Compensation Bill [HL]

As the noble Lord, Lord Goodhart, said, we discussed this matter at Second Reading, and the noble Lord raised this matter with me in our first conversations on the Bill. I have been back to seek legal advice, not only from within the department but also from parliamentary counsel. The noble Lord is right to say that we are seeking to ensure that someone who is given the wrong information or who, for very good reasons, could not conceivably have known that they might be covered has a defence. He said that ignorance of the law is no defence, so we wanted to create a certainty that there would be a defence in those very rare cases when the regulator perhaps gave someone the wrong information or someone had no reason to believe that they were covered at all. There is no question but that we would want to ensure that we did not create a loophole. I have gone back to this provision, and my initial instinct was to take it out; but, having had the benefit of legal advice and advice from parliamentary counsel, I am conscious that in so doing I would run the risk of someone finding themselves in a very difficult position through genuinely not having understood or from having been told the wrong information. I also checked where we get the provision from. There is a similar clause in the Financial Services and Markets Act 2000, which nobody has questioned as far as I know. Indeed, no Member of the Committee has referred to that as being an example of where it does not work. The provision in that Act says that,"““it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence””." We cannot put the same language in because of the nature in which the Bill is drafted; it would be meaningless to refer to ““due diligence”” when we are leaving the detail to secondary legislation. But the principle is the same: we are trying to ensure that if there are extenuating circumstances of a particular kind, they will be taken into account. I agree with the noble Lord, Lord Hunt, that this should not be about people getting off the hook who are crafty enough to try to use the provision. We are confident that those who are operating in the way in which we are trying to capture by this Bill could not conceivably use the provision in such a way; they would be expected to know and would be captured by it. I am always slightly cautious when there may be a very marginal case where, in all certainty, someone believed that they were not covered or had been given the wrong information.