Compensation Bill [HL]

moved Amendment No. 55:"Page 10, leave out lines 28 and 29 and insert ““a client of an authorised person where—" (a)   money is paid to the authorised person in complete or partial satisfaction of the client’s claim, and (b)   the client is unable to obtain all or part of the money because the authorised person becomes insolvent or is otherwise unable or unwilling to pay.”” The noble Baroness said: My Lords, in moving Amendment No. 55, I shall speak also to Amendments Nos. 56 and 57. I gave an undertaking to this House that I would address as appropriate concerns raised by the Delegated Powers and Regulatory Reform Committee. I have done so and this group of amendments specifically addresses the concerns that the committee raised about the compensation scheme. Amendment No. 55 makes it clear that the compensation scheme will apply only to claims management companies that handle clients’ money. When an authorised person has been paid money directly on behalf of a client but fails to pass this on, for whatever reason, the client should in the first instance try to recover the money from the person’s professional indemnity insurance. There may be circumstances in which the insurance will not cover the loss—for example, when the company has not paid the premium, or the company has become insolvent. There may also be circumstances where the authorised person had acted dishonestly. In those circumstances, the authorised person would either be unable or unwilling to meet the loss. The compensation scheme may therefore provide a remedy to recompense the client with the money he has lost. There may also be circumstances in which the authorised person is unwilling to pay the money because he disputes the cost. Informing clients of the costs involved in bringing a claim and continuing to keep them informed of costs will be a requirement of the rules. Any breach of this requirement might result in the regulator taking action against the authorised person for misconduct. Amendment No. 56 makes it clear that funding for a compensation scheme will be met by authorised persons; also, that payments or financial assistance will not be met from government funding. Amendment No. 57 removes the reference to an appeal, as that is no longer necessary. As noble Lords know, I have separately tabled amendments, which we debated earlier this evening, making it clear that sanctions imposed by the regulator can now be appealed to the independent tribunal that we are setting up under the legislation. I hope that your Lordships will feel able to accept this. I beg to move.