Oral Evidence

Taken before the Justice Committee

on Tuesday 22 November 2011

Members present:

Sir Alan Beith (Chair)

Mr Robert Buckland

Jeremy Corbyn

Nick de Bois

Chris Evans

Ben Gummer

Mr Elfyn Llwyd

Elizabeth Truss


Examination of Witnesses

Witnesses: Patricia Barratt, Senior Associate, Clifford Chance LLP, Vicki Derrick, Martin Houghton-Brown, Chief Executive, and Holly Towell, Policy Advisor, Missing People, gave evidence.

Chair: Welcome Martin Houghton-Brown, Chief Executive of Missing People; Patricia Barratt, Senior Associate with Clifford Chance; Vicki Derrick, who has personal experiences of the kind of distressing circumstances that we are looking at today; and Holly Towell, Policy Advisor to Missing People. We are very grateful to you for coming in today to help us with the inquiry. It has come to our notice and has been bought to Parliament’s notice through private Member’s Bills and in other ways that there is a real area of practical difficulties for people in circumstances none of us would choose to be in involving family members, and we want to look at whether the Government should be pressed to do more about it and, if so, what. We are particularly grateful to have witnesses with a range of knowledge about it. Mr Gummer, will you begin?

Q1 Ben Gummer: Thank you, Sir Alan. Mrs Derrick, it is perhaps appropriate to start with you, if I may. To set the scene, will you describe for the Committee your experience of trying to establish that your missing relative is dead.

Vicki Derrick: Obviously, my husband has been missing for the past eight years. Like most normal everyday people, I was under the assumption that, after seven years, somebody is just presumed deceased. On looking into it more, as I have had to do, that is not the case, as it does not exist in this country; there is no presumption of death procedure, so it has been quite a long process to look into. I have had a solicitor involved.

We still have a mortgage that has not been resolved, which is still in joint names. I can’t change that mortgage. I can’t move house. I haven’t been able to do anything for the past eight years. It has been extremely difficult. I have gone from having a joint income of a husband, who earned far more than I earned, to being a single mum overnight, on a greatly reduced income. I have just basically been expected to get on with it. There is really absolutely no help out there for people in my situation. In eight years-

Q2 Chair: Forgive me for interrupting you, but have you had to contemplate selling your house and discovering that it would be very difficult to do that?

Vicki Derrick: I haven’t. I am looking at the fact that I have got a very good family to support me. If didn’t have that support, I may have had to go down that road. I wouldn’t have had to try to sell my house; I would probably have had my house repossessed, because I would not have been able to keep up the mortgage repayments. There is absolutely nothing I can do with my mortgage. My husband’s name is on that mortgage, and he is not around to sign it over to myself. Obviously, having some kind of procedure in place to help families try to sort these financial issues out would be a great, great help and would ease the burden that I have lived through for the past eight years. You are not only living with the fact that your husband has gone missing; you don’t know why and you don’t know what has happened. I had a two-and-a-half-year-old little boy at the time. There was a lot of pressure, and not enough help out there.

Q3 Ben Gummer: How is your relationship with the police during this period? Have you found them to be helpful or not?

Vicki Derrick: As for the police that I have dealt with in my own city-I live in Manchester, so it is Greater Manchester police-in the very beginning, when Vinny first went missing, it was treated as a high-class missing person case from the beginning and everything was done. From my point of view, obviously, there was not enough contact from the police. To this day, there still isn’t. I do not have any real criticism of how they have handled the case. They have investigated it fully, as far as I am concerned.

Q4 Ben Gummer: All of this, I am sure, does not help you get over the emotional problems. You can understand the administrative ones as well.

Vicki Derrick: Yes. For the past eight years, my life has been on hold. However much I try to move forward, it is always there. I have come to live with the fact and get used to the fact that this is part of my life now. For the mortgage issues, we had a life insurance policy that I tried to get paid out. For all those little things, if they could have been sorted out sooner, it would have made a big, big difference to my life.

Q5 Ben Gummer: I know that we all appreciate enormously your bravery in coming to tell us about it. Mr Houghton-Brown, is this a typical experience?

Martin Houghton-Brown: Sadly, in the charity’s experience-the charity has been in existence for 20 years and was previously known as the National Missing Persons Helpline-there have been consistent approaches to the charity by people from across England and Wales seeking help and support when their loved one has gone missing. They face the very agonising process of saying that they may have died whilst they have been missing. Once they come to their conclusion and want to begin to resolve affairs, seeking out help and support is, at best, chaotic. Legal professionals do not know what they are doing. The courts do not know what they are doing. Because the process is, in effect, a crazy paving of legislation, of statutory and non-statutory provisions, it is very unclear how families should proceed. As in Mrs Derrick’s circumstance, you may proceed along one path and that path will not provide you with provisions for other circumstances. In Mrs Derrick’s case, her marriage is dissolved, but her mortgage remains in their joint name. We have this incredible and archaic process, by which we can have, in one state of affairs, her husband presumed to have died and, in another, him presumed to still be alive.

Q6 Ben Gummer: Just so we get a general picture of this, Miss Barratt, can I ask what the history and the law are behind this? Why is it that there is this crazy paving that has been referred to?

Patricia Barratt: As I understand it, it is because legislation has been developed to deal with very specific situations over a long period of time. In common law, case law grew up to deal with the situation in which somebody was missing in particular cases. There was no procedure to address that. Also, there are legislative provisions to, for example, prevent you committing the criminal offence of bigamy, if you get married after your husband or wife have been missing for a certain period of time. There is another legislative provision to allow for the dissolution of marriage. There is a different piece of legislation for the dissolution of civil partnership. There are also very specific legislative provisions for when certain types of people go missing-for example, merchant seamen and Crown servants. In the tsunami disaster, the Foreign Office said that it would issue foreign death certificates if particular criteria were met. It is a very piecemeal reaction to it. There is a real opportunity now to take an overview and say, "Well, actually, we could have a procedure that works for everything."

Q7 Mr Llwyd: My understanding is that families can ask a coroner for an inquest under section 15 of the 1988 Act, but we have been told by several people-in particular, the UK Missing Persons Bureau-that the criteria are too geographically restrictive and that there must be not only evidence of death, but evidence that the person passed away within the coroner’s jurisdiction. Hence only 12 requests have been made under section 15 between 2007 and 2009. That is not really a step forward. Why do you think that section 15 is so underused?

Martin Houghton-Brown: Apart from the lack of knowledge and understanding of section 15, both by coroners and by the general public, the other determinant is that there are suspicious circumstances. Determining that the person was missing within the jurisdiction, determining that the circumstances are suspicious and, indeed, determining that a death has occurred are all factors, by the nature of someone being missing, on which it is very hard to come to a conclusion.

The police describe a person being missing as their whereabouts being unknown. That means that we do not necessarily know that they have died within that jurisdiction; we do not know the circumstances of their death-if they have, indeed, died-and we do not know whether there are suspicious circumstances. Quite rightly, coroners determine therefore that, even if they are approached, it is not necessarily within their jurisdiction to undertake, or seek leave to have, a section 15 inquiry.

Patricia Barratt: One of the things we suggested in the Presumption of Death Bill was an amendment to coroners legislation so that the chief coroner could designate a coroner to undertake an investigation, where appropriate, and we think that coroners’ greater involvement would be good. Section 15 is slightly problematic, because it requires a report to be made to the Home Secretary and it requires the Home Secretary to make a consideration, so I do not think that that is ever going to be a route that you are going to want to encourage lots of people to go down.

Q8 Mr Llwyd: It’s a rather bad piece of legislation, isn’t it? One obvious point is that when a disaster such as this overtakes a family, financial problems occur. In practical terms, how do families manage? We have had some insight, Mrs Derrick, into the situation that, very unfortunately, you were in. How do families manage in the aftermath of such a thing?

Holly Towell: It varies very greatly from family to family. It very much depends on that family’s individual circumstances and their relationship to the missing person. For example, as in Vicki’s case, there are partners of missing people who maybe have a joint mortgage which they cannot renegotiate.

I speak to many people-my role is Policy Advisor-and I give a lot of practical advice, one on one, to families. I speak to many partners left behind who are actually having to pay both halves of a joint mortgage on their own. If they have, say, a joint credit card and they are not the lead name, they might not be able to access any information around that. If bailiffs turn up at the house, they might not be able to find out where debts come from.

In terms of insurance, as Vicki was saying about life insurance, it can be quite difficult for families to try to find out just how they can access a life insurance pay-out. They often end up approaching institutions which want to work with families but do not really have a framework through which they can. It is not like when someone lacks mental capacity and they can go for power of attorney; there is no such provision when someone is missing. You end up in a situation where institutions-financial institutions in particular-are looking to work with families and families are trying to work with them, but there is no way of getting around the fact that they do not have that second signature to help out. That also runs the risk of a lot more families falling into needing to access the benefit system, simply because they do not have the money to live on. We certainly have quite a few families who have had their homes very much at risk of repossession, because they are not able to meet certain payments.

Q9 Mr Llwyd: Do you have any specific suggestions as to how these problems can be alleviated?

Martin Houghton-Brown: It is clear to the charity that legislative provision in line with the provisions that are already in existence in Scotland, Northern Ireland, Australia and many continental European states-providing for a single legal process by which you can obtain a presumption of death certificate that has the same power as a death certificate, which enables you to draw to a conclusion your partner’s affairs in marriage, in financial and in legal terms-is the right, just and sensible thing to do.

Q10 Chair: That prompts this question in my mind: is there a distinction to be drawn between those cases where presumption of death seems reasonable-there is a basis for presumption of death-and those in which someone has simply disappeared and you are never going to be able to find them, but there really is no evidence that points reliably towards presumption of death? Families might be left in the situation that you have described and have to climb the very high threshold of saying, "There are grounds for presuming death." Should there be some category in between?

Martin Houghton-Brown: I think there should. In fact, sitting behind me is Mr Lawrence, the father of Claudia Lawrence, who, sadly, went missing in York. He has found it incredibly challenging to face the process of administering his daughter’s affairs in the duration that she has been missing. In Australia, there is a process of guardianship. After 90 days, you can apply for a guardian to be appointed to administer in the best interests of the missing person and their affairs. Of course, the guardian will also undertake any duties or responsibilities to dependants that the missing person might have.

Again, as you suggest, this is a very sensible mid-term option. In fact, it could be argued that it is the more pressing concern. With such a system, families and people like Vicki could have secured guardianship in the interim in order to administrate affairs- to renegotiate the mortgage to bring it on to a more favourable interest rate, for example. She or other people could have administrated interim affairs prior to any decision that they might have wanted to take to bring to a conclusion their partners’ affairs.

Q11 Mr Llwyd: Mr Lawrence is a lawyer, isn’t he?

Martin Houghton-Brown: He is, and he has submitted evidence to the all-party parliamentary group. His experience was that, even with his legal prowess, he could not negotiate the system. It was only through the good will of professionals in the financial institutions that he was able to do anything-and some would argue that they were in breach of their duties under the Data Protection Act in co-operating with him. 1

Q12 Mr Llwyd: That was my next question. There is also a complication there, isn’t there? Or there can be.

Martin Houghton-Brown: Certainly, financial institutions want to do the right thing, by and large. Our experience is that they are on side and are deeply sympathetic. However, they do not want to be in breach of their duties to protect an individual’s confidentiality. Therefore, if they have not been granted permission to communicate with anyone other than the individual who set up the original account or policy, they are prohibited from doing so. As you will hear from professionals from those institutions later, that poses enormous challenges to them in supporting families in these very difficult circumstances.

Q13 Mr Llwyd: One presumes that it is a very costly process to try to regularise the estate in these circumstances. Do you have a ballpark figure for the average cost to a family of trying to straighten things out?

Holly Towell: In terms of legal costs, I do not know many families from my few years’ work in Missing People who have managed to go completely through the current presumption of death system, so I do not have a massive pool of information to draw on, unfortunately. It usually costs several thousands of pounds, but it is hugely variable. I have spoken to a gentleman who wanted to administer his brother’s estate, which was worth a few tens of thousands of pounds, and he was told not to bother, because it would cost that amount to administer it. Because the system is so disparate, people are quoted vastly different numbers.

Q14 Chris Evans: Mr Houghton-Brown, if someone went missing now, what would be your advice to their families? If someone went missing for 90 days, what would be the best practice for people to get some satisfaction in law? I am thinking of when Rachel Elias, who is my constituent, came before a parliamentary inquiry in June. She said that she went to a high street solicitor who was not very helpful. What would you advise if someone rang you up straight away? Will you guide us through that process? What would be the best thing for them to do?

Martin Houghton-Brown: Holly faces this challenge every day, so I shall let her answer. But it is fair to say that we feel incredibly inadequate in the face of-in the words of the Scottish Law Commission, when it reviewed its provisions in 1974-an archaic process, which fails to deliver.

Holly Towell: In terms of dealing with the immediate aftermath and the practical and financial issues that families come up against, they often end up being routed through to me from our helpline. Essentially, my role here is to tell them that, unfortunately, they are in a bit of a legal grey area and to be open and honest with the financial institutions-which their missing relative and perhaps they, jointly or solely, hold assets with or are a customer of-and just to have that open relationship, to explain the situation and essentially to rely on good will.

We know that some families are able to get so far, usually when they have some sort of personal relationship with, for example, a bank manager, if they are from a smaller community. But the broad number of families come up against these hurdles whereby, if they do not have the signature of the missing person, there is not much that can be done. It is a case of advising them along the lines of where I have heard other families perhaps having success and sometimes of recommending that they perhaps go to the CAB and see if it can help, but really it is just one of clarifying what families suspect, which is that there is not really anything out there for them to access.

Q15 Chris Evans: You touch on the relationship with the bank-you said, with a local bank manager. When I worked in banking many years ago, the policy was that if there was a dispute in the family, we froze the bank accounts and we froze all the assets. Is assets being frozen a major problem for families of a missing person? We have already talked about not being able to renegotiate a mortgage on to a preferential rate. Are banks still freezing bank accounts and things like that?

Holly Towell: Not really. In my experience, a lot of the time families are hoping that their loved one’s bank account will be frozen, because while they are away they might have various debits consistently coming out and accruing quite a lot of debt. For families, it is so important that they maintain a missing person’s estate, essentially for if they return: they do not want them to come back and find that they are completely financially destitute or that their home has been repossessed. A lot of the families I speak to would like assets to be frozen, in lieu of being able to directly manage and safeguard them themselves. I have not actually spoken to a family where that has happened in terms of freezing.

Q16 Chris Evans: In terms of the entire legal process, how long does it usually take to tie all the ends up? You said you have had only a few families where you have seen that.

Holly Towell: At the moment, I am working with about 30 families, and the duration that they have been trying to work through presumption of death processes can vary massively. For example, I am speaking to a few families whose loved ones went missing this year, but because of the circumstances around the disappearance they are looking into presumption of death now, because it is very likely that their loved one has died. I am also working with a few families who have waited seven years-it is a common misconception that you must wait seven years-and they have had failed applications trying to go through probate and so forth. They may be on application No. 2 and it has been seven years since they started on this process. So durations can really vary.

Q17 Chris Evans: My final question is for you, Martin. What has been the impact of the John Darwin case on your charity? Has there been an effect in the way the families of missing people have been treated, because he disappeared and re-emerged several years later?

Martin Houghton-Brown: No. In truth, in the Scottish case, there has been only one circumstance since the Scottish legislation was enacted in which someone reappeared. The legislation that Clifford Chance helped us to draw up, in line with that in Scotland and Northern Ireland, put in place indemnity insurance as an option to enable the courts to help protect financial institutions and individuals from the occurrence of someone returning.

Of course, it is possible in any circumstance that people may perpetrate fraud, but I think that not legislating on the basis that an individual may seek to defraud the system is a weak option and not the kind of parliamentary process that I would hope to be part of.

Patricia Barratt: In addition to indemnity insurance, there is also a provision in the proposed Bill where, if somebody turns out to be alive, you can go back to court and get a variation order, and the court can then have the power to distribute things in a different way.

Q18 Mr Buckland: I should declare that I was a member of the all-party inquiry, as I think was Chris Evans. Our report, in particular on this point, recommended that the MOJ should provide a framework for consultation on presumption of death and that that framework should be in place by the end of the current Session, with any resulting provisions to be implemented by the end of the current Parliament. Are you able to report back as to any progress that has been made on this?

Martin Houghton-Brown: Sadly, at the all-party parliamentary group, the Minister was-missing. I understand that you have secured his attendance here next week. At that time, there was a delay, and it was stated that at the end of the all-party parliamentary group process there would be a response. In some respects, I am grateful for this Committee, but again, the Ministry of Justice has said that after this process there will be a response.

Q19 Chair: They are obliged to respond to us.

Martin Houghton-Brown: Which is why this is a very welcome process. There is no doubt that it is a matter of great concern to the families that the Ministry of Justice reviews the legislation effectively and properly consults on a new process. I suspect that what you will hear will be that a bit of extra guidance and signposting will be sufficient and not to worry. I can tell you that the families of missing people will be gravely disappointed if the recommendation is simply that a bit of extra signposting will fix this incredibly complex issue, which does not need to be complex and can be simplified in line with the other nations of the United Kingdom.

Q20 Mr Buckland: You foreshadow the next question that I was going to ask. Let us just assume for a moment that the legislative solution is not there. There has been a lot of talk about greater collaboration between agencies. What can be done now? What can we do now to make that a reality?

Martin Houghton-Brown: I think codes of practice and good guidance from the ABI and the British Bankers Association would be very welcome and supported. The reality is that each institution will need to set up its own code of practice and guidance. Guidance, training and capacity building needs to be provided for the legal professionals who will be engaged. We know, from our own research, that even county courts, which might be asked to have a leave to swear death in order to initiate a probate process, know of no such process and do not know what to do. The process of trying to draw in the many components of guidance, good practice and codes of practice would be time-extensive and costly for each of the institutions. That does not mean to say that it would not be a welcome step in the right direction, but I do not think that there is a quicker fix than legislation.

Patricia Barratt: And the other thing to add on codes of conduct is that financial institutions which distribute somebody’s estate on the basis of what is in a code of conduct, may well have legal liability if the missing person turns up alive. If they did it under a court procedure, however, they would not have that legal liability.

Q21 Nick de Bois: Just to get clarity on something that you said, Mr Houghton-Brown, am I right to think that your opinion is that you need primary legislation and that non-legislative things are not really an option?

Martin Houghton-Brown: Absolutely. I have been working with missing persons and missing children for many years and I have sought many policy changes in the public domain. This is the first time I have come across an area where primary legislation is the right solution. In the vast majority of cases, secondary legislation, and in most cases good public policy, will fix the problem. In this case, I do not believe that that is true.

Q22 Nick de Bois: Is your primary reason the jigsaw of legislation that surrounds this?

Martin Houghton-Brown: Absolutely. Also, the current system forces a family to go through extended expenditure and extended processes, meaning that we create a disparity in law where we have someone alive in one court and dead in another court, all of which goes against the laws of natural justice.

Q23 Chair: The Scottish and Northern Irish situation is different and in many respects I think that you would say it was better. There seems to be some disagreement about whether the Scottish and Northern Irish legislation applies only after seven years, with the court not having discretion to grant a declaration earlier. What is your view on that?

Patricia Barratt: My view is that there is a clear discretion in the legislation to issue a presumption of death certificate once the applicant is able to demonstrate to the satisfaction of the court that it is likely that the person is dead.

Chair: That it is likely that the person is dead?

Patricia Barratt: Yes, at any point. There is a Council of Europe recommendation on this, which says that if there is some evidence that the person is likely to be dead, the period of waiting should be no longer than a year.

Q24 Chair: We will consult the Lord Advocate on that and try to get a definitive view. Is there a case for there being a higher standard of proof than balance of probabilities, if you are looking at that question within a relatively limited period in the absence of concrete evidence of death?

Patricia Barratt: I don’t think so, no.

Martin Houghton-Brown: Our experience practically dealing with the affairs of missing people in its broadest context is that less than 1% of missing persons out of 250,000 who go missing every year are thought to die. Although the charity takes on the more difficult cases and therefore 10% of our cases lead to a fatal outcome, it would be our experience that, once someone is missing for longer than a year, the likelihood of their coming home severely diminishes in any circumstance, let alone one where the probability is towards death. Therefore, the risk of exposure to drawing an incorrect conclusion that the person is presumed to have died is very minimal and certainly our experience would back that up.

Q25 Chair: Did the private Member’s Bill introduced by Lord Boswell in 2009 differ markedly from the Northern Ireland provisions on which it was modelled?

Patricia Barratt: It was very closely modelled on the Northern Irish Act, which itself follows very closely the Scottish Act.

Q26 Chair: Would you go for pretty much the same thing now, or would you want to introduce other things into it?

Patricia Barratt: There are enormous benefits from having a homogenous similar system. The families of missing people might live this side of the border or that side of the border. It would just be very helpful if there were a common system.

Martin Houghton-Brown: I think that some families would certainly say that ensuring the legislation provides the capacity for a judge to act on the basis of evidence, rather than on the duration of time, so it is not about an automatic process after seven years, would be very important. As for the provisions around guardianship that we alluded to earlier, whilst they may not necessarily fall into a presumption of death Bill, they would equally be of concern and of import to families.

Chair: In fact, I dragged us into that topic a little earlier. Mr de Bois might want to pursue it a bit further.

Nick de Bois: On the Australian guardianship?

Chair: Yes.

Q27 Nick de Bois: You referred to it earlier, Mr Houghton-Brown. Given that it allows for an administration process, and I think you implied that it was almost an interim process, do you think however that it could be a substitute for the presumption of death legislation, or is it needed in addition to primary legislation?

Martin Houghton-Brown: I think it is needed in addition because, for example, of being able to administrate your financial affairs. If you come to the conclusion that your loved one has died and you want to remarry, guardianship will clearly not bring to an end and bring to a close your marital affairs. Of course, some families would choose to go through dissolution of marriage on the grounds of abandonment after five years, which the current legislative provisions allow for but, of course, a moral and emotional decision of saying, "My husband has abandoned me," when actually your view is that he has not abandoned you, can create enormous distress for families.

It is right that we can recognise the appropriate circumstances. They are separate processes and guardianship enables people to administrate affairs in the interim, in the hope that their loved one will return. If they come to the conclusion, along with the investigating authority-the police in most cases-then the drawing to a conclusion of people’s affairs through presumption of death would be the next step along the way.

Q28 Nick de Bois: Given that we might have limited parliamentary time, what would your preference be: to go for the primary legislation or for the guardianship? Perhaps I could also ask the same question of Patricia Barratt. Which would be your preference, given limited parliamentary time?

Patricia Barratt: Being a lawyer, I am not sure that I am the best person to answer that. I think that Parliament has a responsibility, as a steward of legislation over the years, to make sure that the legislation on the statute book is fit for purpose, and if we have a situation where you have lots of different common law and bits that don’t fit together, this is one of the purposes of Parliament and parliamentary time should be made available to do that.

Martin Houghton-Brown: I am certainly not an advocate of lots and lots of legislation, but this is about simplifying processes. This is about redacting the current set-up. I think that family members would say to us that, if we were to represent either guardianship or presumption of death as a preference, we as a charity would be dishonouring their evidence to us. So I would not go on record as saying that either is a preference. I certainly agree with Patricia’s view that this is an overdue matter for Parliament.

Q29 Chair: Presumably, conflicting emotions are involved, but many families would want to hold on to hope for a little longer; in other cases, circumstances lead people to believe that there is no basis for hope, but that must affect how people want to handle the situation.

Martin Houghton-Brown: Absolutely, which is why the balanced system in Australia is a sensible and fair one that enables families to respond effectively in either setting.

Q30 Jeremy Corbyn: I am sorry I missed the earlier part of your evidence. Why do you think that the Ministry of Justice and, before that, the Home Office have been so dilatory in addressing this matter? It would not, I believe, be legally complicated for them to do so, and these situations cause enormous stress to a significant number of people across the country.

Martin Houghton-Brown: Interestingly, we have had a huge amount of support from the Home Office. James Brokenshire MP, the Minister responsible for missing persons, is in the process of drafting a national strategy for missing persons, which is due to be issued later this month or early next month. We have been delighted, and we have a very collaborative and positive working relationship with the Home Office, as we do with the Department for Education in relation to missing children.

Our relationship with the Ministry of Justice has not been the same. It is under enormous pressure-I understand that. I know that finance is limited and that limited legislative time is available to it. In the words of officials from the Ministry of Justice, "This is not a priority for us." However difficult and challenging it is to administer affairs-my organisation faces enormous financial pressures-we have to continue to do our best by the people whom we are here to serve. We cannot say them to them, "I’m terribly sorry, we cannot help you because we don’t have enough money." We do all we can to help these people, and the Ministry of Justice should take the same responsibility. That is what a big society is all about.

Chair: Thank you very much indeed. We are grateful to you all for the help you have given us this morning. I shall now ask some further questions relating to the insurance industry’s approach.

Examination of Witness

Witness: Nick Kirwan, Assistant Director, Health and Protection, Association of British Insurers, gave evidence.

Chair: Mr Kirwan, welcome. You are the Assistant Director of Health and Protection at the Association of British Insurers, so, presumably, this is an area that you deal with personally and have experience of. You have heard not unfavourable comments about the insurance industry’s dealings with people in this situation.

Q31 Elizabeth Truss: Thank you, Mr Kirwan. What evidence of death will an insurance company accept in a missing persons case?

Nick Kirwan: The answer is that it depends quite widely. Generally speaking, there are two types of situation from a life insurance point of view that are quite different in terms of the approach that an insurance company would take. In one situation, some kind of catastrophe happens and a number of people go missing together. When that happens, the event is usually very well publicised. The sorts of events I am thinking of are planes being lost over an ocean or the tsunami. In those kinds of situations, it is usually relatively straightforward for insurance companies to be able to settle death claims quickly and easily. You can check the passenger lists and the event is well publicised, so you know that it has happened and that the person was on the plane and is missing, and so on. Usually, that is sufficient to be able to settle death claims quite quickly.

A much more difficult situation is when just one person goes missing. Then, of course, there are all the questions, "Why? What has happened here? Do we know the circumstances?" Insurance companies will need to take a lot of things into account when they are thinking about how to understand what has really happened. One important factor is that insurance companies don’t have to wait for presumption of death, although they will always act on that if it happens and sometimes there is a need for that, but it will depend on the circumstances of the case.

Will some examples help? It might depend on when the person took out their policy, why, and how long ago. If someone took out a policy quite a long time ago for the amount of their mortgage, that is a perfectly everyday thing that people would do and, therefore, there is no suspicion that there would be anything wrong with it. If, on the other hand, somebody took out a very large life insurance policy shortly before they went missing, that might put a different light on it.

Q32 Elizabeth Truss: From the insurance industry’s point of view, if the law in Britain were clearer about presumption of death and all the missing links were tied up as described by the previous witnesses, would that be helpful for the industry? How does it impact the industry in other countries that have a clearer framework around the presumption of death?

Nick Kirwan: I can’t really comment on other countries outside of the UK. That is not my area of expertise. I can tell you that there are no real difficulties in how the law operates in Scotland, Northern Ireland or England. There is no difficulty in that. The insurance industry would like a robust process that ensures the courts will go through a rigorous process to ensure that the person-as we have heard earlier-beyond reasonable doubt could be presumed to have passed away. In those circumstances, the insurance companies can work with that situation.

Q33 Elizabeth Truss: In principle, you would be in favour of a change in the law.

Nick Kirwan: As I said, this is not an area of the law that causes insurance companies problems at the moment. I can see why a change of law would be very helpful for all those missing people. I absolutely see that. The insurance industry is very sympathetic to it. We would absolutely support it and wouldn’t want to do anything that would get in the way of it. Equally, it would be wrong for me to say that the law is in the way of insurance companies operating effectively at the moment because they don’t have to wait for presumption of death.

Q34 Elizabeth Truss: Would you see cost implications for insurance companies of the change in the law?

Nick Kirwan: No, not provided that it is a robust process, as long as it didn’t do anything where we said-probably a ridiculous thing now-that, after a year, people are always presumed dead. We would not want to encourage a target for fraud. But as long as a robust process is going through, which there is in all parts of the UK at the moment, that would not cause us any difficulty at all.

Q35 Elizabeth Truss: There have been some accusations that insurance companies will not accept presumption of death as sufficient evidence to pay out in some cases. Why would that be?

Nick Kirwan: That’s not my understanding and I don’t know of any cases like that. My understanding is that insurers should accept that.

Q36 Elizabeth Truss: In fact, you may well pay out, even if there is not presumption of death. What kind of criteria would you use in those cases?

Nick Kirwan: Where we would pay out without-a case came to my attention earlier this year when a plane went down. The claim was settled within about 12 weeks or so.

Q37 Elizabeth Truss: Generally, it is in those group cases when an incident occurred, rather the case when an individual was involved.

Nick Kirwan: In an individual case, unless the insurance company can satisfy itself quite clearly earlier, it is usually going to wait for the court’s decision.

Q38 Mr Llwyd: Insurance companies are not helpful in every case. For example, we were given evidence about a presumption of death order being made by the High Court and the insurance company would not accept it.

Nick Kirwan: I am very disappointed to hear that. I don’t know of any cases myself. I would be happy to look into it. I don’t know if there were other reasons why policy may not have-

Q39 Mr Llwyd: I cannot say, but a solicitor gave evidence to us, saying that that was the case in this particular instance. But that is unusual, in your view?

Nick Kirwan: In my experience, my understanding is that an insurance company would accept that as evidence of death. Of course, that is not the only thing that insurance companies will look for when paying out. For example, they will need to make sure that the policy had been in force and that the premiums were paid, and there may be other reasons, but I cannot imagine that that would be a reason in itself for the insurance companies not accepting proof of death.

Q40 Chair: I think that you will have heard the discussion earlier around guardianship; I think you were present in the room at the time. You, as an industry, have some reservations about a statutory scheme to deal with things like direct debits and other features of bank accounts, because there might be a subsequent liability. Would a guardianship scheme address your concerns, or would you have worries about that as well?

Nick Kirwan: No, I think we would like to see a simpler way through the situation of people managing their accounts. That is, by far and away, a much larger issue for the insurance industry than managing death claims for missing people. I would have to say that managing death claims for missing people is a very rare occurrence. I spoke to one very experienced claims manager who said she had dealt with only two cases in her career. So it is quite a rare and individual thing, but the issue of people managing their bank accounts and other things is not.

Q41 Chair: It is analogous to the provisions that you have in respect of lack of capacity, but it is a distinct category, isn’t it? We do not have it at the moment, but Australia does.

Nick Kirwan: Yes, and of course the insurance industry would absolutely support something which would help people manage the day-to-day accounts of the person who has gone missing. Our own view is that we would favour some kind of limited power of attorney. The problem with powers of attorney at the moment is that they are very difficult to obtain, and when you do obtain them they have no limits. Maybe there is room for something which is much easier to obtain more quickly but has some limited powers-for example, that you can only act on the person’s current account, so that you can cancel their Sky subscription and gym membership which they are clearly not going to use, but keep their life insurance policy and their home contents policy in force and those kinds of day-to-day things. The issue at the moment, of course, is the Data Protection Act, as I understand it.

Q42 Chair: In the absence of such a scheme or until one might be brought in, why is the industry so concerned as to worry about temporary alternatives to it, given that, if you take the case of Scotland, over the past 34 years only one missing person whose estate was subject to an order has reappeared? It is going to be a very rare problem for the industry, isn’t it?

Nick Kirwan: Yes, I think this whole thing is a relatively rare problem. I do not have any numbers about this, but there are also cases where attempted fraud happens which does not succeed-people go missing and try to notify the insurance company, but the insurance company finds them, so that they never actually get to the point of receiving their pay-outs.

Q43 Chair: On managing affairs and the sort of situation that you heard described earlier, what about the Data Protection Act issues? Is the industry being too rigid in dealing with this? Has it had any discussions with the Information Commissioner to get an understanding of how best to deal with situations where it really is in everybody’s interest for the necessary information to be made available to the next of kin?

Nick Kirwan: Yes, it is very important. I can tell you that I have got a meeting with the Information Commissioner later this week to discuss that. I have not had one to date, but it is something that we would like to see resolved.

Q44 Nick de Bois: Just to return to your point about fraud, you put considerable emphasis in your written submission on-I will read it out for clarity-"The combination of an increasingly difficult economic climate combined with increasingly fluid travel habits, may result in ‘going missing’ becoming more common if access to insurance funds without a ‘body’ becomes easier. A change in process would increase the risk that monies are paid out which may at some point in the future need to be repaid." I have got two things on that. Bearing in mind the Scottish case that we have just referred to, what evidence have you based that on? Is it just a subjective statement, which is fair enough? Are we not in danger of causing a lot of distress to families by going to the lowest possible common denominator without evidence to support that?

Nick Kirwan: No, we don’t want to go to the lowest common denominator. We want to ensure that we have a clear, robust process in place. Provided that it is a clear and robust process, I think that the insurance industry would support it.

Q45 Nick de Bois: So it is a worry, but you cannot point to any evidence.

Nick Kirwan: Yes.

Q46 Ben Gummer: Can I just add to that, Mr Chairman? I have personal knowledge of one case where the insurance company was defrauded in an alleged missing person scenario. Do you have any figures for how many actual cases of fraud there are per year that you deal with as an industry?

Nick Kirwan: We don’t have accurate information about that, but it is only a handful.

Q47 Ben Gummer: But it is an annual occurrence. I am trying to get a grip on where you are at the moment.

Nick Kirwan: My understanding-it is only anecdotal evidence-is that there are probably about equal numbers of cases where we deal with missing people where we are settling claims and attempted fraud. Most of them are attempted. Very few of them are successful, and when they are, they tend to be very high profile, as in the case mentioned earlier.

Q48 Chair: I am not sure that I understood what you said there. You appeared to be saying that there were as many cases of fraud as there were missing people.

Nick Kirwan: No, I’m saying that there are only a handful of cases of attempted fraud.

Q49 Chair: As opposed to quite a significant number of missing person cases in which the insurance companies accept-

Nick Kirwan: No, the number of missing persons cases that we deal with is very few, where people have life insurance policies. It is a handful of cases every year.

Q50 Chair: If that is a handful, are we talking about a very much smaller number of actual fraud cases than that handful?

Nick Kirwan: Yes. They are both very small.

Q51 Chair: You might want to check that, if you have industry figures.

Nick Kirwan: I don’t believe that we have accurate information on those numbers. It is not a problem that our members report to us regularly.

Q52 Mr Llwyd: If it is only a handful, with respect, it will not be difficult to confirm, will it?

Nick Kirwan: I think that that is right. We could write to our members and ask how many cases there are. Would that be helpful?

Q53 Chair: It would be useful to know. It is interesting that we did not pick up from the earlier witnesses a sense that the insurance industry was treating people with an air of great suspicion. Clearly, however, that is a danger that must arise when you are dealing with individuals. If you are worried about fraud and experience it in a number of areas of insurance, how do you avoid, as an industry, making the emotional turmoil of people who are in this situation even worse by adding suspicion to it?

Nick Kirwan: Well, insurers are experienced at dealing with these situations. These are exceptional cases that we are talking about. I would like to think that our members try to make the process as helpful and as easy to navigate as possible, in sometimes difficult circumstances. It is what life insurance companies do.

Chair: Mr Kirwan, thank you very much indeed for your help. We are very grateful.

[1] Note by witness: Missing People asked for this s entence to be clarified; it was a speculative statement, and on subsequent clarification implies a breach where there was none.

Prepared 16th February 2012