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Clause 11: The Claims Management Services Tribunal
78. Clause 11 establishes the Claims Management Services Tribunal and makes provision about its constitution and proceedings.
79. Subsection 2 provides that the Tribunal will consist of members of an existing Tribunal - the Financial Services and Markets Tribunal. It provides that members of the Financial Services and Markets Tribunal shall also be members of the Claims Management Services Tribunal; that the President and Deputy President of the Financial Services and Markets Tribunal shall also be the President and Deputy President respectively of the Claims Management Services Tribunal; and that the panel of Chairmen of the Financial Services and Markets Tribunal shall also be the panel of Chairmen of the Claims Management Services Tribunal.
80. Subsection 3 sets out the arrangements for hearings. Hearings will be by a member of the panel of Chairmen, selected in accordance with arrangements made by the President. Hearings may be before a member of the panel of chairmen sitting alone, or with one or two members of the lay panel. It is anticipated that routine hearings will be heard by a Chairman and two lay members, although in certain circumstances (such as in an emergency) a Chairman might sit alone. In the event that a chairman sits with one other member, the Chairman will have the casting vote.
81. Subsection 4 gives the Lord Chancellor the power to make rules about the proceedings of the Tribunal. In is anticipated that, in order to ensure compliance with the European Convention on Human Rights, the rules will specify that a decision of the Regulator to attach conditions to, suspend, or cancel a person's authorisation will not have effect for a period of 28 days during which an appeal may be brought. The rules may also provide that the Regulator may apply to the Tribunal for an interim order preventing the provision of regulated claims management services by an authorised person pending a full hearing. This could be used where there was evidence that there was a high risk of consumer detriment were an authorised person allowed to continue providing the services. The rules will be made by statutory instrument subject to the negative resolution procedure.
82. Subsection 5 gives effect to various provisions of Schedule 13 of the Financial Services and Markets Act in relation to the Claims Management Services Tribunal. These include provisions about the remuneration of members of the Tribunal, the appointment of staff and procedural matters including practice directions, evidence and decisions.
83. Subsection 6 amends the Tribunals and Inquiries Act 1992 to add the Claims Management Services Tribunal to the list of Tribunals under the general supervision of the Council on Tribunals.
Clause 12: Appeals and references to Tribunal
84. Clause 12 specifies the circumstances in which appeals and references may be made to the Tribunal.
85. Subsection 1 makes clear that a person may appeal to the Tribunal if the Regulator refuses the person's application for authorisation, grants the authorisation on terms or subject to conditions, or imposes conditions on, suspends, or cancels the person's authorisation.
86. Subsection 2 makes clear that the Regulator may refer complaints about the professional conduct of an authorised person to the Tribunal, and may also refer to the Tribunal a question about whether an authorised person has complied with a rule of professional conduct.
87. Subsection 3 outlines the powers of the Tribunal on a reference or appeal under this section. The Tribunal may take any decision on an application for authorisation that the Regulator could have taken. It may also impose or remove conditions on conditions on a person's authorisation, suspend or cancel a person's authorisation, or remit a matter to the Regulator.
88. Subsection 4 makes clear that an authorised person may appeal to the Court of Appeal against a decision of the Tribunal.
Clause 14: Orders and Regulations
92. The provision on negligence will have no implications for public expenditure.
93. The cost of regulating claims management services will vary according to the means of implementation. It is likely to have a limited effect on public expenditure if a private body is designated as the Regulator. In the event that the Secretary of State regulates directly, or through a new public body, the effect on public funding could be higher.
94. It is envisaged that the regulatory costs will be recouped from those regulated by way of a registration and annual fee. However, to deliver the regulatory mechanism before sufficient income from fees is established it is likely that Government would need to provide funding for start up costs, and support during the early years of regulation. The aim will be to achieve a self-financing regime as soon as possible. The full Regulatory Impact Assessment published with the Bill sets out the estimated range of costs of introducing statutory regulation.
95. The provisions on negligence will have no implications for public service manpower.
96. The provisions relating to the regulation of claims management services are likely to have an effect on public service manpower if the Secretary of State regulates directly or establishes an NDPB. However if a private body is designated as the Regulator, there may be limited effect on public manpower.
REGULATORY IMPACT ASSESSMENT
97. The Regulatory Impact Assessment (RIA) for this Bill has been agreed with the Better Regulation Executive. The RIA assesses that in relation to claims management services, the introduction of statutory regulation will impose new regulatory burdens on the sector, leading to an increase in costs for new and potential new claims management companies. However, it will be outweighed by the benefits to businesses outside the claims management sector, who are likely to see a decrease in the number of vexatious or frivolous claims brought against them, and reducing the costs of dealing with them. The provision on negligence will have no cost to business or regulatory impact.
EUROPEAN CONVENTION ON HUMAN RIGHTS
100. The offences under clauses 6 and 10 are punishable, following conviction on indictment, by a maximum sentence of two years imprisonment, in line with similar provision in relation to financial services and immigration services regulation. The aim of the Act is to regulate the supply of claims management services and effective sanctions are essential to ensure that its provisions are enforceable. It is considered that the offences, and the penalties provided, are proportionate to the desired aim.
101. The investigatory powers under clause 7 are necessary to enable the Regulator to investigate the possible commission of criminal offences. Their exercise might interfere with the right to respect for private life in Article 8, but would be justifiable within Article 8(2) as both necessary and proportionate with the legitimate aim, with safeguards attached to the exercise of the powers. The power to enter and search premises in clause 7(5) and paragraph 14(2) of the Schedule cannot be exercised without the Regulator first having obtained a warrant. Clause 7(8) and sub-paragraph 14(6) of The Schedule require the Secretary of State to make regulations specifying the circumstances in which the powers will be used. It is intended that the power will under the regulations be strictly limited.
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