Compensation Bill [HL]

moved Amendment No. 37:"Page 2, line 35, leave out ““designate a person”” and insert ““establish an office””" The noble Lord said: This is the first of an important group of amendments. In moving Amendment No. 37, I shall therefore speak also to Amendments Nos. 38, 45 and 50. The Bill is extremely vague about who the regulator will be. The regulator can be a public body set up by the Secretary of State; it can be an individual appointed as the regulator; it can be the Secretary of State himself, although that is perhaps the least desirable of the possibilities. It can be a private sector body such as a trade association representing the providers of claims management services—a frontline body, as I think it has been described. That is much too vague and is plainly part of the cause of the serious concerns expressed by the Delegated Powers Committee. What this group of amendments tries to do is provide that the office of the regulator must be a public office. That could be through a public corporation or through an individual appointed as the holder of the office. But it should not be a private sector corporate body such as the Claims Standards Council. I believe that there would be a serious danger. It is of course possible for a professional body to be a regulator and to exercise regulatory powers in professions comprising many members. That would be true, for example, of the Bar Council or the Law Society, although even there the regulation is very much subject to oversight by the Legal Services Ombudsman. But if only a small number of members are carrying out the regulated business, it is plain that conflicts of interest will inevitably arise. If the regulator is an association whose members conduct claims management business, there is an obvious risk of a conflict of interest. For example, it must be in the interests of members of the association to restrict the number of new entrants and to make it as hard as possible to satisfy the entry tests so as to reduce competition. Again, a conflict of interest would arise when the association considers whether to make rules which may have an adverse effect on the profits of its members. Of course I do not accuse the Claims Standards Council of doing that, and in any case it is not yet a regulatory body. But any body that is in the position of the Claims Standards Council, as a body whose membership is made up of members of a limited number of businesses taking part in a particular role, will be subject to serious tests of conflict of interest. It is desirable that the regulator should be removed as far as possible from those conflicts. We are not dealing here with a traditional profession, but with a relatively small group of businesses. Members of the regulatory body will be potentially in direct competition with applications for authorisation. It is therefore plain beyond doubt that the regulator should be the holder of a public office which could include the Secretary of State—although as I have said that would not be desirable; it could be a public body that already exists, or it could be a new public body incorporated for the purpose. That is another possibility. It is very unfortunate that the Government have not been able to sort out their own ideas on who should be the regulator before bringing forward the Bill. The noble Viscount, Lord Eccles, mentioned earlier that I had said at a previous stage that this Bill was premature. The reason I feel that it is premature is that while it is necessary not to lose any time in regulating claims management companies, it is also desirable in circumstances of this kind that the Government, when they launch such legislation, should have a clear idea of how they actually intend to regulate these businesses. However, so far the Government have been unable to do that. I beg to move.