Examination of Witnesses (Questions 80-99)
DEPARTMENT FOR
BUSINESS, ENTERPRISE
AND REGULATORY
REFORM
22 OCTOBER 2007
Q80 Mr Mitchell: The Law Society
has determined that additional charges were not improper provided
that the client had been properly informed of the charging arrangements.
Was it investigated whether the clients had been properly informed
when cases arose?
Sir Brian Bender: There is
a pilot going on in Mr Kevin Barron's constituency that is trying
to ensure that there are proper information and complaints procedures,
but as a result of that complaint, more than £3 million has
been refunded to claimants.
Q81 Mr Mitchell: The Law Society's
legal complaints department has referred some cases to the Solicitors
Regulatory Authority for refusing to make redress.
Sir Brian Bender: Correct.
Q82 Mr Mitchell: So how much has
been recovered?
Sir Brian Bender: Solicitors
have refunded more than £3 million, according to my information.
In addition, the Legal Complaints Service has recovered some £720,000
in fees from 15 law firms. It has also referred three law firms
to the Solicitors Regulatory Authority.
Q83 Mr Mitchell: So the Law Society
has not recovered very much.
Sir Brian Bender: It has
not yet recovered enough.
Q84 Mr Mitchell: Not much.
Sir Brian Bender: Not much.
Q85 Mr Mitchell: Let us move on to
the subject of the contractors. Capita Insurance Services was
the contractor for central processing of the case work, and Capita
Health Services and Atos Origin were the two contractors for medical
assessments. Presumably they were making good money out of the
work.
Sir Brian Bender: Yes. However,
in Capita's case, for example, there was a re-tendering for the
contract, which incentivised it to complete early. Capita won
a competitive tender a couple of years ago.
Q86 Mr Mitchell: Has anything been
recovered from Capita?
Sir Brian Bender: I do not
believe that it has been overcharging us. Clearly, it has been
carrying out a commercial operation. It got the job in the first
place because it bought out the company that bought out the claims
handling function of—
Q87 Mr Mitchell: At the time, the
solicitors complained that the two medical assessment companies
did not take on extra staff to do the work, as a result of which
there were long delays. Is that correct?
Sir Brian Bender: That is
a slightly different issue. There was a problem in obtaining sufficient
medical expertise. Can you add anything on that, Ian?
Ian McKenzie: Yes. As I understand
it, there is a constraint primarily within the COPD scheme in
terms of the number of respiratory specialists in the UK who can
undertake some aspects of the regime that we have in place.
Q88 Mr Mitchell: The solicitors did
not staff up either. So two sets of organisations—solicitors
and medical examiners—were handling a large number of complaints
without taking on extra staff, despite the fact that those complaints
caused you a lot of extra work and required a lot of extra staff
at your organisation. Did that not ring alarm bells at all?
Ian McKenzie: The NAO paid
tribute to the work that was done once the Department actually
recognised the challenges of some of the things that it was dealing
with, including the alignment that we sought to bring about between
different aspects of what I might call the delivery chain. That
allowed people to move through the compensation scheme, and the
Department put a lot of effort into bringing that alignment about
and ensuring that solicitors and contractors were all working
on the same cohort of claims in order to bring them to a conclusion.
Q89 Mr Mitchell: When did alarm bells
actually begin to ring about the scale of expenditure? When did
you start getting complaints that solicitors in Doncaster and
Nottinghamshire were suddenly driving around in Rolls-Royces and
paying themselves millions of pounds?
Ian McKenzie: The response
in terms of growing the resource base and the number of staff
working on the scheme happened effectively in 2000.
Q90 Mr Mitchell: We had a letter
from Mrs Ann Elizabeth Evans, [10]which
presumably has been passed on to you; if not, it will be. She
complains that her solicitors put in claims that were additional
to those for which she had filled in the forms. The claim questionnaires
were altered, particularly with regard to questions that potentially
raised the most in terms of special damages. In other words, her
claim was upgraded to a higher level than she wanted. She says
that the answers that she was seeing on the copy documents on
their file did not reflect questionnaires that she had sent to
the solicitors in May 2001. Subsequently, she went to an independent
solicitor who was concerned that the fraud contained within her
file could be the subject of much wider practice. Have you had
indications of fraud, and will you look into that case?
Chairman: That is a detailed question
and you might wish to provide a note on it. [11]
Sir Brian Bender: We shall
look into that. There is a separate issue on fraud, but some fraud
has been detected, yes. I think that some 0.2% of claims have
been found to be fraudulent and therefore either reduced or denied,
as a result of which we have saved £20 million. There is
a separate investigation—not against the taxpayer but involving
the UDM, in which the Serious Fraud Office is involved. That has
been written up in the press. I shall provide a note on the particular
case to which Mr Mitchell referred.
Chairman: Thank you. The final questions
are from Mr Williams.
Q91 Mr Williams: I think that most
of the areas have been covered.
Looking at it personally, Sir Brian, is
not the Law Society's argument somewhat obscene in that solicitors
could make deductions from compensation, which often went to widows,
to cover their costs for cases that they lost? To my mind that
is utterly morally objectionable. As an individual, how do you
feel about that?
Sir Brian Bender: I find
it disappointing, and I think that many of the things that have
happened in this case have highlighted—I am choosing my
words carefully—significant issues of professional practice
in the legal profession. Those matters are being pursued by the
Legal Complaints Service and the regulatory authority. There has
been a lot of disappointing professional behaviour.
Q92 Mr Williams: Of the 10 groups
of solicitors listed in appendix 7, have any been asked to make
repayment, and if so, have any not yet made it?
Ian McKenzie: When you refer
to repayment, are you referring to deductions that they have made
from claimants, or to repayment to us for the fast-track scheme?
Mr Williams: No, from claimants.
Ian McKenzie: It would not
necessarily be to our knowledge, effectively. We have written
to all firms. Ministers have written on several occasions—both
in 2003 and, as Sir Brian mentioned, most recently earlier this
year—to all firms involved in the scheme, urging them, if
they have taken deductions without the claimant's knowledge, to
ensure that those deductions are repaid. All firms have received
a message from the Department to that effect.[12]
Q93 Mr Williams: Just as an exercise
for the Committee, would you write to each of those 10 and get
first the answer to my question?
Sir Brian Bender: Certainly,
Mr Williams. Just to be clear: your question is not the reimbursement
of overpayments to the Government, but about charging the claimant?
Mr Williams: Yes.
Sir Brian Bender: We will
do that. [13]
Q94 Mr Williams: This is intriguing.
That is the top 10 solicitors. Obviously, hundreds of solicitors
are involved. Could you do us a table giving us a list of the
lowest 10, just so that we can see whether any solicitors at all
emerge suffering from deprivation as a result of this exercise?
Ian McKenzie: Yes. [14]
Mr Williams: I think all the points otherwise
were covered by Mr Touhig and Mr Bacon. I am quite happy.
Chairman: Do you have a final supplementary,
Mr Bacon?
Q95 Mr Bacon: Yes. Sir Brian, my
question just arises out of your exchange with Mr Williams. You
said to Mr Williams, "Just to be clear: you are not talking
about overpayments to the Government." You presumably mean
overpayments by the Government. Law firms would not make overpayments
to you, would they?
Sir Brian Bender: Yes, you
are correct. I was trying to distinguish between charging the
claimants and overcharging the Government. I got my preposition
wrong.
Q96 Mr Bacon: Yes, and for Mr Williams'
benefit, you will send a note on charging the claimant?
Sir Brian Bender: Yes.
Q97 Mr Bacon: Would you send for
my benefit a note on charging or over-charging the Government?
To me, it will be just as interesting.
Sir Brian Bender: Will do.
[15]
Q98 Mr Bacon: And also, out of those
top 10, how much you expect back from any or each of them, and
how much any or each of them has paid?
Ian McKenzie: We can certainly
provide the information about recouping—effectively, what
is owed by each organisation—and where we are against the
repayment. [16]
Q99 Mr Bacon: When you said that
Ministers had sent a letter on several occasions urging repayment,
you had presumably taken legal advice about the standing of the
letter and the lawful need on the part of the solicitors firms
to pay you back that money? Have you?
Ian McKenzie: We did take
legal advice. It was not about paying us back the money, but about
ensuring that with the claimants on behalf of whom they were handling
the claims, they had been clear where they had taken deductions,
and that if they were taken without the claimants' knowledge,
or inappropriately, effectively, the firms had an obligation to
repay that money.
10 Ev 13-16 Back
11
Ev 16-17 Back
12
Information provided, not printed. Back
13
Ev 20-23 Back
14
Ev 17 Back
15
Note by witness: This relates to the Department's position
in respect of OROS cost recovery from individual organisations.
As at 2 November 2007, the Department had recovered over £41.8
million which equates to 52% of the total debt (£80.6 million)
which is to be recovered. The Court has set an end stop of 31
March 2008 for repayment of these debts. Those with any outstanding
debt at that point will be asked to make a final lump sum payment. Back
16
Ev 17-18 Back
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