Compensation Bill [HL]

I am very grateful to the noble Lord, Lord Hunt, for, as always, opening our discussions by setting out the nature and seriousness of the issues. As we go through this afternoon, it is my intention to reassure the noble Lord that I share his desire to ensure that we have no loopholes in the legislation. I agree with the noble Lord that we would seek to put things in the Bill where appropriate. We recognise the advantages of secondary legislation, a matter which we have already discussed in Committee, in allowing us the flexibility to tackle other areas that may arise with greater speed than primary legislations allows. I hope that in that context I will be able to make these things clear to the Committee. I agree with what the noble Lord said about time being up. It is very important that those involved in this area understand precisely what we are doing. Although the speed at which we wish to move is tempered a little by the process of legislation, none the less, we intend to get this done as quickly as possible. I shall say a little more about that in a moment. The noble Lord was particularly concerned about the issue of mis-sold endowment policies. I know that he has been keen to ensure that we address those issues as soon as possible. The noble Lord kindly shared with me the correspondence he had with the Financial Services Authority. As he will know, its chief executive indicated that extending the remit of the FSA would require at least secondary, and possibly primary, legislation. I mention that at this point because I went to see my honourable friend Mr Ivan Lewis, who is a Treasury Minister, to have a discussion on the issue. I have extended an invitation to the noble Lord, Lord Hunt, and I think that we have a meeting next week with the Treasury to discuss these issues again. I hope that that will, at least in part, demonstrate the seriousness with which we take these issues and that we recognise that the noble Lord is absolutely right to push hard on these questions to ensure that we deal with them as quickly as possible. Part of demonstrating how we are seeking to do this as quickly as possible is that we have not waited for the legal services reform issues to be addressed in future legislation; rather we have brought forward this Bill now. But I am conscious that in order to ensure that we have effective regulation, we must put in place the right structures. This means that we need the code of practice and rules of conduct. We also need to work closely with the reputable industry and other stakeholders who are directly affected to ensure that we have it right. In other words, the people we are authorising need to know, as it were, what the rules of the game are going to be. Proper enforcement procedures therefore need to be in place, thus enabling us to act properly. Before regulation can commence, we will need to produce the secondary legislation, including the order that will determine which sectors are to be regulated, but we shall not wait for Royal Assent before starting on this important work. We have already begun on the process of consultation required under Clause 11(3). I have already indicated that the secondary legislation will give us an opportunity to deal with other issues that may arise from time to time, bringing those sectors quickly into the regulatory net. We will also commence work on the regulations that are to underpin the Bill. While I do not have the exact timings, as those are made ready and become available, I plan to share drafts with the noble Lords, Lord Hunt and Lord Goodhart, and the noble Viscount, Lord Eccles, as well as other noble Lords who have participated in our discussions. We shall begin work on the regulations required under the schedule, including consultation on the rules and codes of practice. We need to set up a procedure for the grant of authorisations and to establish a mechanism for dealing with complaints, as well as proper arrangements for enforcement against both authorised and unauthorised persons. Without effective enforcement, the regulation will be worthless. We also need to put in place regulations to establish the process of authorising those persons providing claims management services. We want to ensure that only those who meet the criteria for authorisation and agree to comply with the rules and the codes should be approved. That must be done quickly, but with due care and attention. On 20 December last I indicated in Grand Committee that I expected to receive advice on the issues of regulation from the independent expert before Christmas. I have indeed received a detailed report on which I have had an opportunity to speak briefly with the noble Lords, Lord Hunt and Lord Goodhart. I have sent a copy of the report to the Claims Standards Council asking for a formal response to the findings. At the time I also said that I would make available as much of the report as possible. I shall be doing that very shortly, but only after I have had the Claims Standards Council’s response. I expect this to be ready before we reach the Report stage. At that point noble Lords will have an opportunity to discuss in greater detail the Government’s firmer proposals on how we plan to take forward this regulation. I am very happy to accept Amendment No. 51, the only caveat being that the drafting works properly. I have not yet checked it with parliamentary counsel. I am sure that the noble Lord, Lord Hunt, will not mind if that is done, but I have no difficulty in accepting all the noble Lord has said about the value of the may/shall debates that we have had so often when considering legislation. However, I take the point being made here. Turning to Amendment No. 67A, the provision in Clause 7(3) is intended to allow regulations to cover, if necessary, complaints from consumers which relate to events that took place before the commencement of the Act. If the Secretary of State were to regulate directly prior to the designation of a regulator, I understand that any necessary transitional provisions could be made under Clause 11(1)(c). I have already mentioned the report from Mr Boleat and it is our intention to delegate a person as the frontline regulator and for the Secretary of State, my noble and learned friend the Lord Chancellor, to have oversight responsibility. That is our starting position and remains so at the moment. However, if we are unable to designate a body, the Secretary of State will then be required to regulate. As the noble Lord, Lord Hunt, has already pointed out, that is implicit in Amendment No. 51, which as I have said I am happy to accept. In order to bring the noble Lord up to date, as he requested, perhaps I may point out that during the development of the Bill we consulted with a wide range of organisations from the legal, insurance and consumer fields about the sectors that should be subject to regulation. This includes the Association of Personal Injury Lawyers, the Association of British Insurers, the Law Society, the Criminal Injuries Compensation Authority, employment tribunals and the Local Government Association. We have extended the remit of the Consumer Panel, which was established to advise on legal services reform, to include the regulation of claims management services. Members of the Committee may be interested to learn that the organisations represented on the panel include the Federation of Small Businesses, Which?, the National Association of Citizens Advice Bureaux, the National Consumer Council and the Office of Fair Trading. We plan to involve the panel in the development of the order. I accept the principle that the noble Lord, Lord Hunt, seeks to establish: that we need to act with speed but be ready for Royal Assent and not wait beyond that. Hence, we sought to consult early in the process and to have the draft regulations ready as soon as possible during the passage of the Bill through this House and another place. I hope that I have at least in part assured the noble Lord that I entirely support his sentiment and that he is therefore able to withdraw his amendment.