Compensation (Claims Management Services) Regulations 2006

We on the Liberal Democrat Benches give a broad welcome to the regulations. They provide for additional consumer protection in an area that has long been the subject of abuse. Some years ago, a Granada Television programme that conducted a sting operation on doctors who were providing bogus medical reports to claims farming organisation showed up an anomaly. The doctors were severely disciplined by the General Medical Council, but the claims farming agency was free from discipline and regulation. I hope that the orders will remedy that situation and provide increased consumer protection. In relation to two points made by the noble Lord, Lord Kingsland, we support the dual approach to insurance brokers, because we are talking in these regulations about consumer-accessible structures, much more so than the rather more strategic exercise carried out by the Financial Services Authority. It is extremely important that consumers who feel aggrieved and may well have a justifiable complaint can go to a regulator who is readily accessible to them in a simple way. So far as the regulation of those who refer the claim is concerned, we could go on regulating and regulating and regulating backwards, but surely the point of the exercise is to regulate those who process the claim on behalf of the consumer. The complexity of all these regulations tends to justify the observation of an old-fashioned lawyer such as myself, who used to appear in many personal injury actions, that probably the best way to process any kind of claim, whether for personal injury, compensation for damage to a motor car, criminal injuries or anything similar, is to find a solicitor who is prepared to do the job for you, even on a conditional fee arrangement—and do it in that way. It is self-evident that the simplest form of regulation is one-tier—and that is the case in respect of solicitors. It is currently being changed, but there is a reasonable expectation that it will work. In relation to solicitors, a compensation scheme does not exist at this stage in the structures set out under these regulations. I hope that the Minister can confirm that the Government at least intend that there should be the kind of compensation scheme available to people who suffer damage at the hands of solicitors. In my professional capacity, I have handled a few cases in which solicitors had acted either criminally or negligently, so I can tell the Committee that in many cases compensation is provided at a reasonable early stage. I recall one case in my last days as a Member of another place where substantial compensation was provided when there had been dishonesty in the conduct of some conveyancing several years earlier. I would like to raise a few other points. Under one of the regulations, it is countenanced that fees will be payable and regulation available when people make claims for statutory benefits to which they are entitled as of right and as a matter of law. Certainly it is right that there should be regulation if people are rewarded for making such claims on a consumer’s behalf. Would the Minister clarify the position of voluntary agencies such as citizens advice bureaux, because I have not been able to find the answer in my, albeit short, researches into these matters? If they carry out work of this kind, will they be subject to regulation and, if so, can that be justified as an extra tier of management for an already hard-pressed voluntary sector, bearing in mind that CABs will often advise people to go elsewhere if better services are available? However, sometimes it is difficult to find alternatives, particularly in rural areas. We hope that fee levels can be regulated so that, where statutory benefits are being claimed, it will not be possible for a large percentage of the return to be creamed off by the referral agency. Criminal Injuries Compensation Authority claims can be large, but it does not provide significant compensation for the cost of obtaining the compensation itself. We hope that the Minister will confirm that in such claims, which are routinely handled by solicitors and others, it is intended that the fee levels should take into account the statutory entitlement to the money being obtained and that that should be reflected at a low fee level. The Minister said that it was intended that persons providing a regulated claims management service must have professional indemnity insurance in due course, but we regret that it is not being introduced immediately. If it is to be introduced only in time to come, there will be a difference between the use of a solicitor and the use of a claims management service, to the detriment of the consumer. Finally, we hope that the Secretary of State will be regulator for only a short period, albeit with a structure beneath him. Regulation of claims of this kind may involve substantial casework. The sooner it becomes a free-standing, independent body recognised as having the powers of other independent professional regulation bodies, the better it will be.