These notes refer to the Compensation Bill [HL] as brought from the House of Lords on 27 March 2006.
COMPENSATION BILL [HL]
1. These explanatory notes relate to the Compensation Bill as brought from the House of Lords on 27th March 2006. They have been prepared by the Department for Constitutional Affairs in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.
2. The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.
3. The Compensation Bill contains provisions in relation to the law on negligence and breach of statutory duty, and the regulation of claims management services.
4. The explanatory notes are divided into parts reflecting the structure of the Bill. In relation to each Part, there is a summary and background section. Commentary on particular sections is then set out in number order, with the commentary on the various schedules included with the section to which they relate.
5. Notes on the effect of the Bill on: public expenditure; public sector manpower; cost to business and regulatory impact, follow the commentary on sections, as does a brief note on issues relating to the European Convention on Human Rights.
[Bill 155-EN] 54/1
6. The Bill is divided into 2 parts:
Part 1: Negligence and Breach of Statutory Duty
- Part 1 contains provisions relating to the law of negligence and breach of statutory duty.
Part 2: Claims Management Services
- Part 2 contains provisions relating to the regulation of Claims Management Services.
PART 1: NEGLIGENCE AND BREACH OF STATUTORY DUTY
7. Part 1 of the Bill contains provisions relating to the law on negligence and breach of statutory duty.
8. Under the current law, for a claim in negligence or for breach of a statutory duty involving a standard of care to succeed there must be a duty of care owed by the defendant to the claimant; a breach of that duty by the defendant; and loss or injury suffered by the claimant which is causally connected with the breach. Clause 1 concerns a particular aspect of the current law, relating to the second component: whether there is a breach of the duty of care.
9. The question whether there has been a breach of the duty of care involves two elements: how much care is required to be taken (the standard of care) and whether that care has been taken. The ordinary standard of care is "reasonable care"; and the question whether or not that standard has been met - whether reasonable care has been taken - is a question of fact for the court to decide, having regard to all the circumstances of the case. What amounts to reasonable care in any particular case will vary according to the circumstances. In some cases, what would be required to prevent injury of the kind suffered may be such that to demand it of the defendant would be to demand more than is reasonable.
10. This provision is not concerned with and does not alter the standard of care, nor the circumstances in which a duty to take that care will be owed. It is solely concerned with the court's assessment of what constitutes reasonable care in the case before it. It only affects statutory duties which involve a standard of care, such as those owed under the Occupiers' Liability Acts of 1957 and 1984. It does not extend to other forms of statutory duty, such as cases where there is an absolute statutory duty involving strict liability in the event of failure; cases which concern what is reasonable in a context other than carelessness; or cases where infringement of a right is actionable as a breach of statutory duty which does not depend on carelessness.
11. Part 1 also contains a provision to the effect that in claims in negligence or breach of statutory duty, an apology, offer of treatment or other redress shall not of itself amount to an admission of liability.
COMMENTARY ON SECTIONS: PART 1
Provisions relating to the law of negligence and breach of statutory duty
Clause 1: Considering a claim in negligence or breach of statutory duty
12. Clause 1 provides that in considering a claim in negligence or breach of statutory duty, a court may, in determining whether the defendant should have taken particular steps to meet a standard of care (whether by taking precautions or otherwise), have regard to whether a requirement to take those steps might prevent an activity which is desirable from taking place (either at all, to a particular extent, or in a particular way), or might discourage persons from undertaking functions in connection with the activity.
13. This provision reflects the existing law and approach of the courts as expressed in recent judgments of the higher courts.
Clause 2: Apologies, offers of treatment or other redress
14. Clause 2 provides that an apology, an offer of treatment or other redress shall not of itself amount to an admission of negligence or breach of statutory duty.
PART 2: CLAIMS MANAGEMENT SERVICES
15. Part 2 of the Bill sets out the framework for the regulation of claims management services.
16. The Better Regulation Task Force (BRTF) report: Better Routes to Redress published in May 2004 found that the "compensation culture" is a myth but that it is a damaging myth that needs to be tackled. The BRTF identified the activities of claims intermediaries as contributing to a 'have a go culture' and recommended that claims intermediaries should be subject to statutory regulation, if self-regulation did not work.
17. One of the concerns identified by the BRTF was that while there were established complaints mechanisms and bodies to help people who are unhappy with the way they have been treated by solicitors or insurers, there has been no clear-cut equivalent in the case of claims intermediaries. It has been suggested that as a result, more claims for redress have been brought against solicitors and insurers because there has been no regulatory way to proceed against anyone else.
18. The Government published a consultation and responses paper on the simplification of conditional fee agreements (CFAs) in June 2004 Making Simple CFAs a Reality which included a discussion of the widespread concern over claims intermediaries' activities and work underway to try to produce a self regulatory solution. The Government responded to the BRTF's report in November 2004 accepting the recommendation that regulation of claims intermediaries should be considered if self-regulation failed.
19. The proposed legislative framework is flexible and would allow the Secretary of State to designate a body to regulate claims management services, to establish a body to regulate (where he thinks that no existing body is suitable for designation) or to regulate himself. The Bill also provides the outline regulatory framework to authorise providers who would be required to comply with rules and codes of practice. The Bill also includes power for the Regulator to investigate unauthorised activities and to prosecute those who try to evade regulation.
20. If the Secretary of State designates a body to regulate claims management services he will retain oversight responsibility for the body. He will have the power to issue directions, provide guidance, require the body to try to meet regulatory targets and to provide information on its regulatory responsibility. It is anticipated that the regulation of claims management services would in due course be integrated into the proposed new regulatory framework for legal services set out in the Government's White Paper "The Future of Legal Services: Putting Consumers First" (Cm 6679).
COMMENTARY ON SECTIONS: PART 2
Clause 3: Provision of regulated claims management services
21. This section prohibits the provision of regulated claims management services by those who are not authorised, exempted from authorisation or subject to a waiver, or an individual acting otherwise than in the course of a business. Subsection 1(d) makes it clear that the prohibition does not apply to individuals who offer claims management services on a voluntary basis (for example a friend offering advice on a claim for compensation). It would, however, apply to voluntary or not-for-profit organisations (although not to individual volunteers providing their services through such an organisation).
22. Subsection 2 defines "authorised person" as a person authorised by the Regulator. This would also allow the Regulator to authorise claims management companies (as "person" also applies to a body corporate or unincorporate (Schedule 1 to the Interpretation Act 1978)). Thus employees or members of a company or other organisation would be covered by the authorisation granted to the 'parent' company or organisation for which they are providing claims management services, avoiding the need for specific authorisation of each individual (natural) person. This subsection also defines claims management services as "advice or other services in relation to the making of a claim". The claim may be for compensation, restitution, repayment or other remedy or relief in respect of loss or damage, or in respect of an obligation - whether pursued through the courts or by other means (for example the Employment Tribunals, Criminal Injuries Compensation Scheme or complaints about the mis-selling of financial products such as endowment policies). Only those claims management services that the Secretary of State prescribes by order under clause 3(2)(e) will be subject to regulation. The Secretary of State can therefore target areas that he considers to be at particularly high risk.
23. Subsection 3 gives examples of activities which constitute the provision of services (where they are connected with a claim). The list, which is not exhaustive, includes financial services (for example assisting with the purchase of insurance or loans); legal representation (for example acting on a claimants behalf in pursuing a claim); referring or introducing one person to another (for example referring a claim to a solicitor); and making inquiries (for example contacting witnesses in the course of investigating a claim). The provision of advice does not extend to the preparation or giving of evidence. For example, if a person were asked to give evidence in a personal injury claim (whether or not expert evidence) this would not amount to providing claims management services.
24. Subsection 4 sets out the circumstances in which, for the purposes of sub-section 1(d), an individual acts in the course of a business. Individuals acting in the course of employment or who otherwise receive or hope to receive reward (directly or indirectly) as a result of the provision of services will need to apply for authorisation unless they are exempt subject to a waiver. Individuals who are not acting in the course of a business will fall within sub-section 1(d) and will not need to be authorised.
25. Subsection 1 permits the Secretary of State to designate by order an existing individual or body to carry out regulatory functions, including:
- authorising persons to provide claims management services,
- regulating the conduct of authorised persons (for example by prescribing mandatory rules and codes of practice),
- other functions which are conferred on the Regulator by or under Part 2 of the Act (for example additional functions which the Secretary of State specifies in regulations under clause 8).
26. Subsection 2 sets out the criteria that must be met before the Secretary of State may designate a person as the Regulator. The Secretary of State must satisfy himself (under subsection 2(a)), that the individual or body is competent to carry out the regulatory functions. In considering whether a person meets the criteria, it is likely that the Secretary of State will take into account a wide range of possible factors including:
- an appropriate infrastructure,
- suitable internal governance arrangements,
- adequate financial and staffing resources,
- appropriate regulatory policies.
27. The Secretary of State must also satisfy himself that the proposed Regulator has made arrangements to ensure that there is clear separation between its regulatory functions and any other functions undertaken (such as representative functions). In addition, he must be satisfied that the proposed Regulator will promote the interests of persons using regulated claims management services in order to increase consumer confidence in the sector. This would include:
- setting and monitoring standards of competence and conduct for authorised persons (for example by prescribing rules of conduct and a code of practice);
- promoting good practice by authorised persons, particularly the provision of information about charges and other matters (such as the availability of free, alternative means of pursuing a claim);
- promoting practices likely to facilitate competition between claims management companies (for example by ensuring rules of conduct are not anti-competitive), which should result in more consumer choice and better value for money; and
- ensuring that consumers are protected (including putting in place a mechanism for handling complaints where consumers are dissatisfied with the service they have received).
28. Subsection 3 gives the Secretary of State the power by order to create a new body (for example a non-Departmental public body) which he may then designate as the Regulator. This power may only be exercised where the Secretary of State thinks that no existing body is suitable for designation under subsection (1).
29. Subsection 4 places obligations on the Regulator, including the requirement to comply with any directions given to him by the Secretary of State, and to have regard to any guidance or code of practice issued to him. The Regulator must also try to meet any targets set by the Secretary of State (for example targets relating to the handling of complaints). The ability to assess performance against targets would provide the Secretary of State with reliable information about the body's effectiveness as the Regulator. The Secretary of State could also require the disclosure of other information and reports. For example, he might request an annual report on the Regulator's performance, a copy of any business plan or annual budget estimate or information relating to a specific regulatory activity. The Regulator must not release information to the Secretary of State where disclosure would contravene other legislation such as the Data Protection Act 1998.
30. Subsection 5 requires the Secretary of State to lay before Parliament any code of practice issued to the Regulator.
31. Subsection 6 gives the Secretary of State the power to pay grants to the Regulator (for example to assist with the costs of establishing the new regulatory regime or subsidising operational costs). Grants may be subject to terms and conditions, including terms as to repayment.
32. Subsection 7 makes it clear that the powers and duties of the Regulator may be exercised or undertaken by others acting on his behalf or with his authority.
33. Subsection 8 makes it clear that the Secretary of State may by order revoke an individual or body's designation as Regulator. The decision to revoke designation would only be taken if the Regulator were persistently failing to carry out his regulatory functions effectively and efficiently, and after careful consideration of the circumstances that led to the failure.
34. Subsection 9 requires the Secretary of State to exercise functions of the Regulator if no other body or individual is designated, or as an interim measure until a new body is established.
35. Subsection 10 gives the Secretary of State the power to transfer by order a function of the Regulator to himself, either for a specified period or indefinitely. For example, if the designated Regulator failed to deal adequately with consumer complaints, the Secretary of State could transfer these functions to himself. This would ensure that the Secretary of State had the ability to protect consumers (without revoking designation) in the event that the Regulator failed to properly carry out particular functions.
36. Subsection 1 permits the Secretary of State by order to specify bodies (for example existing professional bodies) whose members may offer claims management services without the need for authorisation. This sub-section is intended to avoid the need for duplicate regulation. Where individuals providing claims management services are already subject to regulation by a professional body, which has in place appropriate rules and codes of conduct regulating the behaviour of its members and adequate provisions for investigating complaints, it is envisaged that they would be exempted from the requirement for authorisation by an order made under this sub-section. The exemption would apply only in so far as an individual was already regulated in the provision of regulated claims management services by their professional body. If they provided services that were outside the Regulatory ambit of their professional body, they would need to be authorised to provide those services.
37. Subsection 2 permits the Secretary of State to exempt by order other persons or classes of persons from the requirement for authorisation. Any exemption may be restricted or subject to compliance with specified conditions. Subsection 2(a) provides a power to exempt by order a specified person or class of person such as charities providing impartial advice to claimants. Subsection 2(b) gives a power to exempt individuals and bodies from authorisation in specified circumstances (for example where advice is being given in connection with a particular type of claim). Subsection 2(c) gives him the power to exempt persons or classes of person in particular circumstances.
38. Subsection 3 gives the Secretary of State the power to attach certain conditions to an exemption (for example he may require an individual or body to have regard to the Regulator's code of practice).
39. Subsection 4 makes clear that persons established or appointed by virtue of an enactment (such as statutory Ombudsmen) may provide regulated claims management services without the need for authorisation.
40. Subsection 5 defines "exempt". An individual is exempt if orders made by the Secretary of State under this section mean that he is not required to be authorised in order to offer claims management services, and therefore does not contravene section 3(1) by doing so.
Clause 6: Enforcement: offence
41. Subsection 1 creates an offence of providing regulated claims management services in contravention of section 3(1). Any person providing such services when not either authorised, exempt from the requirement for authorisation or subject to a waiver by the Regulator, and who is not an individual acting on a voluntary basis, would be committing an offence under this section.
42. Subsection 2 specifies the penalty for the offence. On summary conviction, the maximum penalty is 51 weeks imprisonment (six months until the relevant provisions of the Criminal Justice Act 2003 are commenced), a fine or both. For a conviction on indictment, the maximum period of imprisonment is two years. It is envisaged that sentences at the higher end of the scale would only be imposed for the more serious offences (particularly where the offence is repeated).
Clause 7: Enforcement: the Regulator
43. Subsection 1 gives the Regulator (or the Secretary of State where no Regulator is designated) the power to apply to the court for an injunction restraining a person from providing regulated claims management services if they are not authorised, exempted by the Secretary of State or subject to a waiver by the Regulator. This power would be used, for example, to stop an unauthorised claims management company from providing services to a consumer pending a prosecution under clause 6(1).
44. Subsection 2 gives the definition of court as specified in (1) as the High Court or a County Court.
45. Subsection 3 gives the Regulator the power to investigate whether an offence has been committed (for example investigating whether an unauthorised company is offering regulated claims management services unlawfully). Further details of investigatory powers are given in subsection (4) (see below). It also gives the Regulator the power to institute criminal proceedings relating to the offences in this part (i.e. offences in clauses 6, 9 and 10). This will allow the Regulator to take action directly, without relying on the involvement of the Crown Prosecution Service.
46. Subsection 4 gives the Regulator the power to require any person or body to provide information or documents for the purposes of an investigation into whether any of the offences in clause 6, 9 or 10 have been committed. These might be paper records relating to a claim, or electronic records
47. Subsection 5 allows the Regulator to apply for a warrant to search any premises where it is suspected that regulated claims management services are being offered or conducted without the Regulator's authority, to determine if an offence has occurred. Such application would need to be made to a judge of the High Court, Circuit judge or justice of the peace.
48. Subsection 6 grants permission for any documents (either paper or electronic) relating to the investigation to be copied by the Regulator. These could relate to the determining of whether an offence has occurred, or support any criminal proceedings that might result.
49. Subsection 7 clarifies that the reference to the Regulator in subsections 4 and 6 includes anyone authorised by him in writing, for example an investigator employed to investigate if an offence has occurred.
50. Subsection 8 requires the Secretary of State to make regulations that would determine the supporting evidence needed by a judge or justice of the peace to satisfy them that a warrant should be issued. This might include the reasons to believe an offence has occurred, the steps taken to procure the evidence needed, and any corroborative evidence available should the complaint stem from an anonymous source. The regulations will also detail the circumstances in which the powers in subsection 4 can be used (for example regulations may require a formal approach to be made requesting information and a period allowed for an individual to comply before the power to enter premises can be used or specify the circumstances in which the Regulator could obtain a warrant). Regulations may also specify conditions to be complied with when these powers are used (for example they may require that entry to premises can only be gained during office hours).
Clause 8 and The Schedule: Regulations
51. This section gives the Secretary of State the power to make regulations about authorisations under clause 4(1) and the functions of the Regulator. It also makes clear that transitional provisions may be included in regulations made under this section. The power to include provisions about the extent to which functions may be exercised in respect of matters arising before the commencement of a provision under this Part is intended only to give the Regulator a discretion to investigate complaints relating to an authorised person, where the subject matter of the complaint arose (or arose in part) before the person's authorisation.
- The Schedule - Claims management regulation
52. This schedule gives further detail about provisions that may be included in regulations made by the Secretary of State under section 8 (about the authorisation of claims managers and the functions of the Regulator).
- Waiver of requirement for authorisation
53. Paragraph 3 makes provision for the Regulator to waive the requirement for authorisation in specified cases or circumstances. The Regulator may only grant a waiver if the Secretary of State intends to exempt the person under section 5. Waivers may only be granted for a single period of no more than six months. In exercising the power to waive the requirement for authorisation, the Regulator might attach conditions such as requiring that due regard is given to the code of practice.
54. Paragraphs 4 - 6 specify matters that may or must be included in regulations about the grant of authorisations. The regulations must specify the procedure for applying to the Regulator for authorisation to provide regulated claims management services. Regulations may require the applicant, or any person who appears to the Regulator to be connected with the applicant, to provide relevant information or documents. The Regulator is only able to grant authorisation if he is satisfied of the applicant's competence and suitability to provide the kinds of services to which the application relates. In order to assess this, the Regulator is required to apply the criteria (and have regard to the matters) which are specified in regulations. The Regulator may consider the suitability of persons expected to be employed or engaged by, or otherwise connected with, the applicant. For example, he may require personal information about those individuals who control a company (such as Directors and the Chief Executive). The criteria that the Regulator must apply in assessing the competence and suitability of an applicant may relate to:
- proceedings in any court or tribunal
- proceedings of a body exercising functions in relation to a trade or profession (such as an existing Regulator or Ombudsman)
- financial circumstances (for example a requirement for capital adequacy or solvency)
- management structure (for example a description of roles including responsibility for decision making and financial controls)
- actual or proposed connections or arrangements with other persons (for example a parent company or subsidiary) which might compromise the Regulator's effective supervision of the applicant
- actual or proposed arrangements for training
- arrangements for accounting
- practice or proposed practice in relation to the provision of information about fees (for example information about charges to be made for the provision of claims management services, or information about free alternative means of pursuing a claim)
- arrangements or proposed arrangement for holding client's money (for example the requirement for a separate client account)
- arrangements or proposed arrangements for insurance
The list is not exhaustive. Regulations may also permit the Regulator to grant authorisation subject to terms or conditions, or grant applications only to a specified extent or in relation to specified matters, cases or circumstances. This will enable the Regulator to determine the scope of a grant of authorisation by limiting the authorisation to providing the regulated services in relation to a particular types of claim (for example personal injury); or by specifying what types of services an authorised person may provide (for example prohibiting an authorised person from handling client money).
55. Paragraph 7 specifically relates to regulations concerning fees. Regulations may enable the Regulator to charge fees and set out the consequences of failing to pay fees. Different levels of fees might be charged (which could depend on the business turnover) and the regulations may also permit the waiver, reduction or repayment of fees in specified circumstances. The Secretary of State has a power to prescribe or control the level of fees. The regulations may set out accounting and auditing requirements and make provision for the way in which income from fees might be used.
- Conduct of authorised persons
56. Paragraph 8 and 9 enable the Regulator to make rules for and issue a code of practice about the professional conduct of authorised persons. Regulations may specify the manner in which rules and codes of practice are to be prepared and published, and provide for consultation and approval by the Secretary of State. An authorised person's failure to comply with rules and/or a code of practice could be used as a basis for imposing conditions on, suspending or cancelling authorisations.
57. We envisage that rules would cover (for example) consumer protection (including handling clients' money, complaints procedures etc) registration requirements and procedures, advertising requirements, requirement to have indemnity insurance etc.
58. Codes of practice are likely to cover matters such as organisational standards, behaviours and competence.
59. Paragraph 10 requires regulations to provide for the Regulator to investigate complaints about the conduct of authorised persons. Such an investigation may lead the Regulator to impose conditions on a person's authorisation, suspend a person's authorisation or cancel a person's authorisation.
60. Paragraph 11 enables regulations to require an authorised person to take out professional indemnity insurance to cover any loss caused by his provision of regulated claims management services. Requirements about the level or nature of insurance cover may be included, together with provisions about the consequences of failure to comply. A failure to comply might result in the imposition of conditions, or the suspension or cancellation of authorisation.
61. Paragraph 12 may require the Regulator to establish a compensation
scheme to cover loss to consumers suffered as a result of the actions of authorised persons. This would only cover circumstances where an authorised person receives money on behalf of a client in settlement of a claim and the client is unable to obtain the money from the authorised person (for example because the authorised person is insolvent). The funding of such a scheme will not be met by the Government.
62. Regulations under paragraph 13 may permit or require the Regulator to take specific action for the purpose of assessing compliance with terms or conditions of authorisation. For example, the Regulator might carry out periodic audits or require authorised persons to provide information at specified intervals.
63. Regulations as described at paragraph 14(1) permit the regulator to take action of a specified kind for the purpose of investigating a complaint about an authorised person or assessing compliance with the terms of authorisation.
64. Paragraph 14(2) provides for the regulator to be able to apply for a warrant, from a judge of the High Court, Circuit judge or justice of the peace, to search business premises of authorised persons to investigate complaints and assess compliance with conditions of authorisation.
65. Regulations under paragraph 14(3) will give the Regulator leave to take copies of any papers and electronic records that pertain to the investigation of a suspected offence.
66. Paragraph 14(4) allows the Regulations to stipulate that the Regulator can impose penalties on those suspected of improper actions or withholding information relating to compliance. Such penalties would include the withdrawal or cancellation of all or part of an authority, either on a temporary or permanent basis. These penalties will be commensurate with the gravity of the offence.
67. Paragraph 14(5) allows the Regulator to authorise others, in writing, to exercise enforcement powers on his behalf. This might be a private investigator or other relevant professional.
68. Regulations under paragraph 14(6) will determine the supporting evidence needed by a judge or justice of the peace to satisfy them that a warrant should be issued. This might include the reasons to believe an offence has occurred, the steps taken to procure the evidence needed, and any corroborative evidence available should the complaint stem from an anonymous source. These regulations will also detail the circumstances in which the powers in subsection (1) can be used. This could include the requirement of a formal approach to be made requesting information and a period allowed for an individual to comply before the power to enter premises can be used. They may also specify conditions to be complied with when these powers are used (for example entry to premises can only be gained during office hours).
69. Paragraph 15 permits regulations to be made about the exercise of a power under clause 7 (which provides a mechanism for enforcement and investigation of suspected offences by unauthorised persons).
Clause 9: Obstructing the Regulator
70. Subsection 1 makes it a criminal offence to obstruct the Regulator, without reasonable excuse, in the course of investigating whether any of the offences in clauses 6 or 10 have been committed. A reasonable excuse might be, for example, that the Regulator was mistakenly pursuing the wrong person. If a person or body refuses to provide information to the Regulator, or obstructs the Regulator when he attempts to enter premises, they could be prosecuted under this section. The offence of obstructing the Regulator would also extend to obstructing a person authorised by the Regulator. In addition, the offence may also be committed by obstructing the Regulator in the course of action taken by virtue of paragraph 14 of the Schedule (for the purpose of assessing compliance of authorised persons with the terms or conditions of authorisation (such as carrying out audits of authorised claims management companies to ensure they operate with the Regulator's rules and code of practice)).
71. Subsection 2 specifies the penalty for the offence. On summary conviction, the maximum penalty is a fine not exceeding level 5 on the standard scale.
Clause 10: Pretending to be authorised, &c.
72. Subsection 1 makes it a criminal offence for an unauthorised individual or body to pretend they are authorised, exempted by the Secretary of State or subject to a waiver from the Regulator. In order to commit this offence an individual or body does not need to have provided regulated claims management services, but merely to have claimed that they are either authorised, exempt or subject to a waiver. If an unauthorised claims management company falsely advertised that they were regulated they could be prosecuted under this part.
73. Subsection 2 makes it a criminal offence to offer to provide regulated claims management services, where the provision of such services would constitute an offence under Part 2. It is not necessary for a person to make an overt claim to be authorised, exempt, or subject to a waiver or to go on to provide any regulated claims management services in order for the offence to be made.
74. Subsection 3 makes it clear that subsection (2) applies to both direct and indirect offers, including an offer made through the medium of advertising in any form by a person making arrangements for an advertisement (including through an intermediary), whether the advertisement contains an offer to provide services or describes him as competent to provide services.
75. Subsection 4 specifies the penalty for the offence. On summary conviction, the maximum penalty is 51 weeks imprisonment, a fine, or both. For a conviction on indictment, the maximum period of imprisonment is two years. It is envisaged that sentences at the higher end of the scale would only be imposed for the more serious offences (particularly where the offence is repeated).
76. Subsection 5 provides that an offence is committed each day an advert offering claims management services is displayed or made available. This gives the courts the discretion to vary the penalty according to the length of time the advertisement is displayed.
77. Subsection 6 makes it clear that the 51-week maximum sentence which applies to the offences in clause 10(1) and (2) will be read as six months until the relevant provisions of the Criminal Justice Act 2003 are commenced.