Compensation Bill [HL]

My Lords, I was only pausing in my speech. I was about to address that precise issue, because that is the second part. I am doing this now because it colours and flavours all of our discussions; I hope noble Lords will forgive me for taking a little time to do that. I have sought to address this in two ways. First, I am mindful of the changes that will follow, so I have short-term and longer-term visions. The reason that I must think about the longer term is that the draft Bill that will create the legal services board is expected in this Session. There are implications for the potential overview regulatory role that could be played by that body. Secondly, in the context of wider changes in relation to regulations, it may be that parties who are currently not interested will change what they do and develop competences in other areas. Without prejudice, because it is not interested at this point, the Law Society springs to mind for the future. Thirdly, the unfair commercial practices directive may also have implications for this area of work. I am also mindful of continuing changes in relation to issues of regulation. I have mentioned those matters, because it is important that we set up a regulatory framework. In two or three years’ time, it is clear, because of what has happened to the market—if the 500 companies shrink or if other areas are to be regulated—we may need to look at a longer-term solution, too. I am thinking both short term and long term, as I hope your Lordships’ House would expect of me. I am approaching this from two directions and work is under way to address these simultaneously and speedily, because I still have a target date of October. First, we shall look to see whether within existing regulators there is an obvious regulator that, within its abilities, competencies and interests, will be willing to take this on. Secondly, we shall look at the way in which the Secretary of State might regulate. I want to say something about how that would work, because I know that there are concerns about the Secretary of State doing that—which I am sure will be raised on other amendments tonight—and under the Bill there is that possibility. The elements of direct regulation would include the Secretary of State as regulator, with an individual appointed or designated with the appropriate responsibility for carrying out the regulation. There will be a non-statutory advisory committee made up of representative stakeholders—financial services, the legal profession, consumer groups, insurance and the claims sector—to oversee and advise on these arrangements. A monitoring and compliance function would be contracted out to a suitable unit, be responsible to the regulator for carrying out authorisation, monitoring, complaints, enforcement and general ““back office”” work. There would be a tribunal to consider appeals against decisions of the regulator, which is already catered for in later amendments. That would be the framework around which the Secretary of State would play the role. My noble and learned friend would not be sitting in a room trying to regulate, but he would have an overseeing function. I am looking at that option, given what I was saying earlier about the longer term and the potential changes that might take place—and we do not know, although we can guess, how the market might develop or shrink as a consequence of regulation. Those are the two options that I am working up. I plan to provide more information as swiftly as I can, but I hope that that gives noble Lords a clear indication of my thinking in relation to the Bill as it currently stands. As we go through the amendments there will be further opportunities to deal with any particular questions noble Lords may have. I hope that is what the noble Lord was looking for and that, on that basis, he will be able to withdraw the amendment.