Compensation Bill [HL]

moved Amendment No. 31:"Page 2, line 12, at end insert—" ““(   )   for the avoidance of doubt, ““claim”” includes a claim against a landlord for breach of an implied covenant in respect of the repair of a dwelling-house under section 11 of the Landlord and Tenant Act 1985 (c. 70) (repairing obligations in short leases),”” The noble Lord said: This amendment seeks to highlight another example of the way in which claims farmers deflect the funding of public services; usually, sadly, solely for their own benefit. The amendment deals with the duty under the Landlord and Tenant Act 1985 to keep housing in good repair. That has become another fruitful area for a number of unscrupulous claims management companies, where tenants are encouraged to claim for defects, often of a modest nature, in their property. The lure of extra cash is far stronger than the idea of better quality housing and so tenants who have not contacted their landlord to get problems fixed none the less bring claims whose proceeds go first to the claims management company. The tenant will no doubt be tempted to spend the balance they receive on other things and often the advertising will urge them to do so. The net result is that the housing stock is not improved. It is another arena in which free services are available to assist those who have complaints. Those with complaints against social landlords can go to the Housing Ombudsman Service, or the Local Government Ombudsman if they are council tenants. If they do so, the service offers mediation and other services under the banner of alternative dispute resolution and offers a conciliatory and, more importantly, free service. For instance, Hackney Council announced a new independent arbitration service which it estimates should save the council up to £1 million a year and avoid lengthy court disputes for tenants. I warmly applaud that action and understand that a number of other local authorities are seeking to save considerable sums of taxpayers’ money through such a new arbitration service. Alternative dispute resolution is the answer to this problem and the free services that are available should in no way be usurped by claims management companies seeking to extract benefit for themselves out of a situation that can be resolved comparatively easily. As regards previous court decisions, I want to refer only to one: that is, Bowen v Bridgend County Borough Council in 2004 in which the judiciary rightly condemned the advice given to the claimant. The claims management company sought to prevent the claimant receiving a free service, benefiting from the claimant being tempted to use its fee-paying service on the basis that the fee would not be paid by the individual claimant but would be recovered as part of the claim. That case highlights the fact that at the outset claims management companies are not advising the claimants of the availability of other forms of funding or of a free service. Instead, they are trying to persuade them to enter into conditional fee agreements, after-the-event insurance agreements and even to take out loans to fund disbursements. The court found that the claimant had not necessarily got a better service or a swifter solution to his problems by using the claims management company’s scheme. They would have done far better to use one of the alternatives, which were never explained to them at the outset. The judiciary were most critical of that. The ombudsman service, as I have already mentioned, is there to offer a free service that allows people to sort out their housing problems. It addresses the problem rather than creating a new one or a profit stream for companies entering this arena. In that case, the costs judge noted that in the 11 cases that he was considering, the average damages recovered was £1,631. It seems that the real problem in housing disrepair cases is that the small claims limit of £1,000 helps no one in resolving these disputes other than claims management companies. Local authorities need to spend money on housing repairs, but they are hampered in their efforts to do so by having to pay out legal and other costs, and the bill falls on the local authority and the council tax payer. This may be an opportunity for the Minister to share with us the Government’s intention about the small claims limit in the context of personal injury claims, but also other claims. The general view expressed to me on all sides is that the limit remains far too low. The Constitutional Affairs Select Committee, before its present inquiry, recommended an increase for personal injury claims from £1,000 to £2,500. Whether or not one agrees that that is sufficient, the need for change appears to be established. The Association of British Insurers has recently pointed out that an increase to £2,500 does not even cover inflation, since the limit was last changed in 1991. There are a number of examples of smaller claims having far too much in addition in costs. I also looked, when I was surfing the Internet, at a marvellously-named company called Claim 2 Gain. It was advertising a specialist claims service for victims of endowment mis-selling. It says that it is experienced in compliance, and, referring to that level of experience, continues on its website:"““This gives us much more leverage””—" than—"““the Financial Ombudsman Service””." My point about all such claims is that where there is a free service, as per the Financial Ombudsman Service, set up by law as an independent public body, its job is to resolve individual disputes between consumers and financial services firms. I have two points to make. First, I do not like the idea of claims management companies trying to pretend that they have expertise greater than the free service, whether it is the Housing Ombudsman Service or the Financial Ombudsman Service. We must find some way of getting through to the public that the free service is available. Secondly, while the small claims limit remains so low, it is catching into a whole range of claims that should not be there in any event, because they should be subject to alternative dispute resolution. Often the bill for costs and other ancillary expenses will be far higher to the public body, defender or provider than is strictly necessary because of all the additional costs that fall into the claims. I hope that the Minister will address those two points. I beg to move.