Joint Committee on Statutory Instruments Sixteenth Report


APPENDIX 1

Memorandum from the Department for Transport

MOTOR VEHICLES (COMPULSORY INSURANCE) (INFORMATION CENTRE AND COMPENSATION BODY) REGULATIONS 2003 (S.I. 2003/37)

1. These Regulations, which are subject to the negative resolution procedure, were made under section 2(2) of the European Communities Act 1972. The Regulations were made on 10th January 2003 and will come into force on the 19th January 2003. The instrument was laid before Parliament today. It has unfortunately not been possible to lay the Regulations 21 days before their entry into force, as is normally required by paragraph 5.21 of the Statutory Instrument Practice.

2. These Regulations, together with other subordinate legislation including rules made by the Financial Services Authority (FSA), implement the fourth motor insurance Directive. That Directive requires Member States to have implementing provisions in force by 19th January 2003.

3. The rules are made by the FSA under sections 138, 150(2), 156 and 157(1) of the Financial Services and Markets Act 2000, and under SI 2002/2706. They contain provisions that are dependent upon these Regulations coming into force by 19th January. Those provisions, which themselves come into force on 19th January, require each motor vehicle liability insurer to notify details of each claims representative it appoints to the Motor Insurers' Information Centre (MIIC) within ten business days of making the appointment.

4. The MIIC is defined in the FSA rules as "the information centre appointed to meet the United Kingdom's obligations under article 5 of the Fourth Motor Insurance Directive (Information Centres)". However, the MIIC is to be authorised as such by virtue of the Regulations. Thus, if the Regulations are not in force by 19th January, the MIIC will not be authorised on that date. Accordingly, it would not be possible for insurers to comply with their notification obligations on that date, or for an uncertain period thereafter. It would not, in our view, be in accordance with good legislative practice to allow that to happen. The interdependence between the FSA Rules and these Regulations make it necessary to bring the Regulations into force by 19th January.

5. Unfortunately, unexpected difficulties and drafting issues arose late in the drafting process, such that it has not proved possible to have the instrument laid before 28th December (which would have been in compliance with the 21 day rule). The Department apologises for this.

13 January 2003

Second memorandum from the Department for Transport

MOTOR VEHICLES (COMPULSORY INSURANCE) (INFORMATION CENTRE AND COMPENSATION BODY) REGULATIONS 2003 (S.I. 2003/37)

1. The Committee has asked for a memorandum on the following points:

(1) The Department's memorandum of 13 January 2003 states that "unexpected difficulties and drafting issues [which] arose late in the drafting process" prevented it from ensuring compliance with the 21 day rule. Given that (as the memorandum indicates) the Department was aware of the need to bring the Regulations into force on 19 January 2003, explain why drafting work was not started earlier so that the drafting issues could have been resolved in time for the Regulations to have been made and laid without breaching that rule.

(2) Explain why regulation 2(1) contains a definition of "guarantee fund", given that this expression is not used elsewhere in the Regulations.

(3) Paragraph (7) of regulation 9 provides that the Motor Insurers' Information Centre may charge a fee of not more than £10 for providing information under that regulation. Explain­

(a) what authorises this provision;

(b) the basis on which the discretion (whether to charge a fee and the amount) is to be exercised, and whether it is intended that there should be a standard fee for requests for information or whether the fee is to be determined in respect of each particular request.

2. Point (1): The Department began the drafting in June 2002. It was believed at that point that sufficient time had been allocated for the purpose. Regrettably, by the time it became apparent that this was mistaken it was not possible to meet the requirements of the 21 day rule.

3. Point (2): This is an error, for which we apologise. The expression had originally been used in regulation 15, but it was replaced by "MIB" in the final draft, the consequential amendment being overlooked.

4. Point 3(a): European Communities Act 1972, section 2(2) authorises this provision. The charge will not amount to taxation (see Schedule 2, paragraph 1(1)(a) of the Act): it is specific to recipients of information who will benefit from the information.

5. Point 3(b): It is expected that there will be a standard fee of £10.00. On this basis, the scheme is not expected to be profit making. But it was felt that the MIIC (against whose costs it is set) should have power to charge a lower amount or to waive the fee in exceptional circumstances.

14 February 2003

Third memorandum from the Department for Transport

MOTOR VEHICLES (COMPULSORY INSURANCE) (INFORMATION CENTRE AND COMPENSATION BODY) REGULATIONS 2003 (S.I. 2003/37)

1. The Committee has asked for a further memorandum on the following point:

The Department's memorandum of 14 February states that regulation 9(7) is authorised by section 2(2) of the European Communities Act 1972. Elaborate upon this statement in the light of section 56 of the Finance Act 1973.

2. As stated in the Explanatory Note to S.I. 2003/37 ("the Regulations"), the Regulations implement in part the Directive of the European Parliament and of the Council of 16 May 2000 ("the Fourth Motor Insurance Directive").

3. Regulation 9(2) to (4) of the Regulations requires "the information centre" to provide specified information to an "injured party" and regulation 9(7) empowers the information centre to charge a fee of not more that £10 for providing this.

4. Regulation 9(2) to (4) implements article 5.3 and 5.4 of the Fourth Motor Insurance Directive. The Directive does not deal with the question of the recovery of the costs of providing the information in question. However, Community jurisprudence (see in particular Case 31/78 Bussone [1978] ECR 2429 and Case 251/78 Denkavit Futtermittel [1979] ECR 3369) establishes that costs may be recovered subject to certain rules. These include that the Community measure in question does not prohibit recovery (implicitly or expressly) and that the costs charged are not excessive or distort competition.

5. The Department considers that the provisions of regulation 9(7) are permissible on this basis and that accordingly vires for the provision are provided by section 2(2)(b) of the European Communities Act 1972.

6. The Committee refers to section 56 of the Finance Act 1973. Under section 56(1), where a government department (defined by section 56(5)) provides services etc. in pursuance of any Community obligation it may require the payment of fees and charges prescribed by regulations.

7. By virtue of regulations 1 and 3 of the Regulations "the information centre" for the purposes of regulation 9 is the Motor Insurers' Information Centre, a company limited by guarantee and incorporated under the Companies Act 1985. This company is wholly owned by the Motor Insurers' Bureau, a company limited by guarantee and incorporated under the Companies Act 1929. The members of that company comprise persons underwriting motor insurance. The Motor Insurers' Information Centre is not therefore a government department for the purposes of section 56 of the 1973 Act. Accordingly, the Department does not consider that section 56 provides vires for regulation 9(7).

7 March 2003

Fourth memorandum from the Department for Transport

MOTOR VEHICLES (COMPULSORY INSURANCE) (INFORMATION CENTRE AND COMPENSATION BODY) REGULATIONS 2003 (S.I. 2003/37)

1. The Committee has asked for a further memorandum on the following point:

In relation to the Department's memorandum of 7 March, the purpose of the Committee's question was to seek the Department's views on the scope of section 2(2) of the 1972 Act in the light of section 56 of the Finance Act 1973, and not to suggest that the Motor Insurers' Information Centre is a government department. Does the Department agree that section 56 proceeds on the basis that section 2(2) of the 1972 Act does not (in the absence of an express provision in the Community instrument itself) authorise any implementing legislation to require the payment of fees or other charges for the provision of services or facilities in pursuance of a Community obligation? If not, explain the purpose of, and need for, section 56.

2. The Department regrets its misunderstanding concerning the Committee's earlier request, having assumed that since section 56 of the 1973 Act clearly did not confer any power to make the regulation in question it was asking for an explanation of why we believed section 2(2) of the 1972 Act was wide enough to confer it. We now set out below our understanding of the relationship between sections 2(2) and 56.

3. Section 2(2) confers a wide power. That is apparent from subsection (4). It is restricted only to the extent specified in Schedule 2. The Department's view as to the nature of the restriction relating to taxation has already been explained in its Second Memorandum. There is nothing in the 1972 Act to suggest that, where a Community instrument imposes an obligation on Member States to provide a service or issue documentation but is silent on the matter of charges, section 2(2)(b) confers no power to prescribe fees or charges. Furthermore, section 56(3) of the 1973 Act expressly preserves powers exercisable otherwise than under that section to require the payment of fees and charges; it does not purport to occupy the whole field and it cannot be construed as amending or further restricting the scope of section 2(2) by implication.

4. Therefore the Department does not agree that section 56 proceeds on the basis suggested by the Committee.

5. As to the purpose of, and need for, that section, the Department regrets that it is not at the date of this memorandum in a position to express a full view. However, we have considered the differences in the formulation of the two powers as we feel that these, and in particular the extent to which section 56 is wider than section 2(2), must be significant.

6. In a number of respects the application of section 56 is wider. First of all it applies to international agreements other than Community obligations. Secondly, the powers may be exercised by Ministers other than those designated under the 1972 Act. Thirdly, section 56(1), unlike section 2(2), confers a power of sub­delegation.

7. The application of section 56 is narrower firstly, because it only applies to fees and charges payable to a Government Department whilst section 2(2) does not preclude the making of regulations making them payable to other organisations. Secondly, section 56 is available only in connection with services etc. provided "in pursuance of" Community obligations, and not to matters "related to" them, so that it would permit a charge being made for a service provided in accordance with section 2(2)(a) of the 1972 Act but not for one provided in accordance with section 2(2)(b).

8. Despite these differences, it is the Department's view that the powers conferred by the two provisions are to a large extent co­extensive and that, in the case of the present Regulations, section 2(2) must confer the necessary power. There is nothing in the 1972 Act which limits the scope of section 2(2)(b) in that respect and it would be most surprising if section 56 was intended to preclude the use of that section to impose a charge in an area to which the section itself did not apply.

24 March 2003


 
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