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Mr. Hoban: That is exactly the problem. The Government have introduced a process on a sectoral basis; the Ministry of Justice said that it would not introduce a generic process. The Minister justified the process that we are legislating for with a sectoral response, but the sector does not know the rules by which it will operate. The sector requires clarity.
Given that the Ministry of Justice has rejected a generic application and that this is the first sector where the rules will be applied, it is reasonable for people to expect that there will be rules reflecting the concerns of the sector being used as a guinea pig for the new process.
Ian Pearson: Again, let me explain what we are trying to achieve. I take issue with what the hon. Gentleman said. Previously, he argued in favour of removing some of the Treasury’s powers of discretion to make regulations. I have been at pains to stress that the rules that the various bodies are working on, including the civil procedure rule committee, are generic, but that we are taking a sector approach to implementation. That is why we needed powers to tailor rules and ensure that they have regard to specific circumstances: when we discussed previous clauses, I made it plain that the Treasury needed those powers.
In many cases, when we are talking about legislation in this House, we are talking about the balance between what is contained in primary legislation and what appears in secondary legislation. A lot of legislation is about providing an overall legislative framework as a structure into which contents are put. A lot of the detail that sometimes needs to be changed and updated in the light of circumstances is rightly there in secondary legislation, because it is a lot easier and more appropriate to alter.
The Bill includes a backstop power to enable the Treasury to set out supplementary criteria that can be tailored to the financial services. At the risk of labouring the point, it is important that the Committee recognises that. The Government intend to consult fully on the regulations, including discussions with experts on civil procedure, so that such issues receive the fullest possible debate. I realise that there is a natural desire to want to know the detail of everything immediately, but that is not how most legislation works. We have the right balance between what is in the Bill and what is coming down the track in terms of further work at a more detailed level, explaining how things will operate on a more technical basis.
Mr. Hoban: We can debate on the proper process for consultation, but in most situations one would expect there to have been wider consultation about a radical measure such as this with the sector directly concerned, than has been the case to date. Returning to the generic rules, when the Minister spoke earlier, he did not refer to the fact that the rules were generic for collective proceedings matters. The challenge is that the Ministry of Justice has rejected a generic collective proceedings law, and it will be applied on a sector basis. From what the Minister said, my assumption was that the rules to be developed would be specific to the financial services sector, which would then be tweaked by the reserve powers. That was the impression that the Minister gave me earlier because he did not use the phrase “generic rules” but rather talked about rules relating to the proceedings. He spoke about generic rules during the discussion on the amendments. Is he saying that the Treasury’s reserve powers will take the generic rules and tailor them specifically for the financial services sector? Will those rules under the auspices of the Ministry of Justice be generic rules that can be applied in any circumstances where the Government choose to use collective proceedings?
Ian Pearson: That is exactly what I am saying. I am sorry that the hon. Gentleman did not appreciate what I said earlier and I apologise to the Committee if I was not sufficiently clear. The work that is being done by the civil procedure rules committee centres on rules that will be generic, and it will consult on them. I kept making the point that the Treasury has a backstop power to set out supplementary criteria. That is explicitly because these are generic rules that will apply to other sectors where collective proceedings orders might be introduced. We want to make sure that the rules that relate to the financial services sector are tailored and specific, which is why we need the powers.
That is why amendments 68 and 69 should be resisted. They would distort the development of more comprehensive rules, and the rules need to be developed in more detail by those appointed and best placed to do so. I emphasise that the rules will be subject to the fullest possible consultation and debate before they are finalised. There will be ample opportunity for the industry and others to make their views known. It would also be inappropriate for them to be set in primary legislation, because that would mean that they could not be updated quickly in the light of changing experience and circumstances. I therefore fundamentally believe that the hon. Gentleman’s amendment is misplaced. However, if this debate has helped clarify matters for the Committee and for those who follow these proceedings, it has been helpful.
Mr. Hoban: I may be having trouble understanding, but I believe there is a wider problem regarding the lack of transparency in relation to the process and how we are going to progress from the Bill to a workable set of rules. I assume that, where the Bill contains rules that stem from a requirement to introduce collective proceedings orders for the financial services sector, they will be specific to the sector and not generic. The Minister has referred to backstop powers, which are clearly more important than I previously understood them to be, given that the rules will be generic rather than specific to the financial services sector. We should also bear in mind that the Government actually rejected the process of generic collective proceedings rules. That adds to our confusion that the committee that the Minister referred to is developing generic rules when only one sector is actually implementing the process. It would be useful to know how widespread the Government expect the use of those powers to be.
On the consultation process that the Minister outlined and the time scale, we have not discussed the timetable for the implementation of the provisions. Will the consultation process on the court rules include representatives from the financial services sector as well as the people that the Ministry of Justice generally consults on such things? Does the Minister expect the consultation on the Treasury regulations to happen in parallel with that on the court rules or will it happen subsequent to the introduction of court rules? When does he think the industry will be in a position to see both the draft rules and draft regulation?
6.15 pm
Ian Pearson: Let me have another go and respond to the specific points made by the hon. Gentleman. I hope that he now realises why the Government want to resist his amendments and accepts that they are not appropriate in such circumstances.
There is no intellectual difficulty with saying that, as a Government, we have decided not to move forward with collective proceedings generically, across all sectors, but saying that in sectors where we think there is a case for proceeding there should be some generic rules, to ensure consistency. That seems sensible, as does saying at the same time that there might be some sector-specific circumstances to which courts will need to have regard, so there is a requirement to build on to the generic rules established. That is what we are proposing.
I want to assure the hon. Gentleman and others that there will be full consultation on the matter. We want to consult as widely as possible, including financial stakeholders. Clearly the Treasury consultation will be informed by the consultation on court rules, so although there can be some parallel processing it is right to consult on the court rules first. We would seek to gain the views of the financial services industry on those rules and take them into account when designing the Treasury rules as well. I expect the Treasury rules to follow on from the consultation on the court rules.
The intention is to consult on the court rules later this year, with a view to seeing implementation in 2011—that is my understanding of the time scale at the moment—but I stress that there will be ample opportunity for interested parties to contribute to the consultation exercise. We want to make sure that we get this right and recognise that it is a new departure and, therefore, it is right that we spend a significant amount of time talking to stakeholders and other interested parties to make sure that their views are properly taken into account when it comes to developing the new provisions.
Mr. Hoban: I am grateful to the Minister for that explanation, and of the process in particular, which will reassure people that the proper time will be given to consider the proposals. Given that the court rules are generic to the process, rather than specific to the financial services sector, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Rob Marris: I want a quick run around the block with the Minister on counter-claims—the concept is slightly strange, but I can understand how it might happen—and, more specifically, on the costs of counter-claims. I am referring here to paragraphs (i), (j) and (f) of subsection (2).
The issue involves the opt-out procedure. If someone fails to opt out, they are party to the action and are a claimant. If the defendant successfully counter-claims, there will be a costs order in the usual manner against the claimants. We now have someone who never went near the action but who did not read the blurb and did not opt out, so they are part of the claim; there is a successful counter-claim against them and, lo and behold, someone comes knocking on their door asking for costs. Could the Minister elucidate that a little because, were that to be the case, it would not go down well with our constituents? In spite of the considerable detail in clause 24, that is not covered as far as I can tell.
The obverse of that is that under 24(2)(f) there can be a representative counter-claim on an opt-out basis. There is a representative counter-claim on an opt-out basis against a bunch of claimants. The counter-claim fails, so the claimants who have successfully resisted that counter-claim in the normal course of events, seek their costs against those who made the counter-claim. Those who made the counter-claim included those people who failed to opt-out because it is not now a counter-claim, and therefore are part of that unsuccessful counter-claim. Because of counter-claims, they could end up with a costs bill for a case they never went near. Will the Minister at some point address the issues raised by those examples? Perhaps not today, because these are complex issues and that is the difficulty with putting complex issues in the Bill. I am concerned about people who did not opt-out potentially ending up with a cost bill against them, especially in a counter-claim situation.
Ian Pearson: If I understand my hon. Friend correctly, I would be likely to have similar concerns. My understanding is that the normal rules on costs will apply, as they do in proceedings. He cited clause 24(2)(i). As he will be aware, that is one of an illustrative list of issues that will be considered when determining the rules—the point that I was making to the hon. Member for Fareham. Again, as I said earlier, there will be a full consultation on the rules, so there will be ample opportunity to take account of the views of my hon. Friend and of others concerned about these particular issues. In passing clause 24 today, we are not committing to anything other than providing an illustrative list, which will be considered as part of regulations that will be drawn up, debated and discussed in the normal way. I hope that provides him with assurances that his views can be taken into consideration.
Mr. Tom Watson (West Bromwich, East) (Lab): Does my hon. Friend agree that my hon. Friend the Member for Wolverhampton, South-West is an utter genius and may have spotted a flaw in the Bill? In that unlikely scenario, would the Minister commit to get his officials to look at it and perhaps come back on Report to make sure that his fears can be allayed?
Ian Pearson: I am happy to acknowledge the contribution that my hon. Friend the Member for Wolverhampton, South-West makes to the Committee and to the House in general. He is widely recognised as an expert on many matters. His views are always of great interest. Ministers and officials always take what he says with the utmost seriousness. On this particular point, the comments I have made that these matters will be considered in the future as part of the process of determining the rules, should provide him with assurances that his expert views will be taken into consideration by some very eminent people, whom we have put in charge of drawing up the rules. I hope that provides sufficient assurances.
Question put and agreed to.
Clause 24 accordingly ordered to stand part of the Bill.

Clause 25

Definitions
Ian Pearson: I beg to move amendment 85, in clause 25, page 28, line 34, at end insert—
‘(8) The Treasury may by order amend subsection (2)(b) so that, in Scotland, the definition of “the court” is extended to include the sheriff.
(9) An order under subsection (8) is subject to negative resolution procedure.’.
This amendment gives the Treasury a power to enable collective proceedings to take place in Scotland before the sheriff.
I propose the amendment at the request of the Scottish Government. The amendment will give the Treasury a power to enable collective proceedings to take place in Scotland before the sheriff court. At present, the clause provides for collective proceedings to be heard in the Court of Session only. The reason is that the Scottish Government are currently considering recommendations about class actions generally in a report by the Scottish civil courts. Decisions about the applicability of class actions in Scotland have not yet been taken and there is a question of whether they should be combined to the Court of Session only. The power will enable class actions to be extended to the sheriff court if the Scottish Government find it appropriate to do so in future.
Amendment 85 agreed to.
Clause 25, as amended, ordered to stand part of the Bill.
 
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