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However, the claim to which it refers is not a common law claim. It went through the claims handling agreement. If it had been a common law claim, which entailed a risk, it would be perfectly fair for a union or non-union organisation to charge a percentage or a fee, provided that it was transparent, because it bore the risk. The scandal of the miners’ claim is that there was no risk.
We are not being irrational. We do not say that people—whoever they are—should bear risk for no reason or no reward when there is transparency. However, when people have been deceived, they should get justice and their money back.
Perhaps the most astonishing example is that of Industrial Diseases Compensation Ltd. Its agreement form states:
“The Company shall pay... all of the cost of The Claim to include legal fees and medical examination costs”.
It did not pay a penny. It went through a solicitor on its panel and through the claims handling agreement and did not pay a penny. Its form has a clause 6(i), which outlines what happens if the
“Claimant deliberately misled The Company”.
I shall end with that. The Bill and the law should deal with cases when the company has deliberately misled the claimant.
We must ensure that everyone has access to justice. That is crucial for that minority who did not go through solicitors with miners’ claims but went only through Vendside Ltd. They have no redress through consumer complaints to the Law Society and the system that I believe now works well, from evidence in the past three or four months. The minority who went only through Vendside Ltd should automatically and immediately have full consumer rights so that they can complain the moment the measure receives Royal Assent.
Simon Hughes: The speech of the hon. Member for Bassetlaw (John Mann) means that I do not need to comment on new clause 11. I guess that a further speech in support of it will be made—an excitement to anticipate.
Obviously, there is a serious point behind all the issues that have been raised. That militates in favour of new clause 1, which the hon. Member for North-East Hertfordshire (Mr. Heald) tabled and to which I added my name. The Government appear to be intent on exempting trade unions as a category and there must therefore be regulations to govern that. Like others, I have examined the draft code of practice and the rules, which the Under-Secretary kindly supplied. There are some weaknesses in it, which others have already pointed out. The early sight of the draft regulations for the rules of conduct does not reassure us sufficiently.
Lembit
Öpik (Montgomeryshire) (LD): I have been
considering the arguments that have been put forward on exemptions, and
I wonder whether my hon. Friend has a view on the matter of strategic
importance raised by one of my constituents, Graham Owen, who is a
chartered insurance practitioner. He has suggested that small suppliers
of such services should be exempt because, with a turnover of, say,
less than £5,000 a year,
they are unlikely to be ripping people off on a large scale or indulging
in the kind of scams that we have been hearing about. He has suggested
that there should be a turnover threshold of, say, £5,000 a year
in respect of the total of the five categories that the Minister has
identified, below which a company should be exempt from the
regulations. Does my hon. Friend have a view on that? Would he, like
me, be interested to hear what the Minister has to say about that
suggestion?
Simon Hughes: That is a perfectly proper question for my hon. Friend to ask. My view is always that there ought to be a threshold so that very small practitioners are not governed by regulations. That should also apply to VAT and other provisions. If we want to enable small business people to carry on their businesses, we ought to establish a lower threshold. I have not yet had an exchange with the Minister on that issue, but I hope that she will be able to give us a helpful reply at the end of the debate. My specific and formal answer to my hon. Friend is that there is nothing in the Bill that would prevent the establishment of an exemption for small traders, and the Minister could introduce an exemption for such a category.
Mr. David Hamilton: If there were an exemption for small companies whose turnover was below a certain threshold, what would happen to individuals, such as those involved in the cases cited by my hon. Friend the Member for Bassetlaw (John Mann), who have been screwed by their lawyers? There should surely be recourse for such individuals, no matter what the size of the company.
Simon Hughes: We need to discuss that balance. I understand the hon. Gentleman’s point. Looking at this from the point of view of the consumers of the service, if they have been conned, they have been conned; it does not matter whether they are the company’s only victim or not. This matter would depend on whether the definition involved the value of the service offered or the cost of the service, as they might be different. If the cost of the service were only 10 quid, there could be quite a lot of 10 quids, which would soon add up. I hope that the Minister will address this issue.
The other amendment to which I have added my name is amendment No. 5, which has also been tabled by the hon. Member for North-East Hertfordshire. This is a linked amendment, which the hon. Gentleman addressed in passing in his introductory speech. It proposes that:
“A code of practice issued under subsection (1) shall include details of the advertising standards for providers of claims management services.”
One of the concerns that has been aired in the debate is the need for clear regulation of the advertising involved, whether it is advertising on hoardings or in the local paper, or the kind that comes through the letterbox or is given away outside shopping centres or railway stations to try to get people to buy the services on offer. I hope that the Minister will give us an assurance that our proposal will be accepted.
May I make a
formal request, Mr. Deputy Speaker, that, if—as I hope and
expect—the Government are willing to accept amendments Nos. 15
and 16, we might have a chance to vote on them before Third Reading at
9 o’clock? I want to flag up that request now, if I may. Those
amendments come from amendments that I tabled in Committee, on which
the Minister said that she would reflect, and they involve a simple
proposal.
Clause 5 sets out the procedures for providing exemptions, and, at the moment, they allow only for the use of the negative resolution procedure in the House. So the Government could lay regulations, and only if we prayed against them would there be the opportunity for a debate and a vote on them. The procedures governing exemptions are controversial, in this House and elsewhere, and they are important in that they could be used to exempt trade unions, either generally or in part, or any other group of organisations. For that reason, I proposed in Committee that there must be an automatic debate in both Houses of Parliament on any proposed exemptions. That would be the time to discuss whether trade unions should be included or excluded. We have had a long discussion on that issue tonight, to which the hon. Member for Bassetlaw has contributed at some length, as well as other hon. Members. The history has not been a glorious one, and the wise thing for us to do now would be to ensure that we had to return to the issue. If the Government were to go ahead with their proposal to exempt trade unions as claims management organisations as regulated by the Bill—the opposite of what the hon. Member for Hendon (Mr. Dismore) is proposing—the House should be able to debate and vote on the matter.
7.45 pm
Mr. Heald: Will the hon. Gentleman accept my joining him in his plea that we should be allowed to vote on these amendments, if necessary, at the appropriate time?
Simon Hughes: I am grateful to the hon. Gentleman for that intervention, which I am sure that you have heard, Mr. Deputy Speaker.
The proposition, which is a result of discussions with the Minister and her officials—for which I am grateful—is that the first time that an order is made under clause 5, we should have a debate and vote on it in both Houses, and that we should also debate and vote on any subsequent order that would have the effect of removing or restricting an exemption.
Some very dubious practice has clearly been applied in relation to certain claims. Although trade unions may logically have a strong case for being exempt when acting for their members, the wider concern is that they should be included, so as to prevent similar abuses from recurring. In any event, I hope that the Minister will agree that we should have the opportunity to vote on the amendments later.
Mr. Dismore: I rise to speak to new clause 10, which stands in my name. I have no objection to claims handlers being regulated. Indeed, I first started campaigning for that almost 20 years ago, when handlers were first invented, as I recognised that this could be a growing problem. However, I approach the matter from a very different point of view from that of my hon. Friend the Member for Bassetlaw (John Mann). Perhaps he should come along to the Chamber on a Friday, given the way in which he set out his case in such detail earlier. I hope to be able to put my case, from a different point of view, rather more briefly.
Trade unions have had a rather bad deal out of this debate so far. There has been no problem with trade union legal schemes for decades. Most of them date back to before the second world war, and trade unions have historically played a major role in ensuring that people who were injured at work got justice and compensation—for example, under the old workmen’s compensation scheme, before they had common law claims.
My hon. Friend the Member for Bassetlaw has clearly had a very bad experience arising out of the administration of one particular scheme. However, we must not throw the baby out with the bathwater by losing sight of all the excellent work that the trade unions have done for hundreds of thousands, if not millions, of people over the years in which the trade union schemes have been in operation.
Historically, trade unions have fought difficult, ground-breaking cases, often with contributions from successful cases, in perfectly legitimate schemes. That kind of scheme was starting to die out when I was in practice; very few unions still operated them by then. However, the trade union schemes and the contributions involved were operated for the benefit of the members. They were not operated for profit. They were used to support difficult, complicated, and often expensive cases.
I ran many test cases myself when I was in practice, including some of the early cases involving post-traumatic stress disorder and pension loss. Some cases went to the House of Lords. I remember one in particular, against the Home Secretary in the then Conservative Government, which ended up in the House of Lords. It involved cuts in the criminal injuries compensation scheme, and it was backed by a consortium of about a dozen trade unions and involved several hundred thousand pounds worth of costs. Schemes covering vibration white finger, pneumoconiosis and deafness were all developed with the support of the trade unions, and I believe that we now run the risk of losing sight of the very good work that they have done.
Mr. Clapham: I take my hon. Friend’s view that trade unions have been agencies for the betterment of society. As he has heard in the discussion with my hon. Friend the Member for Bassetlaw (John Mann), much of the problem started with a separate agreement given to the Union of Democratic Mineworkers, which was not available to other unions in the mining industry. Does he agree that all the problems seem to have stemmed from that?
Mr. Dismore: I agree with my hon. Friend. The fact is that the UDM was a rogue union to start with, and has behaved like one ever since it was founded.
John Mann: Will my hon. Friend give way on that point?
Mr. Dismore: My hon. Friend has had plenty of time to make his point. I am going to try to make mine briefly.
Generally,
since the Access to Justice Act 1999 and conditional fee agreements
were introduced, it has been possible to do without deductions.
Occasionally, however, they are required, especially in test cases
involving group litigation, which are not party to parts of schemes
but are often involved in major, complex and expensive litigation. Of
course, deductions are nothing new. Under the civil legal aid scheme,
before it was removed from personal injury cases, deductions were made,
for instance, for disbursements not recovered or payments in.
After-the-event insurance schemes that operate now still apply
deductions in exactly the same way.
Regulating trade union schemes does not affect the dodgy law firms that we have heard about or the claims handling company, as those would be caught under the new arrangements anyway.
In relation to the definition of members, we should also take into account that many trade union schemes extend to members’ families. I remember the debate in my old law firm in the 1980s about whether we could afford to offer such a scheme to trade unions for the benefit of members’ families, as was eventually provided. Trade unions are already regulated under the Trade Union and Labour Relations (Consolidation) Act 1992, unlike claims handlers, who are not. The certification officer has a right and a duty to inspect trade unions’ accounts. Details of trade unions’ officers have to be filed, and any complaints over breach of rules, including over legal services, can be investigated by the certification officer.
Of course, the trade union rule book, of which union legal schemes form part, is a binding contract between the member and the trade union and can be independently enforced through the courts if necessary. Unlike claims’ handlers, trade unions have their own internal appeals and complaints systems, which can include whether cases are being turned down. Trade unions do not encourage their law firms to turn cases down but to fight on, unlike claims handlers. They also use specialist law firms, which generally know what they are doing.
The only beneficiary of regulation will be the insurance industry because trade union legal systems will not operate as effectively as they have done over decades to provide justice for trade union members. I very much hope that the Government will see sense, as they seem to be doing, and accept that trade unions have generally provided an excellent service for a long time. We should not allow one bad experience, albeit involving a lot of people, to affect the whole system of trade union legal support.
Mr. Gummer: I declare an interest as the independent chairman of the Association of Independent Financial Advisers, which has an interest in the Bill but not this part of it. The first Bill that I tried to put through the House, nearly 30 years ago, was opposed by solicitors because they said that they needed none of the regulation that I was suggesting for them. The issue involved was that of fake directories where solicitors used to write letters to frighten people into paying bills that they had no duty to pay and had not incurred. I remember the anger and opprobrium cast at me by the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) and his then hon. Friend who is now in the other place, Lord Clinton-Davis, when I suggested that some solicitors might need such controls.
I therefore have a long history of not being entirely enthusiastic about solicitors and their being unregulated by people outside. I agree with many of the elements of the Bill and consider it a valuable contribution in many ways. I therefore hope that it will not be taken amiss if I suggest that there is a problem in relation to trade unions that has been misunderstood by many.
First, trade unions and their members, as defined in all our minds, come under a category that is already subject to regulation. We should not regulate—or try to do the same thing—twice, as that is both otiose and annoying. My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) has made an important point. Some aspects of the way in which the exemption is to work do not give adequate protection to the consumer.
I say to the Minister that it is important for the Government to be seen to be even-handed when dealing with trade unions. I am sure that she is trying to be so, but perception is vital in relation to that issue. If she is not to be thought to be partial, she must be seen to treat trade unions in the same way as she might treat other organisations. Without straying outside the debate, the Government ought to strive not to be seen to be swayed in a partial manner. I therefore ask her to reconsider her approach so far.
We must protect even members of trade unions by ensuring that the code of practice is—at least in the limited way suggested by my hon. Friend—justiciable. If the Minister thinks that it is important to have a code of practice, it is manifestly true that it ought to be able to be enforced. To have a code of practice that cannot be enforced is merely a fig leaf and is subject to the likelihood that people outside here will feel that the Government are being partial.
Secondly, I thought that the hon. Member for Bassetlaw (John Mann) put the argument clearly, and the hon. Member for Hendon (Mr. Dismore) was a bit hard when he said that he went on. Actually, he did not repeat himself once, and everything that he said was of interest to this House, which was not the case with the shorter speech of the hon. Member for Hendon. The hon. Member for Bassetlaw’s point was not contraryto trade unions—he was saying that there are circumstances in which the protection of members, or those called members, of trade unions, was not sufficient, and that people were misled and dealt with unacceptably. It was right to bring that to the House’s attention. As it came from a Member who has such a history of support for the trade unions, it seemed to me that it was not properly treated by those who suggested that he was being antagonistic to trade unions. What he was saying, and what I am saying, is that good trade unions deserve the support and protection of a properly written law that enables them to feel properly defended against the activities of those who bring trade unions’ name into disrepute.
Not only do we want to be
assured about the meaning of “member”, which is
important, but that people who are embroiled in circumstances in which
the trade union acts as a claims organiser—but not as a trade
union—to someone who is not a trade unionist will not have their
protection removed. That is all that we ask. As the Minister has
refused to include trade unions within the definition—for
reasons that, I think, are comprehensible—the easiest solution
is to accept
the amendments tabled by my hon. Friend the Member for North-East
Hertfordshire. Those amendments are not meant in any way as
antagonistic to trade unions but as protection for the customer. That
is perfectly reasonable.
There seems to be a cross-party view on this matter. It arises from a desire to ensure that people outside perceive the Bill to be even-handed, a desire to protect every one of Her Majesty’s subjects so that they all have equal rights of protection, and above all a desire to make certain that decent trade unions are not besmirched by the activities of what have turned out to be two trade unions in particular circumstances. I should have thought that those were interests common to us all, and if the Minister is unable to move in our direction, I believe that the Government will lay themselves open to the charge of partiality even if, deep down, that was not their reason for behaving in this way.
8 pm
Mr. Kevan Jones: As someone who was a full-time trade union officer for 13 years, I am fully aware of the vital work that trade unions have done—not just their daily representation of their members in the workplace, but their work in the context of test cases—and I am afraid that I will take no lectures from former solicitors about trade union principles.
The hon. Member for North-East Hertfordshire (Mr. Heald) quoted me as saying in Committee that if trade unions acted as claims handlers, they should be treated as such. My view on that has not changed, but I support the Government’s proposals relating to the code of conduct. Under those proposals trade unions will be exempt if they observe the code, but if they fail to do so they will be covered by regulation and subject to the same restrictions, penalties and scrutiny—and under the same spotlight—as rogue claims handlers.
As I have said, I fully recognise the value of the work done by trade unions. My hon. Friend the Member for Bassetlaw (John Mann) mentioned a case to which I too will refer. Some firms of solicitors, including Thompsons—for which the hon. Member for Hendon (Mr. Dismore) used to work—
Mr. Dismore: Will the hon. Gentleman give way?
Mr. Jones: No, I will not.
Mr. Dismore: On a point of order, Madam Deputy Speaker. As the hon. Gentleman has made that point, I want to explain to him that I never worked for Thompsons. I used to work for a firm that eventually became Thompsons.
Madam Deputy Speaker (Sylvia Heal): That is not a point of order for the Chair, but at least the correct information is now on the record.
Mr. Jones: The hon. Gentleman has made the point for me. He has a clear connection with Thompsons, a company that has not acted in the best interest of its members, certainly in the case of the Durham branch of the National Union of Mineworkers.
Mr. Dismore: That was in 1995.
Mr. Jones: That may be so, but the hon. Gentleman has been a good advocate on the company’s behalf tonight. I am here as an advocate for my constituents, many of whom—poor and vulnerable individuals—have been ripped off by unscrupulous solicitors using sharp practices in a firm that should know better. If the hon. Gentleman wants to be associated with that firm of solicitors, he should feel free to be so, but I have no such wish.
I support what the Government are doing with the code of conduct. It is a sensible way of not overburdening trade unions with legislation. My hon. Friend the Member for Bassetlaw pointed out that trade unions are already regulated by the certification officer, and members can have redress following complaints to the certification officer about the way in which the organisation operates. I think that that is right, but I also think there are problems with the draft code. For instance, the definition of “members” should be tightened up. The Durham NUM’s scam was to enlist people as associate members. Those people have no legal right to complain to the certification officer, because they are not actually members—and let me point out to the hon. Member for Hendon that that was done with the connivance of Thompsons. “Members” must mean “members” as defined in the Act that covers the certification officer. That may close the loophole. But if “members” means associate members, that should be clarified in the code. Another issue that needs to be clarified is the status of retired members. They may not still be making contributions, but I think that they should still be covered because of their years of contribution and their association.
Mr. David Hamilton: In many cases throughout the United Kingdom, that will apply not only to retired members but to their widows and families. In my part of Scotland many retired members have passed on, but the union still deals with their widows and families, at low cost.
Mr. Jones: I have no problem with that. It is a good example of a trade union not just supporting its retired members, but doing sterling work in supporting widows and others in the community. Unions should be congratulated on that, but alas, it is not what has happened in Durham. That is why it is important for the code of conduct to include a definition enabling trade unions to do the great work that my hon. Friend has described.
There is also the issue of funding. Paragraph 2 of the draft code states
“A Trade Union should give a member relevant information about the funding of their claim, including details of any fees payable by the member and any fees being received by the Trade Union in respect of the claim.”
That is fine, but if a fee is to be deducted, members should be told on what it will be spent. It is important to avoid misapprehension or, indeed, the lies that have been peddled in, for instance, the Durham NUM case. It was said that the fee was being deducted to fund the case when that was clearly not so.
As has
been said, in nine cases out of 10 trade unions provide the cheapest
way for people to obtain justice in court when accidents have befallen
them, but if there is a cheaper way, it should be explained to people
so that
they can decide what to do. I realise that nowadays, given conditional
fee agreements and insurance, there is no reason why any trade union
should charge individuals anything, but I think it vital to make clear
to clients how cases are to be funded and what alternatives may
exist.
Paragraph 3 of the draft code of conduct deals with arrangements with third parties, and I must tell the Minister that I think it contains certain minefields. It seeks to deal with the relationship between a trade union and a third party, which may be a claims handling company. It also refers to solicitors. I think it important to explain to trade union members the exact relationship between a trade union member and a firm of solicitors, to avoid any misapprehension if a success fee, or other fee, is paid to the firm.
I am surprised that Members who are advocates of trade unions, and great champions such as the hon. Member for Hendon, have not homed in on paragraph 4 of the draft code, which I think is a bit draconian for unions. It refers to the competence of employees and volunteers. I do not agree with the sentiment, but paragraph 4.2 states
“A Trade Union should have in place an appropriate quality assurance process to monitor the quality of advice given to members.”
I think that that will impose on many trade unions an additional burden that they will not welcome.
I accept that the volunteers to which the code refers should be trained, but people must recognise that a lot of people who give trade union advice, as lay members in workplaces elsewhere, may not be trained and their knowledge comes from many years of working in particular industries. Therefore, paragraph 4 needs to be tightened so that it is not too onerous for trade unions and does not debar some people who are doing very good jobs in workplaces from giving initial employment advice. In parts, the provision is quite draconian.
John Mann: My hon. Friend makes an excellent and pertinent point. Does he agree that, as a consequence of that particular provision, volunteers within trade unions such as shop stewards or branch secretaries may be unwilling to proffer even indicative advice about where people should go, for fear that complaints will be lodged against them under a regulated system? Therefore, it will be harder to get volunteers to do anything.
Mr. Jones: I agree totally with my hon. Friend. It is important that during the consultation trade unions think carefully about the consequences of that part of the code of conduct. It could put off branch secretaries and other trade union volunteers, who do a sterling job on behalf of their members, from giving “legal advice”. In the worst case scenario, shop stewards will refuse or be afraid to give advice, so that matter needs clarifying.
The
last point in the code again tries to deal with the issue but goes
halfway and does not answer a lot of the points. It is about complaints
and redress. I am not clear, because there is no reference here, how
the provision on complaints by trade union members links with the
legislation in respect of certification officers. Clearly, as a trade
union member—not an associate or other type
of member such as I spoke about earlier—the individual member has
the recourse of going to the certification officer. That needs to be
welded into this part of the complaints and redress system. Otherwise,
there could be a conflict between the code and existing trade union law
that governs regulation of trade unions by the certification
officer.
“Where a complaint cannot be resolved to the satisfaction of the member within a reasonable time, it should be referred to a third party for termination.”
There is no reference to who the third party would be, and there are no explanatory notes. I would be very resistant if the third party were to be, for example,the union’s solicitors, if they were involved. It would have to be some independent body—perhaps the certification officer, as I have outlined.
This is a good first stab at the code of conduct, but it needs to be updated and refined and some of the points that my hon. Friend the Member for Bassetlaw and I have raised need to be taken on board. However, it is better than bringing trade unions into the Bill; there is existing law to protect trade union members. It is odd that it is Labour Members who are arguing for less regulation and the hon. Member for North-East Hertfordshire and other Conservative Front Benchers who are arguing for more regulation. No doubt I will use that as a good example when I am being lecturedby Conservative Members to the effect that the Government are all about more regulation rather than less.
What has been put forward by the Government isa compromise that will protect people. More importantly, it will ensure that organisations that do not abide by the code of conduct will come under regulation. We had the discussion in Committee. The solicitors Thompsons, in their briefing to Committee members before the Committee stage, took the line that has been taken by the hon. Member for Hendon: all trade unions should be exempt. That would include the UDM and others. I pointed that out to a member of the Trades Union Congress, who said “No. We can just have TUC-affiliated organisations.” I was not sure how the Bill could exempt TUC affiliates alone. I think that what the Government have put forward will work if we can get a tougher version of the code to clarify the points that other hon. Members and I have raised.
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