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There are two separate aspects of the scandal. The first is about the way in which certain solicitors have seen this as a quick way to make a lot of money. I first raised the case of Mark Gilbert Morse over three years ago. Those people were not content with getting their fees paid by the Government; they added 25 per cent. on top as a success fee, and they got people to sign agreements saying that they would have the money deducted. As my hon. Friend the Member for Bassetlaw said, the reaction of many constituents was, “I’ve signed the agreement so I have to pay that money.” Well, they did not have to pay it.
I am pleased to say that Mark Gilbert Morse quickly decided to pay the money back, but I am still not satisfied. That company and a number of other companies have said that they have paid it back. We have their word, but I suspect that unless someone has complained about the fee being deducted, the money will not have been returned. That is why the new clause is important. We should force solicitors to pay back all the money that has been deducted unlawfully.
I give credit to the Law Society individual case officers, because some are very good and work very hard in pursuing some of the rogue elements involved in those scandals, but as my hon. Friend said, that can be done only if someone makes an individual complaint; otherwise, people will not get justice. Some firms of solicitors have started paying money back, irrespective of whether complaints have been received. Obviously, they feel guilty and think that they will be exposed later, but we are not talking about small amounts of money; we are talking about millions and millions of pounds. That has been taken by firms of solicitors regulated by the Law Society. Clearly, self-regulation has not worked. That is why I have been one of the strongest advocates for independent regulation of solicitors. I am glad that the Government are taking that on board.
The Bill will cover two other consumer rights issues that need to be addressed. I am not afraid to say this about claims handling companies: I hope that the Bill kills off that industry altogether, because in my opinion there is no need for those companies. They are simply middlemen that have preyed on people and take a cut. If people want legal advice, they should go directly to their solicitors or their trade unions. That should be the best way forward.
To date, there are no ways of getting at claims handling companies, apart from going to their solicitors. The only way to get at the solicitors is through the Law Society, case by case, because many claims handling companies are still holding on to money that was deducted unlawfully. I took up the case of one of my constituents, Mr. Jobes, who had been contacted by Industrial Disease Compensation, now FreeClaim IDC. Ironically, it was one of the founder members of the Claims Standards Council, which was set up supposedly to regulate the sector. I am pleased that my hon. Friend the Minister has not fallen into the elephant trap and allowed the CSC to be the regulatory body for claims companies.
IDC took £3,600 from my constituent, but all it did was get him to sign a form—which purported to indemnify him against legal costs, when the company knew full well that he would not need to lay out any money at all under the COPD scheme—and pass it on
to a firm of solicitors in Liverpool, Silverbeck Rymer. The case went through the process, the money was paid out and the solicitors deducted £3,600 and passed it on to IDC. What did IDC do for that money? It did nothing except pass on the information. It had led Mr. Jobes to believe that he was being indemnified against legal costs.
Mr. Jobes and the other constituents who have come to see me are not, with no disrespect to them, used to dealing with solicitors. Some are widows, others are in very poor health—including Mr. Jobes—and do not know what to do with legal documents they get sent. Some have even been sent threatening letters saying that if they withdraw from the agreement they will end up with huge liabilities. That is a disgrace.
I pursued Silverbeck Rymer through the Law Society, which ruled that it had to repay the full amount. Silverbeck Rymer lost the appeal and had to pay the money back, but I hate to think how many other cases there have been in which money was deducted by solicitors and paid to IDC. How much money is sitting in the coffers of IDC for which it did nothing?
IDC knew that it was doing something wrong. Not long after the publicity on the issue, it changed its agreement so that all that was payable was an administration fee of £100. It was still doing nothing for that £100 except passing information on to solicitors.
Another scandal remaining to be unearthed is the collusion of former NUM officials and others who had access to membership lists. They prostituted any trade union principles that they had by going to work for IDC and helping it to make a quick buck out of the COPD scheme. The scandal of the £100 administration fee is that all IDC did for the money was pass on information to solicitors, who deducted sums from the final award to pay to IDC. I am pursuing several cases with the Law Society, questioning the role of the solicitors in acting as collection agents for claims companies. These scams have cost people tens of thousands of pounds, but they could not have happened without the collusion of solicitors’ firms, including some well known high street names. I would have thought better of those firms.
As well as acting as collection agents, the solicitors are failing to advise their clients that there is no need to pay the £100 administration fee. In fact, if people had gone direct to the solicitors, they would not have paid any fee. The solicitors were not acting independently. They saw IDC and the other claims handling companies as a way to gather hundreds of claims and paid the £100 fee with no questions asked.
Another issue is quality of service. IDC’s website talks of a panel of solicitors, as though they have been vetted or specialise in such claims. In fact, they are high street solicitors who are looking for work. That has meant that not only have some people been ripped off by the fees, but some of the solicitors have taken a sausage machine approach to the cases. They have put the claims through their administration system and, in many cases, accepted the first offer from the Department of Trade and Industry. The work has not been checked and so the firms have settled the cases for much less than other solicitors could have achieved. That is another scandal that the Law Society should address.
Mr. Philip Hollobone (Kettering) (Con): I agree with the hon. Gentleman that the Bill would be successful if it drove unscrupulous claims management companies out of business. However, does he agree that there are some honourable exceptions, not least the National Accident Helpline, which is based in my constituency? I believe that he has been sent details of how it operates, and it has helped thousands of people successfully settle claims for compensation.
Mr. Jones: No, I do not. If people want legal advice, they should go directly to solicitors and cut out the middle man. There is no need for such organisations. Trade unions can be a good source of advice and support for people seeking access to justice, and most people have legal insurance through their home contents insurance. I look forward to the day when the Bill puts claims handlers out of business.
Another scandal involves the way in which some trade unions have acted. I know that 99 per cent. of trade unions do a fantastic job. They pioneer work and they secure access to justice for many thousands of people that they would not get if they were not members of a trade union. However, Durham NUM and Thompsons solicitors have acted as claims handlers. They are not providing support to existing or retired members but operating a scam in which people who have very little connection with the NUM—often widows of former members—but with a COPD case were asked to pay £20 a year to become an associate member of Durham NUM. I have asked what an associate member is, and it is clear that such members have no rights under the trade union legislation. Thompsons told me that it gives people access to the NUM’s legal aid scheme, but that does not seem to exist. It appears that people pay £20 a year to Thompsons solicitors, who deduct another 7.5 per cent. from their compensation, if their case is successful. People are never told that they could go elsewhere to pursue their case. Even worse, the NUM and Thompsons have sent out letters telling people that if they stop paying their £20 a year, their case will be withdrawn, and that is just not true.
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I have been denounced in many quarters, some of which I shall refer to shortly, for feeling so strongly about all this. I feel so strongly, though, because the ladies and gentlemen who have come to me have no connection whatever with the NUM, are often very poor and are not used to dealing with solicitors. Yet the NUM has acted as a claims handler, joining people up for a success fee, which is all that that 7.5 per cent. is. The £20 a year is nothing other than an access point to justice.
I commend the work the NUM has done in some areas, and there is a contrast in the north-east between Durham and Northumberland, where the NUM does not charge anything. It does not matter there who anyone is—an existing member of the NUM or, as my hon. Friend the Member for Midlothian (Mr. Hamilton) said, a member of the community—because they can go to the NUM without it costing them a penny. If they want to make one, Northumberland NUM asks for a voluntary donation afterwards. That is fine: what people do with their compensation after they get it is up to them—they can give it to a cats home, give it to an individual or spend it, but if they want to make a contribution back to the NUM, that is laudable.
That is not what happens in Durham. There, 7.5 per cent. is taken off the compensation by Thompsons solicitors, then passed to the NUM. It is being suggested that that 7.5 per cent. will fund future litigation and keep the NUM going. I have no problem with that, but Thompsons, who seem to act differently in Durham as compared with other areas, has had nearly £100 million out of the Government in costs.
Mr. Jones: And more, as my hon. Friend says. I cannot see why Durham NUM could not have received a success fee or other fee from Thompsons. I think it totally wrong that poor individual claimants should have to fund Durham NUM.
I understand I have been denounced in several quarters, including in the upper House last week in a debate on miners’ compensation by Lord Sawyer, a former general secretary of the Labour party. To be fair to him, he says:
“Since standing down from my main roles in the labour movement, I have become the non-executive chair of the supervisory board for Thompsons Solicitors and I declare that interest.”
That is fine, and I have to say I agree with much of his speech, which attacks the way in which unscrupulous solicitors have deducted moneys. However, he went into the territory of the Durham NUM, on which he has certainly never spoken to me, making comments for which the evidence, I have to say, is weak to non-existent. He says that funds are being used in the Durham area to fight miners’ knee cases and possible surface worker cases that have not yet been funded. I am aware of only one case that Durham NUM has funded for surface workers, but the red herring about miners’ knee cases seems to have come up only since I began to raise these issues.
Lord Sawyer seems to condemn what has been said here:
“In reading the debates in another place on this issue and looking at some recent comments, it is possible to think that this is all about individual consumers in cases against big employers or insurers without trade union backing. That would be a big mistake. Let us condemn law firms and claims companies who exploit workers’ cases by all means, as we are doing tonight, but let us not in the process damage trade unions and their trusted lawyers who are, at the end of the day, the only ones with the commitment, capability or expertise to fight the major cases”.
It worries me that Lord Sawyer is an individual who is supposed to be on the supervisory board of Thompsons solicitors but who has not even taken the trouble to see how those solicitors are acting with the NUM in Durham. If he was doing his job properly, he would be asking the questions I am asking. That raises the question of what he is being paid for—I assume he is paid—as a member of the supervisory board; or is he just being paid to be an advocate for Thompsons solicitors in this place?
Mr. David Hamilton: For clarification, let me say that the issue of knee litigation has been on the cards for some years. The Scottish NUM, south Wales NACODS, Derbyshire NUM and, I think, Durham NUM are four unions that have combined to raise £1.2 million on that. I do not see Northumberland among them, and I do not see the other areas.
When we talk about the trade union movement, we mean more than 6 million trade unionists. Tonight, we are talking about the Compensation Bill, and it clouds the issue to talk about single areas within the NUM. We should talk, as my hon. Friend did, about 99 per cent. of the trade unions being extremely good. That was the correct thing to say.
Mr. Jones: I agree. I have no problem with that, but I challenge Durham NUM to publish a breakdown of what it has done with about £3.5 million, which it has had under the scheme. I also ask why, if Thompsons solicitors is so good and pioneering, it is not contributing, too. It has done very well out of the mining industry in the past 10 years.
I take exception to a point made by Lord Sawyer:
“If there is a dispute about deductions by the union in any mining community, it should be resolved within that community rather than be made into a political football, as it has been by some.” —[ Official Report, House of Lords, 11 July 2006; Vol. 684, c. 662-64.]
I have tried to resolve this issue in the mining communities, as the noble Lord would know if he had taken the trouble to speak to me. I wrote to the general secretary of Durham NUM, David Hopper, on 3 February 2005; to date, I have had not a reply. In that letter, I finished by saying that if he wished, or his executive wished, for me to address them in any way, they should please contact me:
“I am more than willing to speak to either yourself or your committee.”
To this day, I have not heard anything.
What I have heard is many mutterings behind the scenes in the trade union movement about how Kevan Jones is selling out the movement and his past. I was also, apparently, condemned, by name, from the podium last week at the Durham miners’ gala. The gutless individuals who could do that there are not prepared to meet me or talk to me directly about the issues.
It is vital that we press the new clause. I want assurances from the Minister that if she cannot accept it, she will undertake on behalf of the Government to put the utmost pressure on the solicitors and claims handlers who have deducted moneys to pay it back. My great fear is that without pressure from the Government individual solicitors will hang on to the money and give it back only when complaints are made, and that claims handlers who have already deducted money will not be prepared to pay it back. At the end of the day, those who will suffer will be individual consumers, for whom my hon. Friend has been a strong advocate throughout the passage of the Bill, and who are the reason for its introduction.
Simon Hughes: On a point of order, Madam Deputy Speaker. I am conscious of the fact that we have had debates on two groups of amendments and that there are three groups to go. Would you be prepared to accept an amendment to the timetable motion to allow us to continue consideration and start Third Reading later if it had the agreement of all three parties represented in the House?
Madam Deputy Speaker: I understand the point that the hon. Gentleman is making, but it is not within the power of the occupant of the Chair. The timetable motion is not before the House this evening; it has already been decided.
Bridget Prentice: Concern about trade union exemptions has been a key issue in our debates on Second Reading, in Committee and again today. If we are to protect consumers it is vital that an effective and proportionate mechanism apply to those who provide claims management services. We believe that the best approach is to exempt independent trade unions that provide claims management services to their own members and their members’ families, but the exemption will be subject to the condition that trade unions comply with a code of practice that we will develop in consultation with the TUC.
We have taken a risk-related approach because we believe that full regulation is an unnecessary and disproportionate burden on both trade unions and the not-for-profit sector. Regulation is aimed at commercial claims management companies. The Better Regulation Task Force recommended that course of action and the regulator’s initial focus will be on authorising companies that provide a regulated claims management service and tackling companies that attempt to evade it.
The code outlines the key principles that would apply where a trade union deals with a claim on behalf of a member, and it covers the key issues raised in earlier debates. We have had constructive engagement with the TUC general secretary and his colleagues on the issue, but obviously there is much more work to do. Nevertheless, I hope that the draft gives Members some indication of the approach we are taking.
May I point out to the hon. Member for North-East Hertfordshire (Mr. Heald) that the code of practice will be issued by the Secretary of State? The Secretary of State will be the judge of the union’s behaviour in relation to the code; the TUC and the unions will have a vital role in policing union activities, but the ultimate decision about exemption will be for the Secretary of State. Those principles are fundamental to provide a good service to trade union members, and we shall hold consultations about the code later this year.
We believe that the enforcement provisions are effective. If an exempt trade union falls below the standards outlined in the code of practice, the Secretary of State will withdraw the exemption. Once the exemption is withdrawn, the trade union concerned will have to stop providing the services unless it successfully applies for authorisation by the regulator. If it carries on providing the services, or even offers to provide them, without authorisation, it will be committing an offence and will be liable to prosecution.
Once the exemption for an individual trade union or any other organisation has been withdrawn, the full range of enforcement powers in clause 7 will be available to the regulator. If the organisation is suspected of continuing to provide services, the regulator can require the provision of information and documents, seek a warrant to enter and search premises and apply for an injunction restraining the organisation from providing the services. I hope that reassures Members that the full force of the law will be available to the regulator if people fall below the standard required. The actions of a very few unions, which have been well described during the debate, should not detract from the excellent work of the overwhelming majority of trade unions on behalf of ordinary hard-working people.
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