Oral Answers to Questions

David Ward Excerpts

Tuesday 16th December 2014 Commons Chamber

[Chris Grayling]

I am baffled by the attitude of the Labour party. The secure college will take troubled 16-year-olds out of prisons with iron bars and put them into a modern, supportive environment that is focused on education. My view is that we are much more likely to turn a troubled 16-year-old into an untroubled 16-year-old in a nurturing and supportive environment than we are by leaving them behind iron bars. I am astonished that the Labour party does not understand that.

[Mr David Ward (Bradford East) (LD)]

11. What steps his Department is taking to improve the regulation of claims management companies.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

A number of reforms have been made or are being made, including a new set of toughened rules to crack down on abuses, a new power to impose financial penalties on CMCs from later this month and extending the legal ombudsman’s remit to consumer complaints against CMCs from January 2015.

[Mr Ward]

Among other things, the bad behaviour of CMCs has contributed to car insurance premiums that are not only unacceptable, but unaffordable, particularly for many young people. Many have argued that the regulatory oversight of CMCs is simply too light. Does the Minister agree that, as the British Insurance Brokers Association has suggested, there is a strong argument that if the regulation were overseen by the Financial Conduct Authority, CMCs would have to abide by the FCA’s 11 principles of business, which would provide a more effective way of bringing down car insurance premiums?

[Mr Vara]

It is important that the hon. Gentleman bears it in mind that since 2007, when regulation began, licences of over 1,200 CMCs have been removed across sectors, and others have left the industry after the commencement of enforcement action. We have introduced tough measures. From later this month the regulator will reinforce its enforcement tools with a new power to impose financial penalties of up to 20% of a CMC’s turnover. Next month, from 28 January, we will extend the legal ombudsman’s jurisdiction to deal with complaints from clients dissatisfied with the service provided to them by authorised CMC’s. The legal ombudsman will provide a new avenue of redress for clients of CMC’s and will assist the claims management regulator in driving up poor standards and practices in the market.