Compensation Bill [HL]

I shall try to shed some light on this. We have tried to incorporate in the Bill what we call a funnel, which means that we have set out a very broad definition so that we can then look across the sector and determine where there are areas of risk that we can designate. We think that there are probably about 500 companies operating in this area. One issue for the regulator would be to look across to confirm that. I was trying to make the point earlier that one issue in determining the regulator is ensuring that we recognise what may happen in the market as companies leave if they see that they may not be allowed to continue in the way that they have. We are also looking wider than that at other individuals or organisations who may be involved in the provision of services in the sector. We have not sought at this stage to define them completely, but we will do so as we produce the regulation. When it comes to who might be on the board of a regulator, of course the complete range of organisations or individuals would be considered. Although I accept that it is a smaller market, it is not that small at this stage. I am sure that noble Lords would accept that there are companies, individuals and organisations behaving perfectly reputably in this area. For example, one might wish to put on the board a representative from a trade union or from another organisation and one or two companies on the lay member side. The point that I sought to make was that the good regulatory practice that exists thus far was to have reputable people from the area being regulated in order for them to provide an input in an appropriate, transparent way that does not deal with the issue of commercial interests becoming a way in which people operate in a negative way. That is the basis on which we have done it. There is scope and a real opportunity for those companies and organisations which provide a good service to participate in an appropriate and most critically transparent manner. In terms of the specifics on insurance brokers, some could be claims handlers, but if they are not regulated by someone else, we can regulate them. That would be the way that we could approach that. As I have already said, we have deliberately kept the definition wide in order that we can narrow it—that is, the funnel approach—so that we can deal with these particular areas of high risk effectively and as quickly as possible. But I am keen that we recognise the contribution that reputable companies and organisations play in helping us in the regulatory field.