positive Outcomesfor Clients. In such instances, we are unlikely to be confident that the body will meet Overriding Principle 1 Act with Independence and Integrity; and Overriding Principle 5 to Deal with regulators and ombudsmen in an open and cooperative way. Where an individual has been declared bankrupt or been subject to an Individual Voluntary Arrangement (particularly if it is recent), it is likely that an application for that individual to be approved as a HoFA will be refused as the role requires both financial capability as well as probity.
8.21 We are likely to defer our decision until after any pending cases or proceedings have been determined, unless the subject matter of the case or proceeding is less serious and is not dishonesty related.
8.22 The determination of the risks presented by individual persons will be based
upon an assessment of the following:
Where there are concerns about the viability or suitability of a licensable body the CLC may refuse to issue a licence or issue a licence subject to conditions.
in which case, unless the risk can be addressed to the satisfaction of the CLC, the application will be refused or will be issued subject to conditions.
8.23 Unless a HoLP or HoFA is demonstrably inappropriate for the role – for instance, the HoLP is not an Authorised Person - we are unlikely to decline an application for either of these posts. If however, a candidate is in our view insufficiently skilled given the body’s size or profile this will inform our risk assessment of the body and may result in conditions such as targeted Continuous Professional Development (CPD) requirements of the individual and/or increased supervision. It is the licensable body’s duty to ensure it has the appropriate individuals in place to ensure the regulatory requirements are met and that the rule of law is supported.
8.24 Should we decide not to approve a proposed HoLP or HoFA because the candidate is wholly unsuited for the role we will not use this decision to refuse the application itself if we are satisfied with all other elements of the application and the body subsequently nominates a more satisfactory individual for the role.
Note: the Rehabilitation of Offenders Act 1974 does not apply for a HoLP or HoFA. Spent convictions should be declared
Non-Authorised Person with Material Interest
8.25 The approach taken will be similar to that identified at 8.22 (a)-(e) and will be assessed against the quality of the body’s arrangements for regulatory compliance (including the calibre and management level of the HoLP/HoFA candidates). All other things being equal we are likely to be less stringent about adverse information provided on these individuals rather than the roles of the HoLP/HoFA. As identified at 8.22 (a)-(e) we will assess the risks posed by the information presented. This approach will also be adopted where we seek information on an associate who causes us concern. Where an associate is an employee of the body this will inform our assessment of the likelihood of improper influence. Note: the Rehabilitation of Offenders Act 1974 does not apply for those who hold a material interest. Spent convictions should be declared.
8.26 The approach taken will be similar to that identified at 8.22 (a)-(e) – 8.24. Note: the Rehabilitation of Offenders Act 1974 is not exempted for managers as it is for HoLP/HoFAs and those who hold a material interest. Spent convictions do not need to be declared.
8.27 To protect the public, Clients and the reputation of the legal sector the grant of a licence must not compromise the Code of Conduct outcomes. The CLC determines all correctly completed licence applications it receives. We will only grant a Licensed Body licence where the assessment set out at 8.10-8.26 has satisfied us that our regulatory arrangements are/will be complied with.
8.28 The CLC Authorised Officer and their team will determine licence applications based upon an assessment of risk to the Outcomes. Where clarification of the information provided in an application is required the licensable body will be contacted. We will interview the HoLP and/or the HoFA as part of their designation, to discuss details of the application and the applicant’s proposals and to achieve clarification (or reassurance where needed). We may also require other stakeholders to attend an interview to address particular concerns.
8.29 In the case of a particularly complex application or where adverse information is provided the licence application will be determined by the CLC Authorised Officer in consultation with a Legal Practice Inspector (or an employee of equivalent or senior status).
8.30 Adverse information does not necessarily mean licence conditions will be imposed or the application will be refused. If adverse information is provided it will be discussed with the applicant to determine the risk posed to the Code of Conduct’s outcomes, any resource implications for the CLC and the applicant’s willingness or capacity to address the issue. We will not grant the Licensed Body licence unless we approve, either unconditionally or conditionally, each Non-Authorised Person’s material interest. Please see section 10 for information on the options available to us on provision of adverse information which could threaten delivery of the Code of Conduct’s Outcomes.
8.31 Where we are not fully satisfied with information provided but would require the body to make only minor adjustments – e.g. a slight amendment of an arrangement – we will require confirmation, which we shall verify, that the adjustment has been made before the licence is issued, rather than impose a condition upon the licence. Conditions will only be imposed where they are needed to safeguard Client interests and where the issue is such that it must be formally recognised within the licence terms.
8.32 We will notify all applicants of our licence determination within 90 days of receiving a complete application (and including the payment of all associated fees).
8.33 The CLC will determine one of the following:
Granting of a Licence
8.34 Where a licence is granted it will be issued as soon as is reasonably practicable. If we are satisfied that all Non-Authorised Persons material interest holders meet our approval requirements the interest will be approved without conditions and we will advise both the Licensed Body and the investor of this as soon as is reasonably practicable.
8.35 The Licence will specify its terms by way of endorsement:
8.36 The Licensed Body can only carry on its authorisations and permissions in its capacity as the holder of its Licence.
8.37 The Licensed Body must not carry on a reserved legal activity which is not within its authorisations.
8.38 When carrying on its authorisations, a Licensed Body must comply at all times with its conditions.
8.39 Where non-reserved services are permitted we will adopt a co-regulatory approach with the relevant Approved Regulator as per our ABS Multidisciplinary Memorandum of Understanding. Where this is not appropriate it is likely we will require the applicant to ring-fence the services for which it has authorisations and permissions.
8.40 If the application is approved, as a new licensee, we will provide you with any reasonable support or advice you require in the initial setting-up stages and for a short time.
8.41 Licences are issued for an indefinite period – other than temporary licences issued because of a change in the membership of a body - and are valid from the date of issue. Licensed Bodies will be required each year to pay the Regulatory Fee and a contribution to the CLC Compensation Fund. Should a body not provide this fee/contribution they will have invalidated the licence. Licences continue to have effect after a Licensed Body has ceased to practise.
9.1 Our register of Licensed Bodies will be available on our website. This should aid public confidence in legal services providers, enabling interested parties such as the public to be able to identify licensed bodies and their owners, managersand statutory officers. The following information is held on this register:
9.2 We will keep the register as up to date as reasonably practicable. It will reflect any change made within 28 days.
9.3 In very exceptional circumstances the CLC may agree it is appropriate not to publish details of the beneficial owner; it is up to the individual applicant to make such a case to us. The CLC will only consider this in exceptional circumstances e.g. where a real risk of physical harm has been demonstrated.
10.1 We will assess the risk posed by an applicant body. Where risks differ, so do our requirements. If we are not satisfied that an applicant’s arrangements meet our approval requirements, but could be met through the implementation of additional safeguards, the licence will be issued with conditions. Any conditions will be noted on the licence and on the CLC’s register, in addition to any endorsements (see 8.35).
10.2 We will simultaneously issue you with a notice explaining the requirements of the condition(s), the reasons for its imposition and its duration (if time-bound). Any conditions imposed will take effect at the time the CLC directs e.g. a conditionmay take immediate effect or at a future date, or may not have effect until after any appeal in relation to it. Conditions will only be imposed where we consider that compliance with them would mean the Code of Conduct Outcomes would no longer be threatened e.g. if we are satisfied that our notified material interest approval requirements are likely not to be met by the imposition of conditions we would object to the notified interest. In contrast, the purpose of endorsements is to make it clear which legal activities a Licensed Body is authorised to undertake.
10.3 Conditions placed upon the Licensed Body may result in it incurring expenditure and can include:
|(i) a limitation of the types of non-reserved services it may provide
(ii) a requirement that the body as a whole or a person within, or connected to it, takes a specific step, such as:
10.4 Where arrangements need to be improved, the licence will only be fully endorsed when these improvements have been made and where they are to the satisfaction of the CLC.
10.5 In cases where conditions would not be appropriate due to the significance of the risk posed and/or where the body lacks the capacity or inclination to comply with the proposed conditions the licence application will be refused.
10.6 When refusing an application, the CLC shall notify the applicant of the grounds on which the refusal was made.
10.7 The CLC may refuse to grant a Licensed Body licence where it is not satisfied that the business is able to comply with the CLC Licensed Body Code and presents a significant risk to the delivery of positive Client Outcomes. Factors which could determine such a decision include:
10.8 The CLC shall notify the applicant of the grounds on which the application has been refused and their right for this to be reviewed.
11.1 All entities regulated by the CLC must comply with the Code of Conduct. The aim of the Code is to help promote the regulatory objectives. All applications will be assessed against the body’s capability and capacity to deliver the Code’s Outcomes and to comply with its Overriding Principles.
11.2 All the other CLC Codes are designed to ensure those we regulate deliver the Code of Conduct’s Outcomes. We require applicant bodies to provide us with a Compatibility Statement concerning the Code of Conduct Outcomes and Licensed Body Code and any steps taken to address any identified issues e.g. a Non-Authorised Person with a material interestis subject to other duties which could potentially conflict with the Code of Conduct’s Overriding Principles. Wherever appropriate or possible we will work with an applicant to address an issue which has been reported to us.
11.3 No licensable body will be licensed as a CLC Licensed Body until we are
satisfied that their application demonstrates that the body will meet these regulatory responsibilities and deliver the Code of Conduct’s Outcomes.
11.4 All of our regulatory arrangements are set out in the CLC Handbook, an electronic copy of which is available on the CLC website: http:www.clc-org.uk/A hard copy of this document will be available to those unable to access an electronic copy.Improper Influence
11.5 We will always investigate allegations of improper influence and where we are satisfied there is evidence of this we will follow our Enforcement Policy (please see the CLC Handbook).
11.6 Should a HoLP need to report improper influence they should do so to the CLC Authorised OfficerMaterial interests
11.7 As identified in the Licensed Body Code persons proposing to take a step which would result in them acquiring a material interest in a Licensed Body must notify both the Licensed Body and the CLC of this. A person with an existing material interest acquiring an additional kind of material interest must do the same.
11.8 Any proposed Non-Authorised Person with a material interest (of 10% or more) of a CLC Licensed Body will be given temporary pre-approval of their notifiable interest for an initial period of 90 ays during which time the status of the body’s licence will become temporary. The approval will become permanent only when the CLC has judged them fit to own. The 90 day determination of whether to approve, place conditions (or further conditions) on, or object to, an interest gives us sufficient time to analyse the information provided and to properly consider all relevant issues to determine what the appropriate approach should be. Failure to respond promptly to requests for information may result in a delay in determining the application, or in exceptional circumstances in the application being refused.
11.9 If a person had no knowledge of the facts that led to this (such as on inheritance of shares) they must inform both us and the body within 7 calendar days upon possessing such knowledge.
11.10 Failure to notify a proposed step, or an actual acquisition, is a criminal offence which upon conviction could result in a fine. If we are notified of a proposed step and the person subsequently takes the step without our approval they are liable on summary conviction to a fine and a conviction on indictment to a term of imprisonment or a fine (or both).
11.11 We will consider representations made regarding our stated intention to impose conditions or object. These will be considered within 28 days of issue of the notice. Should we then approve the material interest subject to conditions we will issue both the applicant body and the investor with a notice specifying the reasons for the conditions, their nature, and explaining that we could ultimately divest the person of their material interest if it is judged necessary in the interests of the public and Clients to do so.
11.12 In a partnership a Non-Authorised Person’s material interest which is not approved by us does not make it unlawful for the partnership’s business to be carried on or for the partners to carry it on in partnership.
12.1 The factors which determine our regulatory relationship with the bodies and persons we regulate are set out in the CLC Regulatory Policy. We systematically collect information to help us monitor how effectively our regulatory arrangementsare operating. All CLC regulated entities are required to submit data into our secure online Management Information System. The information held on this system is analysed and helps inform our regulatory profiling. We may require you to provide us with information (such as reconciliation statements) on a periodic basis to satisfy us that your declared systems are in place and are operating satisfactorily.
12.2 All entities regulated by the CLC are required to submit an annual information form. The data the Licensed Bodies are required to provide includes:
Any additional information you may wish to provide e.g. evidence of recognised external accreditation, customer satisfaction feedback results or findings from internal compliance activity.
12.3 According to the risk posed by the body we may require information more frequently (and more varied). This will only be requested when justified by risk assessment. Our investigation may include an inspection which may be carried out remotely or through a site visit.
13.1 All Licensed Bodies and their stakeholders must comply with our regulatory arrangements at all times. Where a non-compliance issue is identified we will always seek to resolve it informally in the first instance. Where this has failed or where the severity of the risk renders this inappropriate, we will take formal enforcement action. We always seek to ensure our enforcement response is proportionate to the risk identified. We have a number of statutory powers available to us to protect the interests of the public and Clients. These powers can be exercised against the Licensed Body itself or an owner, manager or employee of it (or all of these individuals) and can be used in isolation or in conjunction.
13.2 Where an issue has been identified the CLC will provide you with a warning notice* to inform you of the action we intend to take as a result, why it is considered necessary and when the Notice will come into effect. You will be able to make representations to us concerning our intentions.
13.3 The CLC Regulatory Policy explains what we as a regulator of legal services are seeking to achieve and how our regulatory philosophy is put into practice. The CLC Enforcement Policy explains how we identify and respond to non-compliance with our regulatory requirements and the factors which determine the form our response takes.
13.4 *The exception to this is where intervention is deemed necessary.Licence Conditions
13.5 In addition to any endorsement (see 8.34), we will impose conditions upon a licence where we consider additional safeguards are needed to protect Clients. Conditions include:
13.6 Conditions may be imposed in the granting of a licence or at any stage in a licence’s duration. We may impose further conditions or adopt other enforcement measures if conditions are not complied with.
13.7 Conditions are likely to be time-bound. The period within which they must be complied with will be stated on the re-issued licence.
13.8 We may impose a financial penalty upon a Licensed Body, and/or one or more of its Managers or employees. We are likely to issue a financial penalty when behaviour is inappropriate and needs changing to deter future non-compliance. We will determine if the act or omission was deliberate, the impact (potential or actual) of the behaviour on a Client, or Clients in general, the reputation of the legal services sector, whether the breach was a one-off or a repeated issue and the attitude of the individual or body, to determine if a financial penalty could be considered an appropriate action and if so, the appropriate level. The penalty will be proportionate to the breach and take account of the resources of the Licensed Body. See the Financial Penalties Framework
13.9 The Legal Services Board (LSB) has set the maximum penalty thresholds for a Licensed Body and an individual within it at £250 million and £50 million respectively.
13.10 We do not profit from a financial penalty; the payment is made into the Government’s Consolidated Fund.
13.11 Disqualification is a serious sanction. If a HoLP, HoFA, manager or employee is found to have intentionally, or through neglect, significantly breached their duties, or caused, or substantially contributed to a significant breach of the licence termsor its conditions they may be disqualified from holding that post, or any role, in any Licensed Body. A disqualified individual may apply for the disqualification to be terminated only when 12 months have passed since they were disqualified.
13.12 The LSB will maintain a list of those individuals who have been disqualified to ensure that people who are disqualified from involvement in the provision of legal services are kept from further harming the public. We will notify the LSB – within 7 days of these events - of a determination to disqualify, the results of any review, if one is requested, and any decision that the disqualification should cease to be in force.
13.13 The list of disqualified persons will include the following information:
The list is available to view on the LSB’s website: http://www.legalservicesboard.org.uk/
13.14 The LSB maintains a similar list of the persons Licensing Authorities have objected to owning a material interest, who have had conditions placed on it, or for whom a divestiture application has been made.
13.15 Where there are improper influence concerns regarding a material interest holding we will act. Our enforcementresponse may take the form of conditions or an objection, or could result in a Restriction Notice and ultimately divestiture. We will issue a Restriction Notice where a person has a material interest shareholding in a body corporate with a share capital and:
our objection to the interest has been disregarded.
13.16 The Notice will advise you of our intention to apply to the High Court for the holding to be divested if at the end of the period prescribed in the Notice the divestiture conditions (identified above) still apply. The Notice will direct that the relevant shares are until further notice - i.e. until the High Court makes an Order; we decide not to apply for an Order; or the body ceases to be licensed by the CLC - made subject to one or more of the following restrictions:-
13.17 The material interest holder will be given the opportunity to make representations for the action not to be taken.
13.18 We will notify the LSB of any objections/conditions imposed, varied or cancelled, any Restriction Notice issued, as well as the outcome of any subsequent review or appeal. We will also notify them if we approve the holding of a person included in this list and provide reasons for that decision. The Notice will state the reasons for the action taken. We will issue a copy of the Notice to both the individual investor and the Licensed Body.
13.19 If the High Court is satisfied that the divestiture condition is met it may order the sale of the shares so the Non-Authorised Person will no longer have a material interest (if they hold more than one type of interest, the interest to which the divestiture condition applies is satisfied). No such Order will be made as a result of breach of conditions or of an objection until the end of the period within which an appeal could be made, or if such an appeal is made, it has been determined or withdrawn. Where an Order is made, the proceeds of the sale (less the sale costs) must be paid into court for the benefit of the persons beneficially interested to them.
13.20 Alternatively, in the case of notified interest conditions being breached the High Court may order compliance with the conditions.
Suspension and/or Revocation of a body’s Licence
13.21 The decision to suspend or revoke a licence will not be taken lightly.We will only
use this measure where, due to the seriousness and/or persistence of the act or
omission no other enforcement action is judged adequate to address the identified
13.22 A licence may be suspended or revoked if:
13.23 Licence suspension will not automatically result in licence revocation. We may end the suspension where we (or the FTT) are satisfied that to do so would not present a risk to Clients. Where this is the case, the body may be subject to a more intensive regulatory relationship to ensure the risks are kept to a minimum.
13.24 A CLC Licensed Body licence will also cease to have effect if the body is issued with a Licensed Body licence by another Licensing Authority.
13.25 Where a body’s licence has suspended or revoked or the CLC is satisfied that one or more of the following conditionsapplies:-
We may exercise our powers to intervene in the business. As set out in our Regulatory Policy (please see the CLC Handbook) we would only take this action where the interests of Clients have been seriously compromised or are at grave risk of being seriously compromised, and where no other enforcement action is judged adequate to address a serious and or persistent issue, or if the body’s viability is threatened or it becomes insolvent. This power can be invoked even after the Licensed BodyLicence has ceased/been revoked.
13.26 *The undue delay conditions apply only where we have given you a notice inviting you to explain the reason for the undue delay and you have not provided an explanation we are satisfied with within the period specified in the notice. In such cases you will be given notice of the failure and advised that intervention will take place.
Intervention - Applications & Orders
13.27 Where it is judged that intervention is the appropriate measure we can apply to the
High Court for the following Orders to be made:
13.28 We must inform you of our intention to do so via a Notice. If an application is agreed the High Court will make an Order to that affect. The Order will take effect once we have provided you with a copy of it.
13.29 ** The sums of money and the right to recover or receive them will vest in us and are held by us on trust and for the persons beneficially entitled to them.
13.30 Where we intervene in a body we will suspend or revoke a licence (though we will not intervene in all cases where a licence has been suspended or revoked)
15.1 We will not issue any automatic waivers of regulatory arrangements; a body wishing to have a responsibility waived will need to make a specific application. A Licensed Body is entitled at any time to apply for a modification of its licence termsor conditions. If the modification concerns removal of licence conditions it is unlikely that an application will be successful if it is made within 12 months after the terms or conditions have been imposed, unless there are exceptional circumstances. (The 12 month exemption period does not apply to conditions which are time-bound). It is a matter for the Licensed Body to satisfy the CLC that the condition should be removed.
15.2 A body wishing to modify its licence terms, endorsements or conditions must complete the appropriate CLC form and provide us with evidence to justify the modification. The standard modification fee will be £320. This is cost-reflective of the 4 hours we judge will be required to assess the modification application. We reserve the right to charge additional amounts above the standard fee for particularly complex applications which take more than the expected time. These will be charged at £80 per hour. The request will be determined by the CLC Authorised Officer. The determination will be made within 28 days of receipt of the complete modification application.
15.3 The CLC will only modify licence terms, endorsements or a condition without obtaining consent from the affected body or individual where there is an evidenced need to do so, for example:
15.4 We will modify the terms, conditions or endorsements of the licence by giving the Licensed Body written notice. The modifications will have effect from the time we give the notice, or such later time as the notice may specify.
16.1 An individual or Licensed Body who is dissatisfied with any CLC licensing or enforcement determination e.g.:
may appeal against the determination. The respondent must submit an appeal to the CLC within 28 days of being notified of the determination.
16.2 The Adjudication Panel (with a quorum of 3) will determine when it is appropriate to impose sanctions – such as disqualification of the Body or a Manager, licence revocation or imposition of a penalty.
16.3 No member of the Adjudication Panel is a member of the CLC Council or an employee of the CLC.
16.4 Wherever possible the applicant making the appeal will be provided with the decision of the Adjudication Panelwithin 42 days of receipt of the request for the appeal. The CLC reserves the right to extend this to 90 days where needed.
16.5 Having been notified of the determination made by the Adjudication Panel, the applicant may appeal to the First-Tier Tribunal (FTT). The FTT provides a general right of appeal wherever an individual or ABS does not accept the CLC’s decision. It will hear appeals only from those who have exhausted their resolution options within the CLC, or where the CLCAdjudication Panel has not met its published timescales. Unless otherwise directed by the FTT, the appeal request must be made within 28 days after the determination was sent to the applicant, or within 14 days after expiry of the time for the Adjudication Panel to determine an appeal.
16.6 The FTT is an independent public body, established under the Tribunals, Court and Enforcement Act 2007. The General Regulatory Chamber of the FTT will hear the appeal. This will constitute a substantive re-hearing of the issue and its determination. Appeals will be heard by a Committee of a legally qualified chairperson and a lay member.
16.7 The FTT can reach any decision which the CLC could have made and can:
16.8 Subject to its Procedure Rules, the First Tier Tribunal is likely to award costs only where it considers a party has acted unreasonably.
16.9 There is a right of onward appeal to the Upper Tribunal on any point of law arising from a decision made by the First-Tier Tribunal.
Consistency of determinations
16.10 After operating as a Licensing Authority for six months we will assess the consistency of our licensing determinations – including the circumstances in which conditions are made and how often – to ensure we are employing a consistent approach. This quality control exercise will be carried out every year after to ensure our licensing approach is consistently applied. With the approval of the LSB we shall make such changes as we consider necessary in the light of these assessments.
17.1 No change permitted under requirement 16 is effective unless and until it has been approved by the CLC with or without conditions and any fee (as provided by requirement 7) has been paid. Depending on the nature of the change proposed, the CLC may require the Body or any of its HoLP, HoFA, Non-Authorised Persons with a Material Interest or Managers to comply with some or all of the provisions of requirements 4 and 8.
17.2 In addition to the requirements of the Notification Code, we must be promptly informed of all such vacancies or changes and we must be provided with full and complete details of the new relevant person so that we can determine/approve their appointment.
17.3 In a Limited Liability Partnership of two Members, if one of them:
the Licence will continue in full force and effect provided the remaining LLP Member is an Authorised Person, and within 28 days of the occurrence an additional person has become an LLP Member. We may extend the 28 day period (up to a maximum of 120 days) upon the Licensed Body’s request.
17.4 Where the Head of Legal Practice or the Head of Finance and Administration:
the licence will only continue in full force and effect provided an appropriately qualified and suitable replacement is in place within 28 days of the occurrence. We may extend the 28 day period (up to a maximum of 120 days) upon the Licensed Body’s request.
17.5 Where there is a change in ownership in a Body the effect of which is that:
17.6 If the above requirements are not met the licence may have effect with or without such Authorisations, Permissions and/or Conditions as the CLC may determine, be suspended, cease to have effect or be revoked.
18.1 Any CLC document served on a licensable or Licensed Body (ABS) under our regulatory arrangements will be posted to its principal office in the United Kingdom.
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Purpose of the Fund
Making a Compensation Claim
Where the Claimant requires assistance in completing a notice of claim this will be provided.
Recovery of monies paid out of the Fund
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CLC General Continuing Professional Development Provisions
Set out below is the framework the CLC complies with in Continuing Professional Development (CPD) provisions. These are provided to inform the regulated community of the parameters the CLC operates within to ensure providers of legal services continue year on year to develop their professional knowledge and competency.
For a CLC lawyer, other than a manager, in each year in which a licence is held:
The CLC Fees Framework 2019
Made 25 July 2019 by the Council for Licensed Conveyancers with the approval of the Legal Services Board in accordance with s.14, 32 and 38 Administration of Justice Act 1985 and s.51 Legal Services Act 2007.
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CITATION, COMMENCEMENT AND REVOCATION
1. This Framework may be cited as the CLC Fees Framework 2019 and shall come into force on 1 November 2019 on which date the Council for Licensed Conveyancers’ Fees Rules 2018 shall cease to have effect.
2. “CLC Body” is a Recognised Body or a Licensed Body regulated by the CLC.
3. The fees payable as provided by the CLC Lawyer – Licensing Framework shall be as follows: -
(1) under paragraph 1(a)(ii) for the issue of a licence:
for the first time, or where such a licence is not in force at the time of the application (and has not been in force for at least 12 months prior to that date): £150;
to provide Conveyancing Services or Probate Services: £400
to provide Conveyancing and Probate Services: £475;
(2) under paragraph 16 and 18 for an amendment to a licence: £75;
(3) under paragraph 26 for a duplicate licence, where chargeable: £50.
4. The additional fee of £100 is payable for failure to submit an Accountant’s Report within the time limited (see paragraph 16.2 of the Accounts Code and Guidance).
5. The fee payable by a CLC Body as provided by
(1) paragraph 5(a)(ii) of the CLC Recognised Bodies – Recognition Framework; and
(2) paragraph 7.10 of the CLC Licensed Body (ABS) Licensing Framework
shall be the turnover declared by the CLC Body for the purpose of determining the applicable annual premium payable in accordance with 10.1 of the CLC Professional Indemnity Insurance Code & Guidance as follows:
Compensation Fund Contribution
6. The Compensation Fund contribution payable by a CLC Body as provided by
(1) paragraph 5(a)(iv) of the CLC Recognised Bodies – Recognition Framework; and
(2) paragraph 7.11 of the CLC Licensed Body (ABS) Licensing Framework
shall be the turnover declared by the CLC Body for the purpose of determining the applicable annual premium payable in accordance with paragraph 10.1 of the CLC Professional Indemnity Insurance Code & Guidance as follows:
7. The CLC may in writing waive or vary any of the provisions of this Framework and may revoke any waiver in any particular case.
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This Framework seeks to ensure that only those individuals able and committed to delivering the CLC’s Code of Conduct’s Outcomes for Clients are awarded a Practising Licence.
To achieve this, the CLC will only license individuals able and willing to act in a principled manner and deliver the CLC Code of Conduct’s Outcomes by complying with its Overriding Principles:-
Applying for a Licence
Issuing a Licence
Practising as the holder of a Licence
Conditions on your Licence
19A We will notify all applicants of our licence determination within 42 days of receiving a complete application. If, because of the complex nature of the application or because we require additional information, additional time is needed to make the determination we will notify you of this before the end of the original 42 day determination period. We will inform you of the reasons for the extension and its additional period, which will not exceed a further 42 days.
20. In any case where it decides to issue a Licence subject to conditions, to refuse an application for a Licence or to refuse an application for the removal or amendment of a condition on a Licence the CLC will notify the individual of the refusal of the application and of the grounds on which it has been refused.
21. Where a determination has been made under requirement 2, 4, 5 or 19, the applicant/ CLC lawyer may within one month of publication of the CLC’s determination appeal to the Adjudication Panel under section 29 of the 1985 Act.
22. If an application is deemed to have been refused as provided under requirement 17, the individual may within one month of the deemed refusal, appeal to the Adjudication Panel under section 29 of the 1985 Act.
Duration of Licence
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This Framework seeks to ensure that only those firms able and committed to delivering the CLC’s Code of Conduct’s Outcomes for Clients are awarded a Certificate of Recognition.
To achieve this, the CLC will only license bodies able and willing to act in a principled manner and deliver the CLC Code of Conduct’s Outcomes by complying with its Overriding Principles:-
Application for and Grant of a Certificate
5A. the following information:
(A) the identities of shareholders or members, whether natural or legal persons, that have a holding in the applicant that exceeds 10 %, and the amounts of those holdings;
(B) the identities of persons who have close links with the applicant;
(C) information that those holdings or close links do not prevent the effective exercise of the supervisory functions of the CLC.
5. where the applicant is a Company the application must also be signed by the company secretary or a director and accompanied by a copy of its Memorandum and Articles and a declaration that they comply with this Framework; and
6. where the applicant is a Company or LLP, its application must include its certificate of incorporation; and
7.identify the endorsements for which application is made (see item 11)
6. The applicant must inform the CLC (with such additional information and documentation as the CLC may require) of any issues as a result of which may cause the applicant to fail to meet requirements 1-4, or:
1. If, as a Recognised Body, it has at any time had made against it:
i) one or more of the orders referred to in paragraphs 4(2), 4(2D) and 5(4) of Schedule 6 to the 1985 Act;
ii) an order of the High Court made under paragraph 6(1) or 6(1A) of Schedule 6 to the 1985 Act;
2. If the issue of a Certificate will have, or is likely to have, an adverse effect on the delivery of positive Outcomes for Clients.so that these issues can be taken into account when the application is determined.
Determinations of applications for Recognised Body Certificates
6A The CLC will notify all applicants of our licence determination within 90 days of receiving a complete application.
Please see items 8.1-8.22 of the Licensed Body (ABS) Licensing Framework for an overview of the type of factors taken into account when determining a licence application.
Changes in the Recognised Body
the Certificate will continue in full force and effect provided the remaining LLP Member is an Authorised Person, and within 28 days of the occurrence (or the end of any time period determined under paragraph (b)) an additional person who is an Authorised Person has become an LLP Member. The remaining LLP must notify the CLC of these changes.
a Recognised Body has only one Manager who:
33. No person lacking capacity (within the meaning of the Mental Capacity Act 2005) may continue as a Manager. No voting powers may be exercised in respect of any shares registered in that person’s name.
34. Where there is a change in ownership in a Recognised Body the effect of which is that:
provided that the owners and Managers of the Recognised Body are Authorised Persons.
Cessation of Recognition
Inspection and Discipline
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and agrees how they are assessed.
1.1. Elements for consideration in determining financial penalties There are three elements which are considered when setting a financial penalty. These are:
If any financial gain arose as a result of the breach or misconduct, the financial penalty for the breach would be the sum of any individual instances of that particular breach that were identified. The sum of the financial gain should also be quantified where possible and added to the financial penalty as a separate element. If the financial gain cannot be accurately quantified, the penalty may be levied based on the evidence available. Additionally, mitigating and aggravating factors can attract a reduction or increase in the base penalty levied for the breach or misconduct.
1.2 Financial Penalties – licensed bodies, recognised bodies and individuals
Different rules apply for determining the maximum penalties which can be imposed against individuals, recognised bodies and licensed bodies (Alternative Business Structures (ABSs)).
The relevant legislation is the Administration of Justice Act 1985 (AJA 1985), the Legal Services Act 2007 (LSA 2007) and the Legal Services Act 2007 (Licensing Authorities) (Maximum Penalty) Rules 2011 (LSA Penalty Rules 2011). The statutory provisions relating to the CLC’s powers to apply financial penalties have been incorporated and expanded on by the CLC’s rules, namely the Adjudication Panel Rules 2015 (AP Rules).
The table below outlines the maximum penalties contained in the AP rules, which may be imposed against individuals, recognised bodies and licensed bodies.
|Recipient of Financial Penalty||Sanction||Statutory Provision||CLC Rules|
|CLC Lawyer||Payment of penalty to HM Treasury which is fair & proportionate (not to exceed £50 million)||s.26(2)(e) AJA 1985||r.13.3 (a)(v) AP Rules 2015|
|Recognised Bodies||Payment of a penalty to HM Treasury which is fair & proportionate (not to exceed £250 million)||Paragraph 4(2)(b) Schedule 6 AJA 1985||r.13.3 (b) (ii) AP Rules 2015|
|Manager or Employee||Payment of a fine to HM Treasury which is fair & proportionate (not to exceed £50 million)||Paragraph 4(2B)(a) Schedule 6 AJA 1985||r.13.3(c)(i) AP Rules 2015|
|Licensed Body (ABS) - entity||Payment of a fine to HM Treasury which is fair & proportionate (not to exceed £250 million)||Paragraph 2(a) LSA Penalty Rules 2011||r.14.2(a)(iii) AP Rules 2015|
|Licensed Body -owner||Payment of a fine to HM Treasury which is fair & proportionate (not to exceed £50 million)||Paragraph 2(b) LSA Penalty Rules 2011||s14.2(b)(iii) AP Rules 2015|
|HOLPs and HOFAs||Payment of a fine to HM Treasury which is fair & proportionate (not to exceed £50 million)||Paragraph 2(b) LSA Penalty Rules 2011||s14.2(c)(ii) AP Rules 2015|
|Manager or Employee||Payment of a fine to HM Treasury which is fair & proportionate (not to exceed £50 million)||Paragraph 2(b) LSA Penalty Rules 2011||s14.2(d)(i) AP Rules 2015|
The CLC is not able to levy fines against CLC lawyers or recognised bodies and their managers or employees. The CLC is required to refer these matters to adjudication but may recommend the fining level.
In accordance with the CLC Licensing Alternative Business Structures – The Licensed Body (ABS) Licensing Framework, particularly Rule 13, the CLC can exercise its enforcement powers which derive from the Legal Services Act 2007 and include the power to impose financial penalties (Section 95). These powers enable the CLC to impose financial penalties on licensed bodies, their owners, managers and employees, HoLP’s and HoFA’s. The maximum sanction is in accordance with the levels set out in the AP rules table included above.
1.3 Steps to determining a financial penalty
Each penalty needs to be individually determined by following the steps outlined below. This assessment should be documented within the penalty assessment template and retained as evidence for the rationale for the level of penalty determined.
1.4 Assessing Conduct and Impact
The first step to determining an appropriate financial penalty is to assess the seriousness of the breach or misconduct. The CLC makes this assessment by attaching a high, medium or low rating to each of the conduct and impact of the breach or misconduct.
1.5 Penalty Brackets
The individual conduct and impact ratings at 1.4 above combine to allow for a breach penalty bracket to be derived. The penalty brackets range from 1 (least serious) to 5 (most serious) as outlined in the table below.
|Conduct rating||Impact rating||Penalty bracket|
1.6 Penalty Bracket Ranges
Fines imposed on individuals will usually be assessed as fixed monetary sums assessed according to the ranges below.
|PENALTY BRACKET RANGES - INDIVIDUALS|
|Penalty bracket||Range of fine||Median starting point|
|1||£100 – £500||£300|
|2||£500 – £1,000||£750|
|3||£1,000 – £3,000||£2,000|
|4||£3,000 - £6,000||£4,500|
|5||£6,000 - £10,000||£8,000|
1.6.2 Licensed and Recognised Bodies
Fines imposed on licensed and recognised bodies are also usually assessed as fixed monetary sums. However where a licensed or recognised body has turnover exceeding £2 million or more and the penalty bracket assessed is 3 or more, then the financial penalty imposed will be based on a percentage of the licensed or recognised body’s turnover.
|PENALTY BRACKET RANGES – LICENSED AND RECOGNISED BODIES|
|Penalty bracket||Range of fine||Median starting point||Percentage (%) of turnover to determine upper range of fine (only use when turnover exceeds the amount specified). Median to be adjusted accordingly if used.|
|1||£100 – £500||£300|
|2||£500 – £2,000||£1,250|
|3||£2,000 – £5,000||£3,500||0.25% if turnover >£2m|
|4||£5,000 - £10,000||£7,500||0.25% if turnover >£4m|
|5||£10,000 - £20,000||£15,000||0.40% if turnover >£5m|
1.7 Mitigating and Aggravating factors
It may be appropriate to increase or decrease the financial penalty levied in certain circumstances.
Examples of where the conduct of the Body or individual may result in the financial penalty being reduced include:
Any reduction is entirely discretional however should not exceed 30% of the unadjusted financial penalty imposed.
Examples of where the conduct of the Body or individual may result in the financial penalty being increased include:
Any increase is entirely discretional however should not exceed 30% of the unadjusted financial penalty imposed.
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