Compensation Bill [HL]

I believe I have just said that no one should underestimate the breadth of the problem. As I see it, the Department for Work and Pensions, the Department for Constitutional Affairs and the Department of Health have contributed four major strands to the legislative programme which is now developing. The first comprises the Compensation Bill, the second the NHS Redress Bill, the third incapacity benefit reform and the fourth legal services reform. All four are remarkably closely interwoven. We have to see this measure therefore as part of that overall concept. I refer, as I have on several occasions, to the speech of the noble and learned Lord the Lord Chancellor of 10 November 2004 in which he told the claims management sector that it had to,"““put its own house in order””," and that the Government were going to,"““push the message that with rights come responsibilities””." The Government’s response to the report of the Better Regulation Task Force laid down very clearly that they wanted to see,"““a major change in quality and behaviour by claims management companies so that the service provided to consumers is significantly improved and consumers’ expectations are not raised falsely through potentially misleading advertising and other sales practices. We also want to see a renewed focus on improving transparency of processes and fees, better quality control and the speedier conclusion of any claims made””." The Government go on to say that,"““a crucial factor informing future decisions on further formal regulation . . . particularly on the delivery of any new formal regulation, will also be informed by the outcome of Sir David Clementi’s review of the legal services regulatory framework.""The development of an industry body that can act as a ‘self-regulator’ provides an opportunity to produce much improved service levels, better standards and an independent compliance and complaints regime. The CSC has a key role to play in ensuring that this improvement continues if—" and that is a big word—"““it can deliver on its promises””." As we now know, later policy announcements have gone down the route of statutory regulation. As regards legal services, the report of Sir David Clementi said about the demand for multi-disciplinary practices (MDPs) that,"““in the context of claims arising out of motor accidents, MDPs could offer an integrated service which dealt with all the related issues, such as property damage (to the car), mobility (courtesy car), health, rehabilitation and compensation. Affinity groups, such as trade unions, also provide a range of services to their members, of which legal advice is one, but one that is sometimes closely connected with other needs such as employment and welfare issues””." Sir David Clementi continued:"““The Consultation Paper . . . identified a number of issues with MDPs. These are:—""(i) the issue of regulatory reach—how could a legal services regulator exercise power over people who were not lawyers, were offering clients a different professional service and who might have different codes of practice in areas such as client handling;""(ii) the additional problem of regulatory reach where there were more than two professions involved and no obvious lead regulator; this would include the problems of using the HOLP model where non-legal professionals are involved””." I hope that by quoting the Clementi report I have given some substance to the problem of having a seamless robe of regulation over this whole area. Sir David Clementi concluded:"““The Regulator would, therefore, have to enter into collaborative arrangements with other regulators where this was deemed appropriate””." If Amendment No. 34 were accepted, Clause 2(3)(a)(ii) would read,"““the provision of services by way of or in relation to legal or other representation””." We do not want to legislate in such a way that the regulator, and possibly even the courts, get bogged down in a series of running arguments about the nature of services provided, and therefore the need to ensure real consumer protection by making sure that all services provided by claims management companies are caught by the regulation. That point is, however, raised against the background of the litigation concerning Claims Direct and The Accident Group schemes in which a number of services were branded as insurance services, and where the company tried to hide behind that branding to prevent the court considering whether they were, in fact, ““insurance services””. In fact, several of the services were nothing of the kind but were claims handling services. The same argument will, no doubt, be tried here. I recall that Master Hurst, in considering the Claims Direct test cases, was given details of these insurance services as: first, arranging for the completion of the Claims Direct application form; secondly, arranging for the completion of the credit agreement application form; thirdly, forwarding the Claims Direct application form to Claims Direct; fourthly, obtaining such other information as may be requested by the appointed representative; fifthly, obtaining witness statements; sixthly, monitoring the conduct of the appointed representative and reporting on the same; seventhly, arranging for Claims Direct’s client to attend at a medical appointment; eighthly, reviewing the appointed representative’s bill of costs; and,   ninthly, maintaining the relevant financial information. Master Hurst examined each of these items and found that only items one, two, three, six and nine could properly be held to be insurance services. Items four, five, seven and eight were all claims handling services, not, as Claims Direct contended, insurance services. The importance of this for the purposes of the judgment was that only insurance services could properly form part of the insurance premium claimed, claims handling services could not. I hope, therefore, that the Minister will understand the reason for this amendment. The burden of proof should be shifted and all activities should be caught. I beg to move.