Civil Liability Bill [HL]

Lord Marks of Henley-on-Thames Excerpts

Committee: 1st sitting (Hansard continued): House of Lords
Thursday 10th May 2018 Lords Chamber

[The Earl of Kinnoull (CB)]

My Lords, I congratulate the noble Lords, Lord Sharkey and Lord Marks, for framing a good debate in this important area, and I thank the noble Lord, Lord Sharkey, for his very clear opening remarks. There seem to be three issues here: first, who should set the tariff; secondly, where it should be set out; and, thirdly, how it should be amended.

I regard the tariff as being very much a political matter. The problem that we are trying to cope with is a widespread low-level fraud that is afflicting our country. It is easy money offered by the claims industry for people following what are probably genuine motor accidents. I read out earlier a quite shocking quote from one of the leading people in the claims industry:

“Even if you don’t experience any symptoms straightaway, don’t rule out the possibility that you’ve suffered this type of injury”.


I feel that as it is a political and social problem it must have a political solution, and it cannot really have a judicial solution.

I am grateful to the noble and learned Lord, Lord Brown, who has lent me his copy of the Judicial College guidelines. The introduction states:

“Assessing the appropriate level of any award remains the prerogative of the courts, which are not constrained by any range identified in this book, since the figures within any such range are persuasive, not obligatory, and merely represent what other judges have been awarding for similar injuries”.


Therefore, the whole basis on which the Judicial College has been gathering figures and making judgments is not the sort of basis on which in any event one would want to build a tariff construction. It is the wrong starting material, although it is an interesting book. Accordingly, I feel that the Lord Chancellor must be the person who takes a decision about what will be contained in the tariff.

In respect of my other two questions, I return to the 22nd Report of the Delegated Powers and Regulatory Reform Committee, which considered this issue at paragraph 13 and stated:

“In our view it would be an inappropriate delegation of power for damages for whiplash injury to be set in a tariff made by Ministerial regulations rather than on the face of the Bill. The tariff should be set out on the face of the Bill, albeit amendable by affirmative statutory instrument”.


I feel that answers both my questions. I urge the Minister to consider having a tariff on the face of the Bill and to ensure that it is amendable with suitable parliamentary oversight.

[Lord Marks of Henley-on-Thames (LD)]

My Lords, the amendments are, as has been said, in my name and that of my noble friend Lord Sharkey. I shall first add to the point made about the Delegated Powers and Regulatory Reform Committee by quoting what it said about placing the tariff in the Bill. It said that the second central question—the first being the question that I quoted earlier about what is meant by whiplash injury—is:

“By how much are awards of damages to be reduced?”


The committee said that the Government’s answer was that:

“The reduction in damages will be whatever the Lord Chancellor says it will be, in regulations to be made by him or her at some future date”.


The committee came to the conclusion, as the noble Earl pointed out, that that is an inappropriate delegation of power. I again make the point that it is appropriate for the Government to accept that recommendation. That has always been the way that that committee’s recommendations have been dealt with. Of course, amendment in the future can be made by statutory instrument.

I turn to the important point that was made in different ways by the noble and learned Lord, Lord Brown of Eaton-under-Heywood, the noble Lord, Lord Faulks, and the noble Earl, Lord Kinnoull, which is that the cost paid by society for these reforms in this particular case—that is, the reduction in damages—is a reduction in awards for genuine claimants. It is genuine claimants who are made to suffer. I cannot see the justification for that in any of the evidence that the Government have produced. We accept entirely that there is a problem with fraud. We are fully behind attempts to tackle fraud by eliminating, or at least reducing, fraudulent claims. But to remove the right to fair damages for claimants in these particular types of cases does not seem to be an appropriate response to this problem in a civilised society.

We address this central problem by saying that the Judicial College Guidelines are an appropriate way of coming to a conclusion on appropriate damages. They are a fair and workable way in which to achieve comparability. They avoid the problem that fraud may be positively encouraged by a cliff-edge system that encourages exaggeration. Damages under this proposal double if the claimant can persuade the medic who is preparing his report that an injury will have a duration of three months-plus, rather than just short of three months—doubled from £225 to £450. In that context, I make two points. The first is that it is a little odd that the response—

[Lord Hodgson of Astley Abbotts (Con)]

Does the noble Lord accept the argument that the quantum of damages is essentially a political decision that should be taken and justified in Parliament, not taken by judges in courts? How do aggrieved people achieve change there? We know how they achieve change in a political situation: they can lobby their Member of Parliament and get change. Is the noble Lord saying that this must be left to the judges and that we have no way of obtaining redress for decisions that an individual might feel are unfair or inaccurate?

[Lord Marks of Henley-on-Thames]

Absolutely not. The Judicial College can respond, and be required to respond, to political guidance if Parliament chooses to legislate on the level of damages. I do not say that that is what is wrong. My concern is about the fairness and comparability of picking out whiplash injuries in an attack on fraud and reducing the compensation to genuine claimants accordingly. My point about the £225 and £450 figures—

[Lord Faulks]

Does the noble Lord accept that if you reduce the amount of damages, it provides something of a disincentive to those who are fraudulent?

[Lord Marks of Henley-on-Thames]

Of course I accept that. It is a question of whether the cost in unfairness is worth paying. It is a dilemma that the noble Lord himself correctly outlined in his speech. We are simply saying that we ought to try every other avenue before trying this drastic avenue of introducing an unfair system for genuine claimants. I will see if I can get beyond the next couple of sentences.

My point about the £225 and £450 figures is that they represent a cliff edge. They compare to £1,800, which is the expected award set out in the Government’s impact statement for such injuries of less than three months’ duration to date. The Government’s response to the outcry that these damages are so low has not been to meet the outcry at all but to reduce them from £235 to £225 and from £470 to £450.

One of our problems with the present proposals is that there is no evidence base for a recent increase in the number of fraudulent claims. We entirely accept the case that the noble and learned Lord, Lord Keen, made both at Second Reading and today that there is a wide prevalence of fraudulent claims that we have to tackle. However, there is not a wide base of evidence for an increase in such claims, nor is there sufficient evidence of how many claims are fraudulent or genuine. There is certainly no evidence that only the fraudulent claims would be deterred and that the genuine claims would continue. That worries me seriously, because the noble and learned Lord suggested earlier today that a genuine claimant might continue whereas a fraudulent one might be deterred. We simply do not accept that. It is just as likely—and I say this also without an evidence base—that genuine claimants would be deterred because the amount at stake had become so low, even though they had a fair claim.

We entirely agree with the Government that the proposal for compulsory medical reports discriminates between genuine and fraudulent claimants. I repeat my declaration at Second Reading that I have just concluded some litigation about compulsory medical reports and the operation of the pre-action protocol. However, there is no corresponding evidence of discrimination in the case of these drastic cuts in damages, which we say are unjust, unfair and fail to give fair compensation to genuine claimants. They discriminate unfairly between injuries sustained in road traffic accidents by drivers and passengers in motor vehicles and those sustained in such accidents by cyclists and pedestrians. Who would receive the traditional level of damages? Passengers and motorists would not, even in genuine cases. They discriminate unfairly between accidents which are covered by the Bill and accidents at work or accidents caused by, for instance, a council’s negligence. Those can also be a source of fraudulent claims.

If the Government are determined to have a tariff, we are worried about the cliff edge. I see no fundamental reason in principle against a tariff; it is a question of weighing the advantages of certainty outlined by the noble and learned Lord against the fact that you have a cliff edge where those cases that are very close to the three-month level produce very large discrepancies in damages. If we are to have a tariff, let it at least be one that does not penalise genuine claimants by allowing them an award that is far too low. That is the basis for our alternative Amendments 13 and 96. We do not put them forward as a preferred option, but they are more acceptable than the Government’s proposals.

[Lord Beecham (Lab)]

My Lords, I concur with the views expressed and proposals made by the noble Lords, Lord Sharkey and Lord Marks. They are absolutely on the right track, although I do not agree with the provision for the Judicial College guidelines to be taken into account. It will be seen that in the next group, we have an alternative proposal suggesting that the Civil Justice Council should be involved in making the decisions.

In this group, however, there is an amendment in my name and that of my noble friend Lord McKenzie which would restore a degree of discretion for the court to uplift the amount of damages payable where it deems it just to do so in all the circumstances of the case. That would revive the role of the judiciary in assessing damages, at least to some extent, where it felt that the scale proffered under the legislation was inadequate—as noble Lords have already made clear, that seems likely in many cases.

I broadly support the amendments of the noble Lord, Lord Sharkey and Lord Marks, and will revert to one aspect to which I referred in the next group.

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[Lord Keen of Elie]

I acknowledge the noble Baroness’s expertise in these areas as a non-executive director of Thompsons Solicitors, and her knowledge of the claims culture that has built up. With respect, in carrying out our work, we looked at the behaviour of the insurance industry in this context. Of course, the insurance industry can operate as an intermediary because, where the claims arise, it passes on the costs to the consumer by way of increased premiums. There have been instances in the past where insurance companies have passed on details of their own insurees’ claims to third parties and that has been exploited. I was quite open earlier in saying that we acknowledge the contribution of a number of different parties to what has developed into an unacceptable claims culture. That is what we are seeking to address in this Bill.

Can I continue just a little further in that context? The first group of amendments from the noble Lords, Lord Sharkey and Lord Marks, proposed that compensation for pain and suffering should be determined by reference to the Judicial College guidelines. Indeed, the second set of amendments proposed to place the tariff amounts into the Bill rather than in regulations made by the Lord Chancellor. All those figures would be significantly higher than those proposed by the Government—indeed, more in line with the amount currently paid out by claim.

I understand that noble Lords feel that the proposed tariff amounts are too low, but we continue to be concerned about the high number and the high cost of these claims in general, and the impact of that on the consumer. Therefore, we have to take a policy view as to how we can disincentivise not just fraudulent claims but what I would call unmeritorious claims—very minor and exaggerated claims. Our view is that it is right to set the tariff through regulations, which will help to control those costs and ensure greater certainty to both claimants and defendants when they come to deal with these claims, remembering that the vast majority of these claims never reach court anyway. They are dealt with before they ever arrive at the door of a court. In addition, we consider that a tariff will provide the flexibility required to change the tariff amounts, in reaction not just to inflation but to changes in the market, if I can gently call them that. We know that we are dealing with a marketplace; it is extremely inventive and can rise again phoenix-like from any statutory provision that we bring forward.

Therefore, we are going to have a tariff of predictable damages, albeit for those who suffer injury with a duration of up to 24 months. That is a relatively minor personal injury, but not one to be dismissed—and we do not seek to dismiss them. The relevant tariff will then be applied. It will be far simpler for someone to take their claim forward and, of course, we then have in place the requirement for an independent medical expert report, albeit in circumstances of dealing with subjective complaints of injury, as the noble Lord, Lord Sharkey, acknowledged. They can be very difficult to determine. If someone comes forward with symptoms, on the basis of a subjective assessment, a report can be made, but it can be very difficult to determine whether those subjective complaints are well based. Indeed, as the noble Earl, Lord Kinnoull, observed, there are claims management companies that would encourage someone to come forward even if he had not suffered any symptoms so far, in the belief that something might emerge in due course. That is why we have taken that approach, albeit we have allowed for the judiciary to have input so that it can, in appropriate or exceptional circumstances, increase the tariff award by up to 20%.

[Lord Marks of Henley-on-Thames]

I just wanted to make this point, but because of the noble and learned Lord’s plea I have perhaps left it a little late, as he has left the question of the figures. He made it clear that a political judgment was made in reaching these figures. The noble Lord, Lord Faulks, asked for clarification that the Judicial College guidelines, on which we rely, were merely an extrapolation from judges’ awards. However, as I expect the noble and learned Lord will accept, there is an element of circularity here because the judges reach their decision as to what is appropriate invariably after having the Judicial College guidelines cited to them, so they feed on themselves and are therefore a fairly carefully worked-out set of figures into which there could be political input.

[Lord Keen of Elie]

With respect, as the noble Lord outlined, they are self-perpetuating figures. Therefore, although we have regard to those guidelines when coming to a view as to where the tariff should be set, that was only one element in deciding the appropriate levels for the tariff itself.

I shall turn for a moment to the amendment proposed by the noble Lord, Lord Beecham, which would provide the court with complete discretion with regard to any percentage increase of exceptional circumstances. We do not consider that that is an appropriate way forward. It would simply lead to an increase in litigation and in the claims culture, so that is why we feel that there should be an appropriate limit on how any exceptional circumstances can be dealt with by the court.

In that context, I should point out that the tariff system is not entirely a novelty. Other European jurisdictions faced with the same claims culture and the same racket, as some people have called it, have introduced tariffs as well, or tables of predictive damages. That includes Italy, Spain and France. In due course both Houses will have the opportunity to debate the details of any regulations that are introduced to put forward the appropriate figures for the tariff, which at present we consider should be in the regulations, if only for the purposes of flexibility.

Again, I want to emphasise that this is essentially a matter of policy to deal with a very particular problem. It is a political decision; it is not one that we consider is for the judges; it is one that is ultimately for the Lord Chancellor to deal with in his capacity as a Minister. It is in these circumstances that I invite the noble Lord to withdraw the amendment.

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[Lord McKenzie of Luton]

My Lords, this is a very straightforward amendment. We know that legal costs are unrecoverable in the small claims court, and the increase in the small claims limit creates real problems. The amendment would at least provide for the courts to allow an award of costs in respect of the provision of a medical report. That is important, because whiplash claims cannot be processed until a medical report is available, and the amendment would facilitate that in circumstances where it would otherwise be difficult for claimants to obtain one.

[Lord Marks of Henley-on-Thames]

My Lords, I have three amendments in this group: Amendments 27, 47 and 52. Amendment 27 seeks a review of the small claims limit. We say that the provisions of the Bill cannot be satisfactorily considered unless at the same time the Government are prepared to discuss what will happen with the small claims limit.

The proposal is that the small claims limit will rise to £10,000 and to £5,000 in these cases, and that will effectively exclude all the whiplash claims on this tariff, with the claimants being unable to recover costs, apart from the very limited fixed costs. If that goes ahead, there will be no legal representation in respect of nearly all whiplash claims. Of course, that will not be limited to fraudulent claims; it will penalise genuine claimants as well.

The reason why there will be no legal representation is that, essentially, the vast majority of these claims are dealt with on conditional fee agreements whereby no fee is paid unless there is recovery. If there can be no costs recovery, even the fixed costs allowable under the protocol, there will be no legal representation. It looks very much, therefore, as if the purpose of the damages sections of this legislation is to wipe out these claims indiscriminately—fraudulent or genuine. There are two swipes. We dealt with the last swipe—cutting the damages to a level whereby, in many cases, it is simply not worth claiming—and changes in the small claims limit would effectively remove the chance of getting a lawyer to work on a conditional fee agreement. We believe that there should be a review of the small claims limit, and we said in our Amendment 27 that the provision may not be brought into force until the Civil Procedure Rule Committee has reviewed the limit of the small claims track for personal injury whiplash claims and published its decision.

Amendment 47 comes back to the question of recoverability of medical reports. It ought to be perfectly obvious that a successful claimant can recover the cost of securing a compulsory medical report or what is termed in the Bill,

“other appropriate evidence of an injury”,

even in the absence of a rule that the claimant can recover other fixed costs. When I raised this point at Second Reading, the Minister said that there would be such recovery. I quoted the impact statement showing that all successful claimants would have to pay the £216 for the medical report. The Minister said no, that was not right and the savings calculated that formed the basis of what I alleged were calculated on the basis of claims avoided, not of all claims. The Government were assuming that a successful claimant would recover the £216—which is £180 plus VAT—in respect of medical reports. At the moment, I can see no provision for that. The Civil Procedure Rules relating to small-claims track cases restrict awards of costs, but by exception they permit, at the discretion of the court, an award of limited costs for experts; but that does not make such costs payable as a matter of course, only as a matter of concession. We seek to have this matter made clear and Amendment 47 is a simple and secure way of ensuring that.

Amendment 52 is a further probing amendment: probing in the sense that, at Second Reading, the Minister expressed considerable sympathy with the idea of having a new protocol for small claims. The existing pre-action protocol for low-value personal injury claims in road traffic accidents came into force in 2010, and it has been kept up to date since. It introduced a simple low-cost way of pursuing claims, generally through lawyers acting on conditional fee agreements—often “CFA lite”, as they are called—whereby lawyers effectively guarantee that there will be no liability on their clients at all to pay fees, because under the existing protocol they will recover the fixed costs from the defendant’s insurers, which they are able to do. The protocol has its faults, not least—some would argue—that the protocol has of itself increased the number of whiplash claims, including the number of fraudulent claims. That is partly because it is very computer-based. It works on the basis of the portal: generally speaking, everyone has to use the portal; the claims are notified and the insurers respond through the portal. There is very little personal checking of what is in fact happening to such claims.

It is also suggested that, arguably, the number of claims settled by insurers without proper investigation has increased. That is for the simple commercial reason that insurers prefer to pay small claims and fixed costs rather than contest cases outside the protocol. That is a danger in relation to all of these proposals. The Government have not sufficiently considered that insurers will find it easier to settle smaller claims under the tariff than to settle larger claims under the Judicial College Guidelines, as they do now, a point made by the noble Baroness, Lady Berridge.

However, for all its faults, the protocol has increased access to justice for genuine claimants. The concern that this amendment is designed to address is that because the protocol does not apply below the small claims limit and the small claims limit is going to rise, there has to be a parallel protocol for unrepresented claimants that is easy to navigate. Our amendment describes that as having,

“the objective of ensuring that the procedures for claimants pursuing such claims are simple and readily understandable for claimants who are not in receipt of legal advice and representation”.

That is the purpose to which the amendment is directed.

[Baroness Berridge]

My Lords, I have added my name to Amendments 27, 47 and 52, to which the noble Lord, Lord Marks, has referred, which relate to some of the most fundamental points in the reforms. They involve the procedure which will exist for genuine claimants through the small claims track and/or the portal.

I am saddened but grateful to my noble and learned friend the Minister to learn that it is not an unintended consequence of the Bill that genuine claimants will be caught. It is an intended consequence of the Bill, so there is a high onus to ensure that access to justice is ensured for genuine claimants.

The noble Lord, Lord Marks, referred to no legal representation but, having worked in what was then called small claims arbitration I know that defendants are usually legally represented. In Scotland personal injury claims, which are generally more complex, are outside its equivalent of the small claims procedure because of the asymmetry of the relationship in the small claims track between the claimant and the defendant. Having represented defendants in those circumstances more times than I care to remember, I know that although district judges go out of their way to try to ensure that there is fair procedure, they cannot step outside the boundary of their judicial role. Invariably, therefore, as the legal representative of the defendant, you know that you are at an advantage.

It is important to remember that, on the figures I have been given, 40% of people who buy fully comprehensive insurance do not also buy legal expenses insurance. Therefore, in order to recover their personal injury losses, their uninsured losses, and their often considerable excess losses—which can be about £500—genuine claimants pursuing personal injury losses, more often than not, will be litigants in person using the small claims track or the portal.

On the claims portal which has been mentioned, I know that a working group at the Ministry of Justice is looking at the new portal which will ensure that litigants in person have access to a streamlined procedure.

At the moment, however, you are within the claims portal only if liability is admitted. Some 75% of insurers have apparently signed up to pass on premiums so, like claims management companies and lawyers, we have good, exemplary and not-so-good companies. Unfortunately, with unrepresented claimants, there is now an incentive for certain insurers to deny liability because once they do so, the case comes out of the portal. It is then for a defendant insurance company to deal with a claimant—precisely the asymmetry of the Scottish situation. We have talked a lot about cold calling. Imagine being in that situation as a claimant trying to recover personal injury losses and an excess. You are busy, you are working and nobody is there to advocate between you and the defendant insurance company. That is a worry in relation to how the current portal operates.

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[Baroness Berridge]

I rise briefly to speak to the amendments I have in this group, which refer to a report by the FCA as well as a report being laid before Parliament.

It is important in this context to look back at Second Reading and the Government’s confession that the insurance industry had not done all it could to get on top of the issue of fraud. In some respects, on Second Reading one could have been forgiven for thinking that the problem of fraud was so great for the insurance companies that they were teetering on the brink of bankruptcy as it was such an urgent issue. Nothing could be further from the truth. A report from Direct Line Group, which is the largest insurance group that we have, shows profits for financial year 2017 of £610.9 million—a leap of 51.4% on 2016. Dividends were up 40.2%. In its interim report in 2017, one of the reasons it gave for that was fewer than expected bodily injury claims. We might argue for a long time about CRU figures, but Direct Line attributes its increase in profits to a decline in personal injury claims.

It is disappointing to those of us who are saddened and troubled by the effect on genuine claimants that there is no proper mechanism in the Bill to ensure that the £1 billion of savings from claimant payments will actually go to the motorists. The Government are saying that that is the Bill’s overall intention. In light of the scale of the fraud that the insurance industry would like us to believe, it is disappointing that it has not invested more of its resources into controlling this fraud because it is a societal issue that affects culture, as opposed to the profits that I have just outlined.

There is a particular legal problem, though, on which I hope the Minister can help us. Many insurance companies are no longer mutuals; they are listed on the stock exchange, with all its reporting requirements and requirements for directors to take into account their shareholders in the payment of dividends. How is that circle going to be squared? You have directors with an obligation to shareholders. They make cost-benefit savings, but they are under pressure either to pay down debt, as some have with some of their profits, or to pay out dividends rather than decrease the premiums they are charging to motorists.

There is a further issue with insurance companies, which is that they have enjoyed bumper savings from the implementation of the Jackson fixed-cost reductions and the LASPO changes that were introduced in April 2013. I am grateful to a fee earner from the Vale of Catmose—and to Thompsons Solicitors—who pointed out to me that insurers have saved at least £8 billion in claims costs between 2010 and 2016; the figure to date is around £11 billion. In spite of this, premiums have continued to increase relentlessly. She said the average premium has gone up from around £385 in the second quarter of 2013 to £493 in the last quarter of last year, according to the ABI’s own premium tracker—an increase of 28% since the LASPO changes.

There have been inordinate savings before that insurers have not passed on as reduced premiums. It may be as a result of being legal entities, as I have described, that they are under pressure from their shareholders to pay out bumper dividends instead of reducing premiums. There needs to be something more effective in the Bill to ensure that, after the Government introduce these changes, insurance companies will be held strictly to account and will pass on the savings they will undoubtedly make.

There is a laissez-faire attitude that, as half the market uses price-comparison websites, these savings will be passed on, but it does not always come to pass. It is ironic that, after the Second Reading of this Bill, we received the message that the Commons had passed the Domestic Gas and Electricity (Tariff Cap) Bill for meters. That clearly shows that, in some circumstances, the market does not provide the savings to consumers that we envisage. The Government need to ensure that savings are passed on and there is a strict mechanism in the Bill to that effect.

[Lord Marks of Henley-on-Thames]

My Lords, I first speak to Amendment 53 in this group, which deals with passing savings to insurers on to the public. Our amendment seeks an annual review by the Lord Chancellor of the extent to which insurers are passing on those savings to their policyholders. It is common ground that the purpose of this part of the Bill is to reduce fraudulent claims and to reduce the cost of all claims. This has become particularly apparent here, for claims both fraudulent and genuine. Savings are to be passed on to insurers that will pass those savings to their policyholders. The Government rely on the letter written to the Lord Chancellor in March, in which the insurers said that they would,

“publicly commit to passing on to customers cost benefits arising from Government action to tackle the extent of exaggerated low value personal injury claims”.

At Second Reading, my noble friend Lord Sharkey pointed out that it did not define precisely what “cost benefits” were, nor did it commit to passing on all savings or even all cost benefits made.

We want to see that all savings are in fact passed on. Our amendment is intended to ensure that the Government do better than simply relying on that letter. Far be it from me generally to accuse the Government of naivety but, generally speaking, a letter of intent in that form would not convince many in commerce that the intent was in fact going to be carried out. I believe that a review by the Lord Chancellor and an obligation to report to Parliament would increase greatly our chances of having that stated intent carried out. The reason that we press for the involvement of the Lord Chancellor is that this is a political decision and political action and it seems to me that a political response is required. The purpose of this group of amendments—and ours is consonant with that purpose—is to encourage the insurance industry to stick to its promise, and indeed to do better, to make sure that all savings are passed on; and, because of the report to Parliament, to enable the Government and Parliament to consider reviewing the legislation and/or penalising the insurance industry by imposing some kind of levy, tax or other measures if it fails to keep up to the mark on this.

I will also speak to Amendment 54 in this group, which is directed at cold calling. If the real mischief at which this part of the Bill is directed is fraudulent and exaggerated claims, then cold calling is undoubtedly the chief instrument by which that mischief is done. Sometimes, in discussing this, we have not looked at the fact that these fraudulent and exaggerated claims in fact come at three levels. At its worst, perhaps, it involves faked or staged accidents. These calls that say, “We understand that you have had an accident that was not your fault”, when no such accident has ever happened, are an invitation to the practice that is most invidious, and which we know happens, of accidents being deliberately staged, sometimes by people who develop a real accident involving innocent motorists crashing with them in order to mount claims. The second is fake injuries, where there is a real accident but the injury is faked altogether and a claim is made. The third is exaggerated injuries. The practice of cold calling makes all three types of dishonesty worse and we really have to get on top of it.

The first part of our amendment would mandate the Lord Chancellor to carry out an annual assessment of the effect of cold calling on the prevalence of fraudulent whiplash claims. The second part would compel the Lord Chancellor, if he were satisfied that it would significantly reduce such claims, to ban cold calling and to ban the commercial use of any data obtained by cold calling. That second part is directed at the fact that it is very difficult to legislate against cold calling from abroad but that, if you legislate against the commercial use of data, you do catch UK corporations or individuals who are using such data to pursue these fraudulent claims. The amendment is not specific to claims management companies. I mentioned earlier the interest that car hire companies and car repair companies have in pursuing these claims. They can offer to pursue personal injury whiplash claims as an add-on to sell their other services.

This is a probing amendment in a sense in that the Financial Guidance and Claims Bill, as mentioned by the noble Lord, Lord McKenzie, covered claims managers and defined claims management services quite widely. However, we are not convinced that that would achieve our object of banning the use of cold calling for other purposes or by other outside companies or that it would cover the use of cold calling in its widest sense.