Civil Liability Bill [HL]

Lord McKenzie of Luton Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Tuesday 15th May 2018 Lords Chamber

Moved by

[Lord McKenzie of Luton]

78: Clause 8, page 9, line 21, leave out “, in the opinion of the Lord Chancellor,”

[Lord McKenzie of Luton (Lab)]

My Lords, I beg to move Amendment 78 and shall speak to our other amendments in the group: Amendments 82, 83, 85 and 80A. I should stress that, like much else that we have debated over the past two days in Committee, these are probing amendments. Amendment 78, together with Amendment 77, just debated, strengthens the role of the expert panel in setting the discount rate. Although the Bill provides that the Lord Chancellor must consult the expert panel, nothing in the legislation provides a link between the panel’s report and the Lord Chancellor’s final version on the discount rate after each review.

Amendment 82 removes paragraph 3(4). It is this provision which gives the Lord Chancellor unfettered discretion when setting the discount rate, and we believe it should be removed. It has been pointed out—a point made by the noble Lord, Lord Cromwell—that the Lord Chancellor has a conflict of interest when deciding the discount rate, as the Government are a defendant in many high-value claims. This would constrain the Lord Chancellor’s involvement. Perhaps we can hear from the Minister on that point.

Amendment 83 would ensure that the Lord Chancellor is not influenced by any other external issue. The Bill provides that, in addition to the advice given by the expert panel, the Lord Chancellor can take account of other anecdotal evidence on investment behaviour. Amendment 83 would prevent that.

Amendment 85 deletes the Bill’s provision that does not limit the factors which may influence the Lord Chancellor when making a rate termination. This is an extremely wide power. Perhaps the Minister can tell us why it is considered to be necessary and give us examples of how it might be used.

Amendment 80A would remove the provision which allows that the investment of relevant damages involves,

“more risk than a very low level of risk”.

I recognise that this is a fundamental issue, and we offer it at this stage as a probe. In doing so, I would like to share some of the advice that we got from APIL, which said:

“The first thought of someone who receives compensation following a catastrophic, life-changing injury is not ‘how can I make the most of this fantastic windfall?’. It is instead ‘how can I eke out my compensation payment to make sure it lasts long enough to look after me and my family for the rest of my life?’ Or ‘will my compensation payment keep pace with inflation in the long term?’”


Injured people need a fair system which recognises the fact that people with life-changing injuries should not have to gamble with the compensation which is carefully calculated to last for the rest of their lives. The fact that many people are so risk averse that their compensation investments may not even keep up with inflation is often overlooked.

They are right to be risk adverse. The compensation they are given is all they will ever have. When undercompensated, they survive—rather than live—in fear of what will happen when the money runs out and cannot see a way forward. Damages must, therefore, be calculated on the assumption of very low risk investments and the system should be reviewed on a regular basis. This is an issue of need: the actual concrete needs of people who have been injured through negligence must be met in a fair and just 21st-century society.

The basis of the Government’s legislation is that claimants should invest in “low risk” rather than “very low risk” investments. It relies on analysis from the Government Actuary’s Department and, in particular, the outcome of an assumed investment strategy based on a portfolio of “low risk” investments.

We understand from the Ministry of Justice that portfolio A forms the basis of the Government’s thinking. An investment strategy which relies heavily on hedge funds and equities cannot possibly be considered “low risk”.

In addition, the GAD analysis has identified that a significant number of claimants would not receive 100% compensation under the favoured model: they would have a 30% chance of being undercompensated by 5% or more if the discount rate were set at plus 1%; they would have a 19% chance of being undercompensated by 5% or more if the discount rate were set at plus 0.5%; they would have an 11% chance of being undercompensated by 5% or more if the discount rate were set at 0%.

Where does that leave the principle of Wells v Wells? Is that still the Government’s thinking and, if so, how is it consistent with that data?

The proposal by the Government to move from “very low risk” to “low risk” is inherently unfair for claimants and it is fairness to injured people which has to take precedence here. Nothing has changed since Lord Scarman said in Lim Poh Choo v Camden and Islington Area Health Authority:

“There is no room here for considering the consequences of a high award upon the wrongdoer or those who finance him. And, if there were room for any such consideration, upon what principle, or by what criterion, is the judge to determine the extent to which he is to”,


be supported on the grounds of compensation payable? How does the Minister respond to that point?

It is, surely, the duty of society to ensure that vulnerable people are treated fairly, according to their needs. In such a society, people whose lives have been shattered by negligence should never be put into the position of having to take chances with their compensation on a volatile stock market. Someone who has been through probably the worst thing ever to happen to him should be allowed to be a risk-averse, safe investor. The person whose life has been shattered because someone else was negligent should not have to worry about whether his funds will run out before he dies.

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I appreciate that these were essentially probing amendments and, at this stage, I invite the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for that very detailed reply and all other noble Lords who have spoken in this debate. On a small point of detail, I think the noble and learned Lord referred to 80% hedge funds. I do not think that is the figure I mentioned, but even at 18% it seems surprisingly high—but there we are.

One outstanding issue is that of how those who are compensated actually make their investments. I draw a parallel with the pensions system. We have just spent quite a long time in this House and at the other end looking at default arrangements for people who have a pension pot and want to transfer it or cash it in on some basis. Encouragement to try to get those individuals to take advice of one sort or another is exercised quite extensively. I raised the same point in relation to people receiving compensation for injury and damages. What happens when they get the cheque? Is there any encouragement for them to get independent guidance on where they should get such advice from? That is still a bit of a mystery to me, even after the debate. I do not know whether there is anything more the Minister can say on that point. The presumption is that individuals will make their own arrangements with presumably regulated advisers. But what about those who do not? What is the process and system that encourages them to avail themselves of investment advice?

[Lord Keen of Elie]

I do not know whether the noble Lord wants me to respond to that but I will, very briefly, if I may, with the leave of the House. Where you have major claims for catastrophic injury, the lawyers involved for the claimants are highly sophisticated. One clear message that I received when discussing this with claimants’ lawyers was that they are concerned not only with the processing and pursuit of the claim itself but with establishing a framework within which the claimant will be able to live. I imagine that almost invariably involves the provision of suitable investment advice, albeit no one is obliged to accept it.

[Lord Faulks]

My Lords, in practice, when these cases come before a court, particularly where there is a party who lacks capacity, a judge, before approving one of these orders—they have the right to approve or disapprove a settlement—must be satisfied that appropriate advice has been taken on the split between periodical payments and a lump sum and that, generally, it is a satisfactory settlement from the court’s point of view. If they are subject to the Court of Protection, the court will then be able to manage investments according to the best interests of the protected party. If I may say so, the noble Lord has a good point on what happens to those who do not need the approval of the court or who are outside the protected party, and who are like anybody else who comes into a large sum of money in any other context. They will be well advised to take advice: some do; some, I fear, do not.

[Lord McKenzie of Luton]

I am grateful to the Minister and to the noble Lord for that education and further information. I still take away the point about where those who do not take advice end up. There is a difference between people receiving compensation for damages—where in most instances it is a one-off arrangement to last them for the rest of their life—and somebody who wins the pools and has a stash to invest, which they may do wisely or foolishly.

The genuine point is this: it is important to be comfortable that people will be as encouraged as they can be to take advice—I know you cannot force them—and to know that any gaps have been covered in our deliberations on the Bill. That is particularly important in this era of scammers and cold-callers. We know the impact that they can have on people’s pensions and there is a real parallel here. Having said all that, I think I have probably said enough, and I beg leave to withdraw the amendment.

Amendment 78 withdrawn.

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[Lord Hodgson of Astley Abbotts]

My Lords, this is another “hurry up and get this thing done” amendment, as we discussed extensively earlier today, particularly on the group beginning with Amendment 58. During the course of the responses that my noble friends on the Front Bench gave in that debate and others, my horse was shot—not once but twice. Or at least it was wounded, so I will be very brief.

I suggest merely that as a Committee we agree that we wish to see the new system brought into effect quickly as possible. This amendment is designed as empower the Lord Chancellor to begin preparatory work on setting up the expert panel and putting it to work before Schedule A1 comes into effect. My noble friend Lord Hunt of Wirral, who unfortunately was unable to stay for the rest of the debate, has written to my noble and learned friend on the Front Bench about this, citing precedents of where it has proved effective in the past to get things moving quickly, and the Minister has acknowledged those particular suggestions.

I hope that the Government will work in parallel and not end-to-end, because that will enable us to shorten the period by bringing this new system into effect. The whole discussion around Amendment 58 was about the length of time that it could take. The quicker we can find ways to shorten the proceedings the better, and this amendment might take a couple of months off that procedure if we can get the expert panel in place now. I beg to move.

[Lord McKenzie of Luton]

My Lords, we support the thrust of this amendment. Matters would have been helped had there been a stand-in panel in the first place.

[Baroness Vere of Norbiton]

My Lords, Amendment 89 would allow the Lord Chancellor to establish a panel informally before the Bill has received Royal Assent. As we indicated in responding to earlier amendments, the Government share the objective of ensuring that the first review of the rate is begun and completed as promptly as is practicable. With that in mind, we have committed in response to the Justice Select Committee report not only to issue a further call for evidence to obtain any additional relevant information but to commission the Government Actuary’s Department to carry out further research and analysis.

The solution proposed in the amendment to the question of how to get the panel working at the earliest possible date is certainly imaginative, but it assumes that there will be a material difference in the time by which the proposed “shadow panel” and the “real panel” will be able to carry out that work. That is not necessarily the case. The panel will need evidence and analysis to carry out its work. That will take time. There are also the considerations that the process of recruitment should be in accordance with the principles of public appointments and that the review process must be open and transparent.

I am grateful to my noble friend for his suggestion, but I do not think that in a subject as sensitive as the setting of the personal injury discount rate I can accept it. I can, however, reassure him that the necessary steps will be taken to ensure that the first review of the rate following the passage of the Bill will be conducted as swiftly as possible, while also on as fully informed a basis as it possibly can be. In the light of this, I hope that my noble friend will feel able to withdraw his amendment.

Civil Liability Bill [HL]

Lord McKenzie of Luton Excerpts

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

Moved by

[Lord McKenzie of Luton]

6: Clause 1, page 1, line 14, at end insert—
“( ) Regulations may be informed by a review from time to time of relevant changes in motor vehicle technology and driving techniques.”

[Lord McKenzie of Luton (Lab)]

My Lords, this is a step back from the legal intricacies of the Bill to reflect on a wider issue. The problem that the Government identify is the high number and cost of RTA whiplash claims. Their policy objective and intended effect are to disincentivise minor exaggerated and fraudulent claims—that is, to bear down on costs by reducing compensation levels for all, and requiring medical evidence before claims are settled. The impact assessment records that the volume of RTA-related PI claims has remained fairly static over the last three years, with rising volumes of traffic, meaning that there are proportionately fewer fatal or serious accidents. It attributes this in part to improvement in vehicle design—for example, integrated seats and headrests. Yet the Department for Transport recorded, for the year ended September 2017, 27,000 killed or seriously injured, with 174,000 casualties of all severities.

Although there was a decrease in settled claims, attributable in part to LASPO reforms, financially settled soft tissue claims for that year totalled some 520,000, whether they were from whiplash or as a result of other road traffic accidents. What seems to be missing in this debate is any form of focus on a wider prevention agenda. It should be about not only reducing costs but avoiding the pain and suffering and sometimes life-changing injuries in the first place. Why are we not raging against the scale of all this, as well as chipping away at monetary compensation levels?

I should point out at this juncture my interest, set out in the register, as president of RoSPA, the safety charity, and am grateful to it for the information it provided. I shall instance just two developments which have the potential to make a difference. In-vehicle monitoring—telematics—is increasingly available in the UK. As noble Lords may be aware, these systems essentially monitor how, when and where a vehicle is driven. The system can provide in-vehicle alerts if pre-set parameters are exceeded. There are obvious benefits for crash reduction circumstances. At present, it is understood that take-up of a variety of different systems is ad hoc and the catalyst, particularly for younger drivers, is reduced insurance premiums. Would not a comprehensive national take-up campaign have a beneficial effect on the real reduction of whiplash, reducing not only costs but the actual medical effects and suffering?

It is understood that next week the European Commission will propose new regulations that will focus on the mandatory fitting of autonomous emergency breaking systems. It has been estimated by the EU new car assessment programme that AEB can prevent up to 38% of rear-end crashes and avoid 1,100 fatalities and 120,000 casualties over the next 10 years. Currently, about 21% of new cars fit AEB as standard. I hesitate to move into issues of the European Commission, but will the Government support those regulations, both before and after Brexit, if that is where we end up?

I am aware that this amendment may be seen as a bit away from the mainstream before us today, but I hold to my point that concerns over levels of compensation for whiplash should be about prevention as much as about having a fair and robust system of compensation. I beg to move.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

I thank the noble Lord for his contribution to the debate and I acknowledge the importance of looking more widely at issues such as road safety in the context of addressing the very issue that this Bill is intended to deal with.

On the question of the European Union regulations, in so far as they have direct effect before exit day, they will form part of retained EU law, and in so far as they do not have direct effect by that date, they will not form part of retained EU law. Going forward, it will be for our domestic legislatures to consider the appropriate steps to take with regard to such measures, and of course they will be conscious of developments in other jurisdictions when addressing that point. I am sorry to revert to an earlier Bill and its progress through this House, but I thought that I ought to address that point directly.

We recognise that the definition of whiplash injury is complex and that there is a need to reconcile the current legal understanding with an accurate medical definition that covers both injuries and symptoms. That is why we developed the definition of a whiplash injury, and the wider reform proposals, with extensive input from expert stakeholders, including medical experts, in order that we could come to a view about the appropriate definition for these purposes. In developing the whiplash reforms, we have considered the impact of improvements in vehicle safety. Indeed, developments in vehicle safety have been one of the features of the analysis and impact assessment that have been carried out. As the Government have mentioned on several occasions, it is surprising that the number of whiplash claims continues to be so high despite the significant improvements in vehicle safety over recent years, including the development of safe seats and head restraints which have had such a material bearing on safety in road traffic cases.

The amendment would enable the Government to take account of advances in vehicle safety and driving techniques when revising the definition in regulations. The noble Lord did not go so far as to incorporate the possibility of increasing numbers of driverless vehicles—but, looking further ahead, that is an additional development that we may have to take into consideration. It is crucial that we retain the ability to continue to amend the definition of whiplash in order to reflect all these developments, some of which may come along far more rapidly than we presently anticipate. That is why in the first instance we propose that the definition should be set out in regulations that can be amended and, in any event, allowing for the suggestion that there should be a more extensive definition in the Bill, it would be essential that there should be the means to amend that definition rapidly in response to changing conditions, and to do so by way of regulations.

When addressing changes in the definition, the Government would wish to take account of all relevant information, including that pertaining to matters of road safety, vehicle development and safety development—but we are not persuaded that this needs to be in the Bill as it is something that the Government would routinely do when addressing changes to the definition. I am persuaded that being able to amend the definition through regulations is an appropriate and sensible way forward, and I hope that that will give the noble Lord at least some comfort that the issues he raises will not be ignored going forward—and, indeed, could be accommodated by the present provisions of the Bill. I hope the noble Lord will consider it appropriate to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I am grateful to the Minister for a very comprehensive reply. I should say that looking to deal with the definition in the amendment was pretty much a peg on which to raise the issue that I did. The Minister prompted me on driverless vehicles. As it happens, I had half an ear to the television set in my office yesterday when I was drafting some of this, so I caught up on that debate. It certainly should feature in the future.

There is a broader issue here—I accept it is not for this Bill—about whether we could make a dramatic improvement to some of the casualty numbers by a comprehensive effort, particularly around some of the black box technologies. The insurance companies bear some of the costs of that at the moment. It may be that they should be asked to do more. What I am looking for here is a thorough, comprehensive focus. If we had the same intensity of focus on dealing with road traffic accidents that we have—dare I say?—on Europe, we might have made a real difference already. Having said that, I am grateful to the Minister for his response and beg leave to withdraw the amendment.

Amendment 6 withdrawn.

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[Lord Butler of Brockwell (CB)]

My Lords, I support this amendment. I, too, declare an interest as a regular cyclist and a member of the APPG on cycling. As has been made clear at all stages, the Government’s main aim in this Bill is to tackle what they perceive as the compensation culture, and in particular fraudulent and exaggerated whiplash claims. It should not be a by-product of that that vehicle road users, including cyclists, are penalised by measures designed for a completely different purpose.

Whiplash claims are brought by motor vehicle occupants, not by people riding bicycles or motorcycles or crossing the road. Nobody makes a fraudulent claim by throwing themselves off a bicycle or a motorbike or by jumping in front of a car. The point has been made to the MoJ that there is no evidence to suggest that fraudulent claims by vulnerable road users are an issue of concern—and, as far as I am aware, no evidence to the contrary has been provided by the Ministry of Justice.

Whiplash claims from cycle and motorcycle collisions are almost entirely unheard of. The mechanism of the typical injury sustained is, of course, different. People on bicycles tend to be injured by hitting hard surfaces—car bonnets or the road. They sustain fractures and injuries from those impacts. It is not at all likely that they would be making a fraudulent claim. Indeed, I think it is impossible to imagine that they would.

I support this amendment. I think that a Bill designed for whiplash claims should not accidentally spread its effect to vulnerable road users whose injuries are likely to be of a completely different nature.

[Lord McKenzie of Luton]

My Lords, we have Amendment 26 in this group. I thank my noble friend Lord Young for stepping in to the breach in place of the noble Lord, Lord Berkeley, and for the other contributions that have been made.

[Lord Keen of Elie]

We have not finished the previous group.

[Lord McKenzie of Luton]

I am sorry. I will speak to Amendment 23 only to congratulate my noble friend for stepping into the breach. I thank him and the noble Lord, Lord Butler, for speaking in support of cyclists. We are very happy to support their proposition.

[Lord Keen of Elie]

I am obliged to the noble Lord for supporting their proposition rather than their amendment—which, I venture, is entirely appropriate in the circumstances. Clause 1 goes out of its way to ensure that vulnerable road users such as cyclists or motorcyclists are not encompassed within the ambit of the provisions in Part 1 of the Bill. That has to be made absolutely clear. I entirely endorse the views expressed by the noble Lord, Lord Butler, as to the types of injury normally suffered by cyclists or motorcyclists. It does not tend to be of the whiplash variety, which is why we have ensured that they are not included in the terms of the Bill. In particular, as I say, Clause 1 expressly serves to exclude vulnerable road users of that type.

However, the point that the noble Lord made was more to do with a matter outwith the present Bill, which is the proposal to increase the small claims limit to £5,000 for road traffic cases. That is being mooted. Indeed, that increase was a factor in our approach to the whole issue of whiplash injury—but it was not limited to that. The proposed increase in the small claims limit will apply to all road users, including cyclists and motorcyclists. The Government’s reasons for seeking that increase are not simply limited to whiplash claims and the claims culture that has developed there but reflect the fact that, in our view, low-value road traffic accident claims—whether whiplash or otherwise—are appropriate for the small claims track and are capable of being dealt with in that track, whether they be for whiplash or other forms of road traffic injury.

In that context, I also note that we are developing, with expert input, the claims portal for these small claims so that claimants will find the system far more accessible. I simply seek to emphasise that the Bill does not embrace vulnerable road users such as cyclists. However, our reason for increasing the small claims limit for road traffic accidents in general is not limited simply to the view that that is a means of dealing with the whiplash claims culture; it reflects a wider view that low-value road traffic accident claims can appropriately be dealt with in the small claims track. Of course, where those claims are perceived to be complex, they can be moved from that track into the next track of judicial determination. In these circumstances, I invite the noble Lord to withdraw the amendment—albeit he acknowledges that it was tabled for probing purposes.

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Moved by

[Lord McKenzie of Luton]

26: Clause 2, page 3, line 18, at the end insert—
“( ) Nothing in this section, or in any amendments to the Civil Procedure Rules which increase the Small Claims Track Limit, prevents a court, in a case where a person suffers a whiplash injury, making an award of costs in respect of the provision of a medical report in support of that person’s claim.”

[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.

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[Lord Keen of Elie]

Trades unions’ experience is, essentially, filtered through claimant solicitors such as Thompsons, and those being consulted include representatives of both claimant and defendant groups—so that is being done. However, I would be perfectly happy to meet the noble Lord, and such representative groups as he may wish to bring to a meeting, to discuss the proposed increase in the limits on small claims. If he wishes to do that, I shall be perfectly content for him to contact my private office, and we can make suitable arrangements. At this time, however, I invite noble Lords not to press their amendments.

[Lord McKenzie of Luton]

My Lords, I beg leave to withdraw the amendment.

Amendment 26 withdrawn.

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Moved by

[Lord McKenzie of Luton]

43: Clause 6, page 5, line 31, at end insert—
“( ) The Treasury must make regulations requiring the Financial Conduct Authority, where it is the relevant regulator, to prohibit a regulated person, in the course of providing any claims management services (within the meaning of section 419A of the Financial Services and Markets Act 2000), from doing, or arranging or advising the doing of, an act mentioned in section 4(2).”

[Lord McKenzie of Luton]

My Lords, I shall also speak to our other amendments in this group. Amendment 43 requires that regulation made by the Treasury must require the FCA, when it is the regulator, to prohibit regulated persons from providing claims management services in advising, doing or arranging any of the acts prohibited by Clause 4 as regards settlement of a claim before a medical report is available. Many have spoken on this Bill and elsewhere about the conduct of claims management companies and how fleet of foot they can be in exploiting opportunities. These activities have been constrained by recent legislation. The FCA is to become a tougher regulator, transitional arrangements have been put in place and a charge cap has been enabled. However, we use this opportunity to get a comprehensive update on where regulation is or what is yet to be put in place for CMCs.

Amendment 44 refers to cold calling. We know that cold calling is often a prelude to some scam or nefarious activity, and there has been a range of activity to restrict such operations. The Financial Guidance and Claims Bill provides for a ban on cold calling for pensions, enables the introduction of a ban on other financial products and makes provision in respect of certain CMC activity but, for the avoidance of doubt, can the Minister tell us where these things stand across the board?

In our debates on the financial guidance body, exchanges took place about no cold calling in respect of personal injury claims by virtue of the involvement of solicitors in that activity. However, it was further suggested that people were finding a way around that. This is by way of a probe. Is all cold calling in respect of personal injury claims—be it by CMCs or otherwise—now prohibited?

Amendment 44 is one of several in this group which require a review of the activities of Part 1: in particular to ensure that savings arising to insurers are passed on to consumers—motorists. We know that this is particularly difficult. The accounts and activities of general insurers can be complicated and it is very difficult to identify a fixed starting point from which to do the analysis. A whole host of questions arise about how the distribution of any savings made should accrue across the range of consumers that face insurers.

There are questions about who might be the person in a particular organisation to have to certify annually that savings have been secured. Experience shows that if you simply have a process whereby someone has to sign off for the company that savings have been passed on and the policy complied with, it could well be delegated to someone who does not necessarily know exactly what has gone on. In all the variations trying to substantiate that savings are made and that what is promised under the legislation is being delivered, we may seriously think about regulation which requires the chief executive of each of the insurers to be the person held to account for the statement about the extent to which compliance with the requirement has been made.

I may return in a moment to speak to some of the other amendments in the group, but for the time being, I beg to move.

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[Lord Keen of Elie]

My Lords, clearly these amendments are directed primarily at two areas: first, the review or regulation of the effectiveness of these reforms and the supporting regulations and, secondly, the issue of cold calling. I will deal with each in turn. I am not going to go through the detail of each set because I understand that the force of the amendments is all in one direction on the first point. The amendments as drafted would require reports on these reforms to be published shortly after their implementation. Although I understand the reasoning behind them, I question how effective they would be in their current form. I appreciate, nevertheless, that these are essentially probing amendments and it is in that spirit that I address them.

As has been observed, the insurance sector has made it clear and very public that it has a commitment to pass on savings. Having made that commitment, insurers will be accountable for it in a highly competitive market. Insurers have pointed out how they have passed on to customers the benefits of previous government action to cut the cost of civil litigation without the need for regulation. The Government, of course, are intent on monitoring the reaction of the insurance sector to these reforms and will engage with it in that regard. If the industry as a whole sought to avoid passing on these savings, that would signal that the competitive nature of the market had changed. If that were to happen, I have no doubt that the Financial Conduct Authority and, indeed, the Competition and Markets Authority would wish to investigate.

Nevertheless, I hear the message from around the Committee about the need to put further discipline in place with regard to these savings, and that is a matter that we will consider. As I say, I appreciate what is intended here. The question is how we can effectively bring that about. We have to remember that the insurers are regulated by the FCA already. Oversight is in place with regard to their conduct. With all due respect, I take issue with my noble friend Lady Berridge about there being some conflict between shareholder interest and the interest of customers.

An insurance company requires to rely on its integrity in order to maintain its resilience as an insurer. Any board of directors that abandoned integrity in favour of a larger dividend would find itself not only in conflict with its regulator but, no doubt, in conflict with its own shareholders, who would not appreciate that sort of conduct either, given that it would simply undermine the capital value of their investment. Therefore, I do not believe that there is that conflict of interest at all.

The amendment put forward by the noble Lords, Lord Beecham and Lord McKenzie of Luton, would introduce a formal requirement for Her Majesty’s Treasury to keep under review the ban on cold calling, and the amendment in the names of the noble Lords, Lord Marks and Lord Sharkey, would introduce a formal requirement for the Lord Chancellor to review the effect of cold calling and the ability to introduce regulations for a ban on cold calling. Of course, a ban on cold calling in relation to claims management was introduced in the Financial Guidance and Claims Bill and was agreed by this House quite recently. As noble Lords will be aware, the Bill inserts a provision into the privacy and electronic communications regulations, which govern unsolicited direct marketing calls, to ban such calls in relation to claims management services unless prior consent has been given. The Government consider these to be robust proposals which will add to the package of measures in place for tackling unsolicited marketing calls.

With regard to the use of the material that is obtained, there is of course provision for regulation of the legal profession. The SRA has regulations in place for the acquisition and use of such data, so that matter is already regulated. However, I acknowledge the point made by the noble Lord, Lord Marks, about the difficulty of what I would term “regulating the unregulated”, where cold calling centres are based outside the United Kingdom. I am advised that it is possible to trace more than half the cold calls received in the United Kingdom to one place—essentially a factory—based in Pakistan. But it is fleet of foot: it changes its name and location on a regular basis. That is a formidable challenge and we are seeking to approach it by means of regulating, apart from anything else, the use of the material gleaned by those means.

The amendment put forward by the noble Lord, Lord Beecham, would introduce a formal requirement for the Treasury to make regulations requiring the FCA also to prohibit certain pre-medical offers—I think that that is also in the amendment. Again, we are of the opinion that the Bill deals sufficiently with that issue as well.

As I indicated, I have heard what has been said around the Chamber about the consideration of further measures to ensure that savings are passed on to consumers, and I will give that further consideration before Report. On that basis, I invite the noble Lord to withdraw the amendment.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for that detailed reply. I am sure that these are matters to which we will need to return at a later stage. One of the things that we were seeking to be sure about—and this is, perhaps, an issue that we share with the Lib Dems—is how extensive and how robust across the board are the prohibitions around cold calling. The noble and learned Lord mentioned the SRA. As I recall, when we were debating the financial guidance Bill at Second Reading, the SRA and its activities were held out as being a reason to ban cold calling for personal injury claims. But then one noble Lord in the debate said, “No, there are people getting round that by a number of means”. It is those sorts of issues that we want to be sure about, so that we can look across the piece and see that cold calling—so far as it can possibly be legally achieved within the UK—is dealt with. Having said that, I beg leave to withdraw the amendment.

Amendment 43 withdrawn.

European Union (Withdrawal) Bill

Lord McKenzie of Luton Excerpts

Committee: 8th sitting (Hansard - continued): House of Lords
Monday 19th March 2018 Lords Chamber

[Baroness Altmann]

My Lords, I rise to support the amendment and to point out to the Minister that it gives him an opportunity. I know that he and the Government care deeply about public health. This amendment gives him the chance to reassure the Committee, and the wider public, that the Bill will do no harm to the precious public health. It is supported by more than 15 medical organisations, and I thank the Faculty of Public Health for its very informative briefings.

The amendment deliberately uses the language of Article 168 of the Lisbon treaty, so there is a body of jurisprudence through which it can be interpreted. The UK can be proud of its high standards of public health protection, safeguarded by legislation, policy and practice. I hope that the Government and my noble friend will seriously consider accepting this amendment to help provide the reassurance that, if we leave the EU, we will do no harm to public health. The amendment places a duty not only on the Government and the devolved authorities but on the arm’s-length bodies that can so often be involved in the detail of public health standards. This Bill is where constitutional stability and certainty needs to be established within our legal system, so I hope that the Minister will respond positively.

[Lord McKenzie of Luton (Lab)]

My Lords, I welcome this opportunity to join with others on this important amendment in support of the noble Lord, Lord Warner. I draw attention to my entry in the register of interests as the president of the Royal Society for the Prevention of Accidents. I will focus on the importance of public health prioritisation in easing the extreme pressures on our A&E departments, in promoting, improving and safeguarding the health of the nation’s workforce and its productivity, and in preventing unnecessary burdens on society and families caused by unintentional death and serious injury.

Currently, an average of 14,000 people die every year in accidents, and accidents remain the biggest single killer of children and young people up to the age of 19. While the UK has made incredible strides over the past century in reducing accidents at work and on the road—giving the country the enviable safety records it has today—unintentional death and injury at home and at leisure is on the increase, with around 6,000 people being killed in their own home each year. In 2010, a total of £11.5 billion was spent by the health and social care sectors on fall-induced fractures alone. This will, of course, rise if today’s problems go unchecked.

Despite the overwhelming evidence that unintentional injury is one of the biggest public health issues facing society today, accident prevention is afforded woefully inadequate focus on the public health agenda. We need a major investment in falls prevention programmes in order to promote healthy ageing and thus ensure that older people are kept out of the health and social care systems for as long as possible, allowing them to enjoy later life to the fullest.

We also need to ensure that we are protecting the most vulnerable at the other end of the age spectrum: the under-5s. A disproportionately large number of young children visit A&E departments, while at least one child under the age of five is killed in an accident every week. This amendment will help as we strive to meet these challenges. It is my hope that it will encourage assessment of public health priorities, and of distribution of resources in line with this. Local authorities must be empowered to discover where their greatest health challenges lie, and properly assisted when they look to tackle them.

As for Europe, the accident prevention community in the UK has learned a lot from its colleagues on the continent, as they have learned a lot from us. RoSPA is a leading member of the European Association for Injury Prevention and Safety Promotion—EuroSafe—and also hosts the European Child Safety Alliance. It also continues to work with the European Agency for Safety and Health at Work in ongoing efforts to drive down occupational accidents and ill health. The latest Health and Safety Executive estimated cost to UK business of injuries and ill health from current working conditions stands at a staggering £14.9 billion, with 31.2 million working days lost each year. While there is still more to be done, much can be learned from the excellent workplace health and safety practice displayed by employers across the country—and, indeed, across the continent—as we look to reduce accidents that happen to people when they are in the home and at leisure.

It is to be hoped that this amendment will go some way to addressing concerns of an impending deregulatory agenda which has the potential to erode decades of research and creation of solid, evidence-based regulation that ensures that the population can work and live their lives unhindered by unintentional injury. While we hear much about the red tape of such regulation hindering business and productivity, we know that the opposite is in fact true: good, proportionate regulation is good for the workforce and good for business.