Compensation Bill [HL]

The noble Viscount raises some valuable points. It is probably worth saying that most personal injury claims are handled by solicitors. With the regulation of companies, it is very likely that they could be the main winners. The noble Viscount is right. I am probably guilty of sloppy use of the word ““market”” because a number of different markets are operating. There is a market for those who wish to make claims. One of the ambitions for regulation is that people who are persuaded by disreputable companies to make claims will be stopped from being persuaded because those companies will not be allowed to behave in that manner. So one may see the number of frivolous claims, or people embarking on the road of a claim that gets nowhere, decreasing substantially. We hope that we will end up with a better claims market where those who genuinely have claims can make those claims more easily and will be dealt with effectively. That would be a good thing. As I said in earlier debates, we are looking at this applying to personal injury, housing disrepair, employment, criminal injuries and the mis-selling of financial products. We will seek to do that under Clause 2(2)(e) by order. I know that the noble Lord, Lord Hunt, has a great interest in ensuring that we capture effectively those different areas. We have also indicated that if something such as mortgage endowment mis-selling were to happen again, we would want flexibility for the regulator to swing into action reasonably quickly without the need for primary legislation in quite the same way. The second market concerns the companies involved in this field. The noble Viscount is right to expect that the number of companies will change. I, too would expect that to happen. I would expect reputable companies to see this as an opportunity to gain a bigger share of the market. They will be authorised to operate, will be considered to be good and will look for legitimate custom to come to them. Legitimate customers who have perhaps gone to disreputable companies in the past will not have to do that and will be able to go to reputable companies. Some mergers may take place and we may see leaders in the field emerging. Because of the regulation, such companies will be able to advertise that they are kite-marked, reputable and so on, and attract more customers in that way. So I have no doubt the number of companies in the market will change. I have indicated the difficulties we face in looking to regulate effectively. We have to ensure the regime we have in place will be able to tackle quite big changes in what could be a turbulent market for a while. I imagine that we will see the numbers of companies reduced—it could be a reasonably substantial reduction in numbers—and my objective is to put in place a regime that can deal with those changes and use public money effectively. I have allowed within the Bill an opportunity for the Government to subsidise because, having established a regulator, the number of companies in the market may decline to the point where the Government may need to subsidise for a while until the numbers grow again. Equally, other forms of regulation may be taken on by the regulator which will provide an income base to allow the regulator to become self-financing. That is my ambition and I hope to achieve it very quickly. I do not want to fail to provide proper regulation because the Government did not foresee their responsibilities. I have been looking at the evidence of what happens in other areas of regulation. Although they are not comparable in many ways, there is a kind of trend that, when you regulate, the market dips but may come back. So the market may dip for a while and we have to try to build the regime around it. As I have indicated, that has implications for precisely how we best fit the regulator to tackle a market that will change to begin with, and may change again if there is a need for other forms of regulation to be taken on. Those are big questions but I think we have the measure of them. They are perhaps leading us in directions which will become clearer before we get to the next stage of the Bill, when I hope to give noble Lords as much information as I possibly can about precisely where our thinking is going. I hope there will be great confidence within your Lordships’ House, as we report back from this Committee, that we have anticipated the issues and dealt with them as effectively as possible, with the caveat that no one can be exactly certain of what will happen.