Compensation Bill [HL]

I begin with the amendment of the noble Lord, Lord Hunt of Wirral. I am very grateful to him for explaining in such detail what he is seeking to achieve. I completely agree with the standards that authorised persons should comply with. The list highlights important concerns about the problems in the industry, which the noble Lord has been keen to ensure we have at the forefront of our minds throughout our deliberations. I also agree that the regulator must be competent to ensure that these abuses are curtailed. The only difference between us is where we might put the list. At this stage, I will indicate how I propose to tackle the important issues that the noble Lord has raised and hope that he will reflect on that and agree. In general, it is better that we include the list either in the criteria for authorisation or in the rules and codes of practice. I will go through each issue and explain where I might be minded to put it: that will give us a basis for a conversation. First, like the noble Lord, I am very concerned about the transparency of charging. I am grateful to the noble Lord for raising that issue and happy to continue discussions about it. It is something that we should probably include in the minimum criteria that the regulator must consider in order to satisfy itself that an applicant is fit and competent to provide the type of services that he wishes to provide. That would be my inclination. I am already considering how we can provide greater clarity in the area in response to the concerns of the Delegated Powers and Regulatory Reform Committee. I shall certainly consider something on fees in the amendments that I propose to table at Report—I will discuss them with the noble Lords, Lord Hunt and Lord Goodhart, and the noble Viscount, Lord Eccles, before tabling them. The other matters in the list are also important. The competence of advisers is extremely important, not least from the example that the noble Lord gave about the citizens advice bureau. The criteria for authorisation would include as a minimum that people are competent to provide the regulated claims management service. We need to find ways to ensure that they continue to meet that competence. The regulator will need to monitor to make sure that those conditions are met and must have the ability to suspend or withdraw if there is a concern that they are not. On capital adequacy, not everyone involved handles clients’ money, but I agree that it is an important aspect that we need to get right, so we think that it should fall within the criteria for authorisation in paragraph 5 of the Schedule. I will consider that further when we formulate the amendments in advance of Report. The additional issues, such as the availability of free alternatives, the restriction of unsolicited methods of approach and the right to withdraw from contracts—the cooling-off period—are probably best dealt with in the rules and code of practice which we are making under paragraphs 9 and 10 of the Schedule. That would be my inclination. Indemnity insurance will be a requirement for authorisation. We have included it in the Explanatory Notes, on pages 11 and 12, where there is a list relating to the grant of authorisation. At the top, it says, ““has appropriate indemnity insurance””. So it is our intention to include that. I plan to deal with all these issues, and I am simply trying to indicate where they might best fit. There is no disagreement from the Government that these are important areas to be covered appropriately. I hope that the noble Lord will be able to reflect on that. I turn to Amendment No. 43, tabled by the noble Lord, Lord Goodhart. I recognise that promoting competition might not be seen as a primary objective of regulation. I hear what the noble Viscount says about the realities of regulation in terms of the narrowing of the number of organisations or companies involved, but to protect consumer interests we would all recognise that competition has its role to play. As the noble Lord, Lord Goodhart, said, supported by the noble Viscount, Lord Eccles, the Office of Fair Trading clearly has a responsibility in that area. Its own statement of purpose says:"““Markets work well for consumers when there is vigorous competition between fair-dealing businesses””." The difficulty is that the activities of the regulator may be outside the scope of the Competition Act 1998. A European Court of Justice verdict in a Dutch case, Wouters, means that there may not be a suitable statutory basis for an intervention on competition issues. If that is the case, the regulator might need to be under a duty at least to consider the implications of what it is doing in terms of competition. That is what I would seek to achieve. In other words, if this is under the scope of the European Court of Justice ruling, the regulator would need something for itself in legislation about competition, because the Office of Fair Trading does not cover this.