Compensation Bill [Lords]

I thought that I had just made it as patently clear as I possibly could that, if the trade union falls below the standard set out in the code and continues to offer the services, all the enforcement powers under clause 7 would apply to it, too. New clause 1 is unnecessary because we do not need further definition of the criteria in legislation and it would militate against the purpose of exemption. It would be too rigid and might mean, for example, that an individual citizens advice bureau would have to be assessed against the criteria. That would be unnecessarily bureaucratic and disproportionate. New clauses 2 and 5 are also unnecessary. As I have explained, if the behaviour of an exempt organisation falls below the required standard, the Secretary of State can withdraw the exemption. Once it is withdrawn, an exempt organisation that continues to provide the service without authorisation will be committing an offence under clause 6 and can be prosecuted. The separate offence that the hon. Member for North-East Hertfordshire proposes is superfluous, as is a separate power to seek an injunction—it is already contained in the Bill. What he proposes would also make the penalty for failing to comply with the code of practice attached to an exemption more stringent than the penalties for authorised persons who break the rules. That seems to be to be the wrong way round. I agree with my hon. Friend the Member for Hendon (Mr. Dismore) that trade unions play an extremely valuable role in assisting ordinary hard-working people. They have a long history of championing the rights of workers in relation to health and safety at work and employment. They are also among the most regulated organisations in the country, which is another reason why it is unnecessary to make them immediately part of the regulatory issue in the Bill. However, we have to recognise the concerns that my hon. Friends the Members for North Durham (Mr. Jones) and for Bassetlaw (John Mann) raised about a small number of trade unions in relation to the coal health compensation scheme. I take those concerns very seriously and have been working with them and the Law Society to ensure that those issues are resolved. I hope that my hon. Friend the Member for Hendon understands the reasons for this approach. We want to do something that is proportionate for trade unions, but we also want the power to protect union members in the rare cases where the service that they receive is not up to scratch. On that basis, I hope that he will not press his new clause. On amendment No. 5, the hon. Member for North-East Hertfordshire spoke of his concerns about inappropriate and misleading advertising. I agree with him that some of the advertising is outrageous and has to be condemned absolutely. An essential part of the claims management regulatory framework will be rules governing the conduct of authorised persons. Compliance with those rules will be a condition of authorisation and any authorised person who does not comply will face disciplinary action by the regulator. That can include attaching conditions to their authorisation—for example, preventing them from providing a particular type of service or from handling client money. It can also involve suspending their authorisation or cancelling it. Advertising is a crucial area. The key issue is that it should not be misleading to consumers. That is covered by the codes of the Advertising Standards Authority and the authorised person’s responsibilities can be reinforced in the rules with explicit reference to the ASA codes. The rules will help to ensure that authorised persons adhere to high standards across all their marketing activities, which will be enforceable by the regulator. The rules that we have issued set out what we expect the standards applied to authorised persons to be. That includes not making misleading or exaggerated statements; not using expressions such as ““no win, no fee”” without qualification, unless there is no possibility of the client having to meet any costs that he may have incurred in connection with the claim; and not offering an immediate cash payment or similar payment as an inducement for making a claim. I hope that that reassures the hon. Gentleman. On new clause 11, the Law Society has taken action to deal with complaints about solicitors who have taken costs in addition to those paid by the Government under the terms of the coal health compensation scheme. The Law Society has assured me that it takes complaints made to it about the scheme very seriously and many solicitors have already been referred to the solicitors disciplinary tribunal for disciplinary action. I empathise with Members who have first-hand experience of the disgraceful behaviour of some of those solicitors. I hope that they take some comfort from the knowledge that action is being taken against those who breach the rules. I understand that some £3.6 million that was made from additional charges has been repaid. But, of course, that is not enough. I know that colleagues in this House are working hard on behalf of their constituents to get additional fees returned, and I welcome the fact that they will continue to do so. I will continue to monitor the Law Society’s handling of these complaints. I spoke in Committee about the requirement for claims management companies to provide the regulator with details about the information that they give to clients about fees. That is a key aspect of the authorisation criteria. The information that is given to clients should be clear and transparent. That is crucial and will be an important requirement of the rules. It is our intention that the regulation should be effective and have teeth. The regulator will not tolerate attempts to mislead or misinform consumers because that would be a clear breach of the rules with which all authorised persons will be expected to comply if they wish to provide a regulated claims management service. An authorised person who is found to be in breach of the rules will be severely reprimanded, and the sanctions will include the authorisation being suspended or cancelled. Given those stringent safeguards, I hope that my hon. Friends will not press new clause 11 to a Division. Points were raised about the code of practice. We have an early draft of the code at present, and it is still being discussed in detail with unions, legal professionals and others. We can thus think about including a consideration of clarity about fees and funding in those discussions. I can tell my hon. Friend the Member for Bassetlaw that Vendside would not be subject to the exemption in the first place. As a separate company, it would have to be authorised if it wanted to continue to carry out claims management services. It is our intention that any subsidiary company, whether owned wholly or in part by a trade union, will not fall within the terms of the exemption. The only bodies covered by the exemption will be independent trade unions listed by the certification officer. Let me turn to retrospection. Clause 8 will allow the Secretary of State to make transitional provision in regulations. For example, that will allow provision to be made for the regulator to use his discretion to investigate complaints relating to an authorised person in respect of conduct that began before the commencement of the Bill and continued after that commencement. There will be a definition of a member in the exemption order. We have been absolutely clear that the exemption will be limited to members and their families. When trade unions act as claims farmers and pursue claims on behalf of non-members, they will have to be regulated. I have made it clear that we will ensure that there are no loopholes. Trade unions will not be able to sign up associate members only for the purpose of dealing with claims. However, retired members will be included in the exemption because they will clearly be part of a legitimate trade union activity. The hon. Member for Montgomeryshire (Lembit Öpik) made an interesting point when he asked the hon. Member for North Southwark and Bermondsey (Simon Hughes) about minimum turnover requirements for smaller businesses. We are consulting on the fees payable by companies for their authorisation. However small a company’s turnover, it is the consumer who needs proper safeguards to ensure that there is adequate protection. We are examining the situation so that there is as much balance as possible. Government amendments Nos. 11 and 12 will put beyond doubt the fact that the Secretary of State could bring claims management services that were provided in relation to industrial injuries disablement benefits within the regulatory net. As well as listening carefully to hon. Members’ concerns, we have continued to speak to many stakeholders about the introduction of the new regulatory regime. That has included discussions with Citizens Advice and Judge Michael Harris, the president of the social security and child support appeals tribunal, both of whom have raised concerns about claims management in relation to claims for industrial injuries disablement benefits and some other welfare benefits. Commercial intermediaries typically charge a flat fee for such a service, or take a percentage of the benefit payment if the claim is successful. Claims of that type would be made at a time when a person was already suffering from the trauma of the injury, which would make them more vulnerable. If consumers are being targeted, we want to be able to help by stepping in and providing appropriate protection. We have considered further the definition in clause 3. Despite its breadth, there is sufficient doubt about whether claims management services for such claims would be covered to justify bringing forward the amendments. The amendments explicitly allow the Secretary of State to bring claims management services provided in relation to industrial injuries disablement benefits within the regulatory net by allowing an order to be made which defines these as claims for the purposes of part 2 of the Bill. The order will be subject to the affirmative procedure. That means that claims management services in relation to industrial injuries disablement benefits could be regulated by order under clause 3(2)(e). The amendment is precisely targeted on industrial injuries disablement benefits, which are benefits of a compensatory nature. It does not extend to welfare benefits more generally, because that would be beyond the scope of the Bill. There is some limited evidence of organisations offering advice on claims for other social security benefits on a commercial basis, but they are most active in the area of industrial injuries benefits. Our debate will serve our consideration of the code of practice. All hon. Members should be assured that it will be taken into account. I have reflected on the issues raised by the hon. Member for North Southwark and Bermondsey. Parliament should have the opportunity to debate the initial exemption order under clause 5 and any subsequent restriction or removal of exemption. We hope to capture almost everyone in the first order, but we are working with an unusually broad definition, so if a small number of organisations emerge that fall within the definition but on which it is not appropriate to regulate, subsequent orders can be used to tidy up anomalies. I would not want to take up valuable parliamentary time on those, but I am pleased to say to the hon. Gentleman that I am delighted to accept amendments Nos. 15 and 16.