Legal Aid, Sentencing and Punishment of Offenders Bill

Debate between Lord Neill of Bladen and Lord Bach

Wednesday 1st February 2012 Lords Chamber

[Lord Neill of Bladen]

I support this amendment. The practice that it outlaws seems to be absolutely disgraceful, with an insurance company being paid by its own side—by the defendant—and then approaching the plaintiff to try to do a cheap deal with him for the benefit of the defendant. It seems to me that the conflict of interest is so gross that it ought not to be permitted at all. I am a little surprised by the words in the amendment, which mention knowing that the plaintiff is represented, because I am not quite sure how the amendment would cover a situation where the plaintiff had no representation. When thinking about how one would refine the language, I think one might consider taking out that qualification, because, with a general ban on this practice, your Lordships would simply agree with the amendment.

[Lord Bach]

My Lords, we welcome Amendment 164 in the name of the noble Lord, Lord Thomas of Gresford, and Amendment 164ZA in the name of my noble friend Lord Dubs. I also welcome the remarks of the noble Lord, Lord Neill of Bladen.

Amendment 164 is really about motor insurance and motor accidents. All Members of the Committee will agree that motor insurance is a social good. It is unique among financial service products in that it is not just necessary but carries with it the coercive powers of the law. As we all know, failure to insure a motor vehicle is a criminal offence with a fixed penalty of having the vehicle wheel-clamped, impounded or destroyed or facing a court prosecution and the imposition of a maximum fine.

That is all well and good and we all agree with that philosophy, but the private industry that delivers this social good is, as has already been said in this short debate, frankly deeply dysfunctional at present. That is perhaps an understatement. Its protagonist, the road traffic personal injuries sector, which comprises 75 per cent of all litigation, has developed deeply dysfunctional behaviours too. The arms race between road traffic personal injury lawyers and the insurance industry is completely dysfunctional.

The Transport Select Committee in another place has studied this twice in the past year. My right honourable friend Jack Straw has led a campaign to fix these structural issues in a market that is very flawed. We have seen the rise of an industrialised road traffic accident personal injury market, aggressively marketed as though it were a consumer good and operated a bit like a sweatshop, with non-lawyers hired at cheap rates to process hundreds of thousands of claims a year. This number is still growing at a startling rate.