Previous Section Index Home Page

4.35 pm

John Mann (Bassetlaw) (Lab): I intend to ask a number of questions of the Minister and the House, and I hope that people will take them into consideration as the Bill progresses. I will address each question by illustrating what I am talking about with an example from the mother of all gravy trains, the scamming of money from miners. I pay tribute to more than 1,000 of my constituents who have already taken action—many of them successfully—against more than 35 firms of solicitors and a whole range of claims handlers.

The first example involves a claims handler called IDC. Many of my constituents signed a form that said that IDC would pay the costs of the claim. It even contained a clause about what would happen if the claimant deliberately misled the company. In fact, the opposite happened. A firm of solicitors called Gorman Hamilton got the claim from IDC and wrote to my constituents to say:

That was not true. The Government were paying the costs. It was a scheduled case. There were never any
8 Jun 2006 : Column 481
costs being paid by IDC. Here we have a conspiracy between a solicitor and a claims handler. My question for the Government is: what will happen with that conspiracy if there are different agencies regulating the claims handler and the solicitor? That is the nub of the issue.

I have some minutes from the national marketing meeting of IDC. Oxley and Coward solicitors, Park Hutchison solicitors, Marrons solicitors, Whittle Robinson solicitors, and Russell Young solicitors were all at that meeting. IDC went through the importance of knowing the needs of solicitors and what they consider “good referrals”, of looking at the screening processes and of the “personal touch”. Mention is made of “MTFS” or “make them feel special”. That is with reference to the clients. Mention is also made of:

There is a discussion of whether to use a shotgun or a rifle approach to the marketing of the product.

The question of collusion between solicitors and claims handlers is at the heart of the issue. Under the heading of questions raised from the floor, the minutes state:

That was the aim of that marketing meeting. The question of the two culprits together is important.

The second example involves PR and Associates. Again, a number of my constituents signed a common law claim form, headed “Common Law Claims”. The offer was that the costs would be covered for a common law claim, and the claimant would pay 15 per cent. plus VAT in return. That sounds fair, but of course, those were not common law claims, despite the fact that Kidd and Spoor Harper said:

the fee to PR and Associates from the claim. Here we have the solicitor doing the work on behalf of the claims handler. There is a cast iron case against the solicitor, but how will that be affected in terms of how the claims handler is regulated?

The third example involves Union and General Services. It is the same old thing. The contract says that the company will pay the costs of the fee. This time the firm of solicitors is called Robinson King, and £3,284 was deducted in this case. The letter states:

for the rest. How will that be dealt with? Money has passed wrongly to a third party.

Separately, Union and General Services, which was a limited liability company, has gone into receivership. When we started to raise the issue, the company was closed down. How will the regulation affect such a scam company, which was set up by a Mr. Revell from Doncaster, a former union official? It was a pretence to call the company Union and General Services. Given that the company put itself into receivership, we would not be able to take a common-law case against it to the
8 Jun 2006 : Column 482
small claims court because it is no longer in existence. How will the ability of companies not to be pursued be dealt with?

Another of my constituents, Mrs. Beckett, went to Raleys, a firm of solicitors that I have already named. She was told:

However, Mrs. Beckett did not go through the NUM, but contacted Raleys directly by using Yellow Pages. Despite that, she was told:

not true!

I have a copy of the kind of publicity that Raleys puts out from a brochure produced by one of the health authorities. Raleys says, “Millions won in compensation,” and asks miners to come forward, but the publicity makes no mention of the NUM. However, when one goes to Raleys, as did another of my constituents, Mr. Dunstan, the situation becomes clearer. He was told:

However, we should not forget—the letter was written in 2000—that the Government were paying the fees.

The letter continues:

not true; it is a lie. The letter then sets out a statement on conditional fee arrangements and says:

The TUC briefing for the debate makes the situation when dealing with unions clear. The vast majority of unions are decent organisations that deal with members who can get remedies in a range of ways. However, Mrs. Beckett was not a member of a union and Mr. Dunstan was a retired member. The situation was affecting non-members, not members, so remedies available for members, ranging from the certification officer to common law governed by statute, would not be available. Precisely how would that be addressed?

Of course, we have also heard about another union: the Union of Democratic Mineworkers. I have lots of similar forms that contain such phrases as:

However, that should not be the case. One of the dilemmas is that although the majority of people went through solicitors, so the Law Society would be involved, some did not. That is precisely why I intervened on the Minister to ask about the Government’s ongoing three agreements with UDM Vendside. There are no solicitors involved and no consumer right is available. The people involved have never been to court or had dealings with solicitors before. Many of them are in their 80s and 90s, and their
8 Jun 2006 : Column 483
only remedy is to go to court to get justice, but that does not appeal greatly to people of that age.

There is far more to the situation. I have a form from a Mrs. Cocker. The Vendside bit of the form has been covered by a sticker for Walker and Co., which is not known to my constituent. An individual employee of Vendside and the UDM had set up a different company. That company then took a cut. I know that because I have a copy of the minutes of a UDM meeting in January 2002 between Beresfords solicitors, the UDM leader, Mr. Stevens, and Clare Walker—Walker and Co. The minutes explain in graphic detail who gets what cut of the money. There is a range of information detailing what Beresfords, Vendside and Clare Walker will be getting. The minutes also cite a company called Melex that is being set up, 90 per cent. of which is owned by the Beresford family.

Letters between Beresfords and the Law Society have come into my possession. Beresfords has been asking, in essence, how it can get around the Law Society rules on referral fees. It asks, “Can we set up a third party?” It does not call it Melex, but Melex comes into existence. Who should get paid? Obviously, the Beresford family get some money, but so does Clare Walker. But it goes on, because then there is the conditional fee arrangement, and insurance. In some cases, Beresfords hands matters on to another firm of solicitors—its panel—which pays a fee back to Beresfords. In a hearing loss claim, there could be five or six different deductions. There is an amount for the ATE Insurance commission—the minutes say who is going to get a bit of that. There is the Melex money. There are the vetting, administration and marketing fees.

That leads me to my key point. It is very easy to set up new companies to get round the guidelines. In other words, people say, “It’s not a referral fee—that’s not allowed under Law Society rules. It’s a marketing fee.” It is only when someone manages to get all sorts of files that they see that lots of people are doing the same work. Walker and Co. was doing the marketing; Vendside was doing the marketing; Beresfords was doing the marketing. Oh, and there is another firm, Indiclaim, which was doing the marketing as well. There are lots of different people doing the marketing. We must ensure that these dodges are not allowed.

I understand that some of these companies are now charging money for training. Training has nothing to do with my constituents. There are different ways of skinning the cat and getting the money. Another firm of solicitors, BRM, is paying £500 plus VAT to Indiclaim. Another one, Wake Smith, has done a better deal, as it has to pay only £300 plus VAT to Indiclaim. My constituents have never heard of Indiclaim Ltd. They do not realise that it is owned by one of the people running Vendside, which is owned by the UDM. We must ensure that people cannot wriggle out of regulation. It is essential that the Government use the opportunity of their agreement with the UDM to look into the matter in graphic detail.

The Law Society is quoted in the legal services ombudsman’s report as saying that:

8 Jun 2006 : Column 484

What they did was set up lots of other companies. My constituent Annie Robinson, aged 93, gets £352.50, which she struggles to get back either from the solicitor or from Vendside. That is simply not acceptable.

It is essential that we act now, and do not wait until the Bill comes into force. The scandal of the miners’ compensation is going on at the moment. These people need consumer rights now, because the Raleys, the Vendsides and the plethora of other firms who have been ripping people off should be held to account—and if solicitors who are claims handlers are struck off, the Government should cancel their agreement with the UDM.

4.48 pm

Mr. David Jones (Clwyd, West) (Con): I wish to declare an interest as a member of the Law Society. Like Members on both sides of the House I warmly welcome the Bill, particularly part 2, although I do have reservations about part 1, which I will touch on later.

Regulation of the activities of these so-called claims farmers—an expression that appears to have supplanted the traditional “ambulance chasers”—is long overdue. Whether or not there is a compensation culture in this country is a matter of debate, and it has been debated today. The Better Regulation Executive took the view firmly that it was a myth, and certainly it appears that costs in negligence actions in this country are considerably lower than those in the United States, France, Germany, Australia or other major jurisdictions. Nevertheless, there is, as appears to be widely accepted, at least a perception of a compensation culture, and that is having a significant and detrimental effect on the national life of this country.

The compensation culture, if it is not a reality, appears to be something that the claims farmers are aimed at creating. We have seen their marketing campaigns. We have seen also their slogans, such as, “Where there is blame, there is a claim”. These slogans are clearly intended, aggressively, to encourage the pursuit of actions for personal injury. Such advertising can frequently raise unrealistic expectations in the minds of vulnerable people.

Since legal aid was abolished in 1999 for personal injury claims, the no-win, no-fee regime that has replaced it has made it more difficult for potential litigants, particularly those who are less sophisticated than others and therefore more vulnerable, to obtain legal redress. It is unfortunate that it is precisely those people—more vulnerable potential claimants—whom the claim farmers seek to attract. Perhaps the expression “prey upon” might be more appropriate.

I am sad to say that the more vulnerable in our society find the prospect of approaching a solicitor intimidating. They find the prospect of making a free telephone call to a claims farmer a more attractive option. Once the potential litigant is in the clutches of the claims farmer, it is often difficult for them to get out.

The abuses of claims farmers have been catalogued this afternoon. As time is short and because other Members wish to speak, I will not rehearse them. There is no doubt that regulation of the industry is a matter of priority and one that is long overdue. I congratulate the Government on bringing legislation forward.

8 Jun 2006 : Column 485

The activity of claims farmers has its consequences. Their pursuit of the creation of a compensation culture has created an increasingly risk averse society. We have heard the stories of school teachers and scout leaders who have been dissuaded from taking young people in their charge out on what would be valuable and character-building expeditions.

Many years ago, when I was considerably younger, I used to go rock climbing. I did it because I enjoyed the risk. When one is clinging 100 ft up on a rock face, it is difficult to think of anything other than maintaining that position on the rock face. I would not begin to pretend that I was in any sense a Chris Bonington, but I enjoyed the experience. I was taken into the mountains by a guide called Terry, but I wonder whether these days Terry would be so willing to take me to the mountains. He has probably heard about the culture of where there is blame, there is a claim and he might well be dissuaded from doing so.

I believe that that is happening. We have heard from my hon. Friend the Member for Canterbury (Mr. Brazier) of the experiences that have been related to him. This is sad. Risk is a fact of life; we take risks every day. Risk is good and it develops character. If we are being dissuaded from taking risks by the activities of claims farmers, we need to deal with the culture that they are generating.

I applaud the aims of the Government in part 1. I understand what they are trying to do. They are trying to deal with the risk aversion that has been built up. They are trying to provide what I imagine is a statutory defence, based upon what they say is common law as it now exists.

Clause 2 is an extremely valuable component of the Bill. I congratulate Lord Hunt on ensuring that the provision was introduced into the Bill. I similarly congratulate the Government on accepting Lord Hunt’s valuable amendment and incorporating it into the Bill. It achieves a number of things. It deals with the simple issue of courtesy. If someone has caused damage or injury to another individual, in a courteous society he should be encouraged to apologise. As we have heard, he is frequently inhibited from doing so, because that may amount to an admission.

The problem extends even further, as we have heard. The clause will give insurers the opportunity to pay for a certain amount of treatment for people who are injured. The fact that that treatment is paid for will give considerable solace to the claimants but, in due course, it will reduce the value of claims that are made and ultimately reduce insurance premiums across the board.

I am concerned, however, about clause 1. I applaud its aim of seeking to ensure that the courts pay regard to the question of whether certain steps should have been taken by defendants or whether it would be unreasonable to expect them to take them. However, it is poorly drafted and, if we are not careful, it will become a fertile source of litigation in future. The application of the clause by the courts when considering such cases is not mandatory but permissive. The word, “may”, is used, but “shall”, is preferable, because it would give the lower courts the guidance that they need, ensuring that they consider the matters dealt with in the clause. However, the drafting is loose—there are references to “particular steps” and “a particular way”, but the
8 Jun 2006 : Column 486
glaring omission is the nature of “a desirable activity”. What does “desirable” mean? There is reference to

What are those functions? The thrust of the clause is sensible and desirable.

Chris Bryant (Rhondda) (Lab): What does the hon. Gentleman mean by “desirable”?

Mr. Jones: Indeed. The House has an opportunity to give the courts clear, unequivocal guidance about how they should interpret the law of negligence in personal injury cases. That is an extremely important issue: it must be addressed in Committee, as the clause requires significant improvement. Notwithstanding that reservation, I applaud the Bill, which is long overdue. I welcome its introduction by the Government, and I hope that, pursuant to its enactment, regulations will be adopted and made law. If the House passes the legislation—and I hope that it does so—it will do a great service to some of the most vulnerable people in the country.

Next Section Index Home Page