I am obliged to the noble Lord, Lord Beecham, for acknowledging that we have at least achieved a curate’s egg, if nothing more.
The Bill makes important changes to our personal injury compensation system; it makes that system fairer, more certain and more sustainable in future for
claimants, defendants, motorists and the taxpayer. That builds on our wider reforms to cut the cost of civil justice claims and strengthen the regulation of claims management companies, which play such a big part in this. The first part of the Bill will deliver a key manifesto pledge. It will support the consumer by bringing down the cost of living through a crackdown on exaggerated and fraudulent whiplash claims that lead to higher insurance costs. The second part of the Bill will provide a fairer method for setting the personal injury discount rate and reviewing it so that it does not remain at one level, as it did for 16 years.
I am grateful for noble Lords’ observations and careful scrutiny of the Bill. I want to touch on one or two of their points. The noble Lord, Lord Sharkey, commented on the complexity of the approach taken on Clause 11. That approach was carefully crafted after consultation with interested parties, including the FCA, to ensure that it is as effective as possible. At the end of the day, the Government’s approach has been determined by the need for a rigorous and proportionate regime for insurers as far as savings are concerned. We have to remember that the FCA is an independent body. Clearly, we cannot confirm exact FCA action in respect of these matters but we assure the House that it will take very seriously any case where an insurer does not treat customers fairly. That could include a public commitment not being met if that formed part of a policyholder’s or consumer’s expectations.
The Government have taken a careful and considered approach to what is sometimes termed “naming and shaming”, particularly with regard to the provisions in Article 6 of the European Convention on Human Rights. There are circumstances in which the FCA may decide publicly to censure a firm, but that would typically follow a detailed investigation. The idea of somehow naming and shaming a firm before such an investigation could raise questions about convention rights under Article 6. I suggest that we have taken a considered approach to this but, ultimately, those outliers—if I can call them that—who might seek to abuse the system will be open to censure, potentially publicly, by the FCA in due course.
In the context of the point made by the noble Lord, Lord Hodgson, I readily adopt the observations of the noble and learned Lord, Lord Judge. At the end of the day, consultation with the Lord Chief Justice will allow the judiciary some input into, or comment on, the setting of the tariff of damages against the background of its knowledge of the general level of damages awarded for personal injury in diverse cases. One would hope that this would ensure no material divergence in levels of damages as far as that is concerned.
The noble Lord, Lord Monks, raised a number of questions. Regarding Amendment 1, the primary legislation approach to setting the tariff is not considered appropriate because it should be amenable to review and flexibility. Setting it in stone would not allow for that. Regarding the question of employers’ liability and employers’ liability clauses, we consider that the courts are equipped to cope with such claims. On cost recovery, referred to in the impact assessment at paragraph 5.66, I note that the aim is ultimately to try to achieve cost neutrality so far as the court process is concerned, but I acknowledge that that is a long-term aim.
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On that point, I touch upon the observations of the noble Lord, Lord Beecham. Regarding access to the courts, we are introducing a digital portal for these whiplash-type injuries, which will be designed to be accessible for those without legal representation. It will lead them into the prospect of alternative dispute resolution of their claim in respect of the merits and quantum. That system is being developed by the MIB and will be stress tested. As I indicated, we would expect it to be available for operation by April 2020.
We debated the question of excluding others such as vulnerable road users before, and I will not revisit the point. We have taken a clear view on the scope of these requirements with regard to whiplash, and that is where we are.
On the matter of a six-year period for review, it will be necessary to collate data from at least three years so that we can produce a comprehensive review of cost and savings. Therefore, we do not consider the period for the report to be excessive in that context.
The noble Earl, Lord Kinnoull, alluded to Clause 11 and what he saw as the onerous obligations on insurers. It is only appropriate that obligations be placed on insurers regarding this matter when potentially very significant savings will be achieved. We make no apology for that, but I observe that these provisions were developed after consultation with insurers and the FCA. However, I readily acknowledge the point that he made about the cost to, among others, NHS Resolution regarding the present discount rate. It seems unfortunate that we have moved from a regime where the discount rate remained at 2.5% for 16 years, only to be subject to what might be termed a cliff-edge change due to the long period that it remained at that level, and was brought down to minus 0.75%. That is why we intend to bring Part 2 into effect at Royal Assent with the two time limits—debated before—of 90 days and 140 days, so that this matter can be brought under control sooner rather than later.
With those observations, I hope the House will accept that the Bill will work to improve the present position. We believe that we now have a much stronger Bill that will ensure that consumers see the benefits that arise from these reforms. I beg to move.