Financial Guidance and Claims Bill [Lords]

Ruth George Excerpts

3rd reading: House of Commons & Report: 3rd sitting: House of Commons
Tuesday 24th April 2018 Commons Chamber

[Jack Dromey]

My hon. Friend is absolutely right. When a reputable company such as Jet2 makes the point that the consequence of this practice might be price increases and a reluctance among some hoteliers to enter into agreements, it is clear that innocent holidaymakers will pay the price.

It is not just travel companies that are suffering due to the large number of cold calls. Around 51 million personal injury-related calls and texts are sent by regulated claims management companies each year. The Association of Personal Injury Lawyers has long called for a ban on personal injury cold calls from CMCs, especially as solicitors themselves are already banned from cold calling. Ironically, only recently, the Justice Secretary said that there would be a “forthcoming ban on cold calling” when discussing personal injury claims. If the Justice Secretary believes that there is a forthcoming ban, why do we not act now and include it in this Bill? As Lord Sharkey said in the other place, the ban is necessary to deal with the “omnipresent” menace of cold calls. Baroness Altmann has said:

“People need protection from this nuisance now. They shouldn’t have to wait still more years for a ban....Direct approaches to people on their mobiles or home phones should have no place in the modern world of business.”

The Government, in the public interest, must accept the amendment to ban cold calls when this Bill passes.

[Ruth George (High Peak) (Lab)]

My hon. Friend makes an excellent argument for banning such cold calls. Does he agree that the banning of cold calling by claims management companies for personal injury claims would be a far more effective method of reducing costs for insurance and personal injury than the Government’s proposals, which are currently being considered in the other place, to limit the injury compensation due to innocent victims, as well as to those who are not innocent?

--- Later in debate ---

[Ellie Reeves (Lewisham West and Penge) (Lab)]

I want to speak to amendments 8 and 9, which, unlike new clause 4, would lead to an outright ban on cold calling by claims management companies.

Claims management companies make and send around 51 million personal injury-related calls and texts each year. Such calls are not only a nuisance; they exploit vulnerable people. It is worth reiterating that solicitors are already banned from cold calling in personal injury claims, but the fact that claims management companies are not risks bringing the sector into disrepute. Cold calling can generate the false perception that obtaining compensation is easy, even where there is no injury. It can put pressure on people to pursue unmeritorious or, at the worst, fraudulent claims, which they otherwise may not do. It may never have been someone’s intention to make a claim, but if they receive a text promising them thousands of pounds, it might seem very tempting.

There is an important context. The Government are proposing to reform compensation rules for whiplash claims and to increase the small claims limit in road traffic accidents from £1,000 to £5,000, and in public liability and employers’ liability claims from £1,000 to £2,000. The Government say that that is to cut down on fraudulent claims and to bring down insurance premiums. However, many, including myself, are concerned that that will have a significant impact on access to justice, with people not being able to access proper legal advice in such claims.

[Ruth George]

Does my hon. Friend agree that a total ban on cold calling, including from claims management companies, would be a much more proportionate response to insurance industry claims of fraud within claims management, and that that should be looked at before any action that will impact on innocent victims of road traffic accidents and employer injuries?

[Ellie Reeves]

I absolutely agree. Surely a better solution to this issue is to have an outright ban on cold calling in personal injury claims by claims management companies, which is exactly what amendments 8 and 9 would do.

New clause 4 gives the single financial guidance body the ability to advise the Government if it considers a ban on cold calling by CMCs to be necessary. If the Government receive such advice, the Bill gives the Secretary of State the power to impose such a ban. However, the Bill does not compel the single financial guidance body to give such advice in relation to cold calling; nor are the Government required to act if they receive advice.

Although the Government have promised decisive action from the outset, I am concerned that the Bill is filled with ifs, buts and maybes and still falls far short of a ban on cold calling. Amendment 8 would commit the single financial guidance body to advise on how best to implement a ban within 12 months of the Bill being passed, and amendment 9 would require the Government to act outright and impose the ban. A ban on cold calling commands support from over two thirds of the population. We must respond to that and strengthen the Bill by agreeing to amendments 8 and 9, to see through a complete and necessary ban on cold calling.

--- Later in debate ---

[Ruth George]

I will not detain the House for long. In a long afternoon of debate on financial guidance and cold calling since the ten-minute rule Bill introduced by the hon. Member for Stirling (Stephen Kerr), we have heard how important it is that so many people receive support and proper independent financial guidance. I welcome the work that has been done on both sides of the House, by Front Benchers and Back Benchers. As a member of the Work and Pensions Committee, I am glad that we have been able to contribute to the work that has gone into the Bill. I hope that Ministers will continue to listen to the arguments as they develop the Bill further when it returns to the other place.

We have heard in recent hours about people suffering from mental health problems. They are more vulnerable to people seeking to take their money, whether through cold calling and doorstep selling. As we have heard, mental health problems can be exacerbated by debt. I hope that the Government will consider widening the definitions of debt and of mental health crisis. I have constituents in High Peak who, unfortunately, even at a time of crisis and having attempted suicide, are unable to access mental health crisis support—in-bed support is not available, and there is even a waiting list for support in the community. I therefore hope that the Government will have as wide a definition as possible of people either receiving crisis care or on the waiting list to receive crisis care—I am sorry to say that there are waiting lists for crisis care. The definition should be extended to all debt.

Recently, I asked some parliamentary questions about the level of debt being recovered under universal credit and was sorry to hear that about 6% of current full-service claimants are paying 40% of their universal credit payments to cover third-party debts, leaving them with just 60% of a universal credit payment, which is already lower for many recipients than legacy benefits. Those people have already seen cuts and this is leaving them with even less to pay their debts.

As we heard from my hon. Friend the Member for Walthamstow (Stella Creasy), companies that provide consumer credit can be ruthless in hounding their customers and often contribute to mental health difficulties. In this era of rising household debt, we have nearly £200 million of consumer credit. Independent financial guidance and support are needed more than ever. I urge the Government to ensure that as many people as possible can access it.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.