Lembit
Öpik: To save time, I shall make this point early.
I accused the Minister of being pedantic in wanting to cover everything
when resisting previous amendments. I now accuse her of being the
opposite. I can give one example where an offer of help cannot be made:
when the person is unconscious. It is necessary to make a judgment
about providing medical help at that moment, regardless of the presumed
wishes of the individual. I will not pursue that with the Minister: she
understands my point. The Government are being a little intransigent. I
suggest that that is a materially important reassurance, for all the
reasons given by the various speakers.
Bridget
Prentice: A little unusually, I accept what the hon.
Gentleman has said. If he will allow me, I shall think about that
aspect of the reasoning behind the amendment, and perhaps get back to
him on Report. Given what has been said, such a provision may need to
be added to the Bill.
The hon. Member for Kettering
raised a constituency point. Basically, it is important to know that if
someone says, “I am offering you this treatment on the basis
that you do not pursue your claim”, it is entirely a matter for
the claimant to make a decision as to whether they accept the treatment
or not. Clause 2 does not affect the basis on which an apology, offer
of treatment or other redress may be made, or indeed how it may be
accepted.
Mr.
Brazier: Briefly, following the extremely welcome remark
that the Minister made, I should like to reinforce the comments by the
hon. Member for Montgomeryshire. We received some particularly telling
testimony—I am not sure that I could find it, two years
on—from the St. John Ambulance brigade making precisely the
point that he made, during the failure of progress of my private
Member’s Bill.
Bridget
Prentice: I am grateful to the hon. Gentleman for that
point. I was thinking of the St. John Ambulance as an
organisation that might well find itself in such a situation on a
fairly regular basis. Of course, it should be emphasised that anyone
who provides treatment should only provide treatment for which they are
appropriately qualified. They would be subject to all the other
associated caveats. I leave it there, and I am happy to think again
about this particular amendment and what it will add to the
Bill. Mr.
David Hamilton (Midlothian) (Lab): I realise that the
Minister is finishing, but I would like her to consider this point. I
passed my first aid test in the 1980s, on the St. Andrew’s first
aid course. The very day after I passed the test, a motorcyclist went
over the top of a car. If I had just passed my test now, I would have
the same concerns that have been expressed today. I had none at that
time and I held on to the person until the ambulance came along. I
would ask the Minister to consider that
issue.
Bridget
Prentice: Again, we have an example of a member of the
Committee with direct experience in this area, and it is for the
reasons stated that I will consider the
matter.
Simon
Hughes: The Minister is being very helpful and I am
grateful for her offer. I hope that she will be able to make a
statement that covers the potential risk in an authoritative way. It
will be very helpful for the Red Cross, St. John Ambulance and all the
other people we are concerned
about.
Bridget
Prentice: I am happy to give the Committee that assurance.
Whether the amendment is accepted or not at a later stage, I will make
sure that everyone is given the absolute assurance that all Committee
members want them to
have.
Mr.
Heald: It was constructive of the Minister to make that
offer. If it helps, the amendment was suggested by Norwich Union, which
felt it might be a useful technical addition. It was put forward in
that spirit and I am glad that the Minister is willing to consider it.
I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Clause 2 ordered to stand
part of the Bill.
Clause
3Provision
of regulated claims management
services
Mr.
Heald: I beg to move amendment No. 15, in clause 3, page
1, line 18, leave out
‘regulated'.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 18, in page 2, line 27, after ‘legal',
insert ‘or
other'. No. 19, in
page 2, line 29, after ‘another',
insert— ‘( ) any
service for money or money's worth to persons bringing
claims'.
Mr.
Heald: This group of amendments is all about ensuring that
the regulation of claims management services is comprehensive. It is
clear that self-regulation has not worked in this field and I welcome
the Government’s decision to pass legislation that will
effectively regulate claims management services.
In response to concerns raised
by the Delegated Powers and Regulatory Reform Committee in the Lords
and the Regulatory Reform Committee in this place, the Government have
passed a significant number of amendments to what was originally
proposed. Basically, that has ensured that some of the key points are
in the Bill rather than leaving them to secondary legislation. I
welcome that. The Minister who dealt with the matter in the Lords was
very constructive.
The growth in the claims
management sector came about as a result of the Government’s
decision to pretty well abolish civil legal aid as it then operated and
establish conditional fee agreements. As members of the Committee will
know, civil legal aid has seen its budget reduced by 24 per cent. in
real terms and considerable difficulties have been highlighted by the
Access to Justice Alliance. Amendment No. 15 tackles the problem that
two kinds of services appear to be referred to in the Bill: regulated
and unregulated
services. The effect of removing the word “regulated”,
which is what I suggest, is that clause 3(1) would read, “A
person may not provide claims management services unless—(a) he
is an authorised person, (b) he is an exempt person” and the
other provisions would then apply. The question for the Minister
is: what are unregulated claims management services? The word
“regulated” has not been used by accident. The
implication is that there must be such a thing as an unregulated claims
management service, and as the Minister knows I am concerned that the
Government might have worded the clause so as to ensure that some
bodies that deal with claims management, such as trade unions, are
exempt. If so, it is hard to see how that fits in with the clause on
exemptions. I would be interested if the Minister clarified why the
word “regulated” is
used. The president of
the Chartered Insurance Institute, Mr. Hales, has branded claims
management firms as a national disgrace and blamed them for the surge
in unjust and vexatious complaints against life offices and advisers.
The Law Society has talked of the significant body of evidence that the
public need protectionfrom unregulated claims companies who
employ unacceptable practices such as cold calling, aggressive selling,
insurance mis-selling and encouraging all kinds of frivolous
claims. The
Department for Constitutional Affairs report on “Effects of
advertising in respect of compensation claims for personal
injuries” supports that view and shows that claims management
companies employ unacceptable practices. Chart 11 on page 22 of the
report shows that 20 per cent. of those who made a claim found out
about their claims management company from an unsolicited phone call,
18 per cent. did so from television adverts, 17 per cent. were
approached in the street and 3 per cent. were approached while in
hospital. Clearly we do not want the concept of the ambulance-chaser to
become established in our country, and therefore firm regulation is
needed. It is no
surprise that companies target the area in an aggressive way. If we
consider the endowment business, the Boleat report states that
insurance companies estimate that there will be about a million
endowment compensation claims this year, with a typical compensation
figure of £6,000. That is obviously very lucrative for claims
management companies and, as the Boleat report notes, all they have to
do is write one letter in order to get the money. About 30 per cent. of
claims come though the claims management companies, which are taking 35
per cent. plus VAT on each transaction.
Claims management companies can
expect to earn hundreds of millions of pounds through such claims. It
is a serious and urgent problem, and in drawing up the legislation we
must avoid any loopholes. That is why I should like the Minister to
explain “regulated”.
Amendment No. 18 is small, but
it would add “or other” after “legal” and
therefore affect the processing of “a legal or other”
claim. The idea is to be comprehensive, but there is no doubt that
insurance or administration, which was not directly legal in every
aspect, could be considered a part of claims management
companies’ work. As the Minister will
recall, when Claims Direct and the Accident Group were taken through the
courts, they argued that they were insurance services and therefore
exempt. Amendment No.
19 is again designed to be comprehensive. If it were accepted, clause
3(3)(a)(iii) would read “referring or introducing one person to
another,” and would be followed by a new sub-paragraph,
“any service offered for money or money’s worth to
persons bringing claims”. Adding those words would catch those
people who carry out what are effectively claims management services,
but who carefully do not present themselves as so doing. It would still
exclude those who provide free advice.
It is not too far-fetched to
imagine in a sector as inventive as the one under discussion that
claims management companies seeking to avoid regulation may move into
the rehabilitation sector and then provide all the other services as an
ancillary service. I dare say that the Minister will tell me that the
provision is inclusive and not exhaustive, but we must be careful.
Simon
Hughes: I support the amendments. They all seem to go in
the right direction. I said on Second Reading that we should have as
little legislation as possible in this country. We legislate far too
much. The problem is often with administration, and if we administered
better we would need to legislate less. I approach all legislation on
the basis that we should not legislate unless we absolutely have to and
we are persuaded by the evidence. There are sufficient considered views
about the issue in part 2 to make it appropriate to legislate, and
therefore to regulate.
I noticed—amusingly but
understandably—that at the end of our discussions about part 1,
civil servant team A departed and the Bill team for part 2 arrived.
There are clearly experts on this sector here to assist the Minister,
and no doubt they have had many issues to consider as the
Constitutional Affairs Committee and others have reported. The
Government have been under much non-partisan pressure to regulate this
area. The hon. Member for North-East Hertfordshire broke down using a
verbal pie chart the ways in which the literature comes our way: being
stopped in the street is one way; and others include advertising, and
the stuff that one picks up in shops or finds in newspapers.
We are making a rod for our own
back if we start part 2 with “Claims Management Services”
and then state that it will deal with regulated claims management
services only. There could be a wonderful debate about what a claims
management service is, but it is better to have one such debate, and if
necessary leave it to the courts, rather than two, the first being
about whether something is a claims management service, and the second
about whether it is regulated.
We are trying to deal with an
abuse of the free market in which person A or company A exploits person
B or organisation B. We ought to catch all the fish in the net, not
start to limit the definition in the title of the clause. I
see where it goes: one looks for the definition of regulated, and in
typical legalese, subsection (2)(e) says that
“services are regulated if they
are—” and we get a
circular
definition— “of a
kind prescribed by the Secretary of State”.
We immediately set ourselves up for
secondary legislation, which the Secretary of State must produce and to
which Parliament must agree. The alternative definition is that
services are regulated if they
are “provided in cases or
circumstances of a kind prescribed by
order”. Again, there is
only one way forward: secondary legislation. It is better that we
define a claims management service and then leave it, letting the
market decide. If there is a debate in court over whether something is
a claims management service, we should let that
happen. 1.30
pm The last reason
is that, as the hon. Gentleman hinted, it is impossible to think ahead
to how such things might happen. At the moment, we are thinking mainly
of people who advertise on television, radio, hoardings and flyers. In
the age of the internet and e-mail, people could proffer such services
there, but they could also do so in other ways. A weekend community
event in any of our constituencies could be sponsored by an individual
or a company that wanted to advertise in a different way by selling
something at a
stall. I am worried
that if we start trying to define this by regulation, we will always
have to be regulating. I urge the Minister to accept the amendment,
resist over-prescription and over-definition, and try to ensure less
unnecessary work for Parliament and lawyers, and less secondary
legislation, which would be
void.
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