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Lord Donaldson of Lymington: I repudiate emphatically any suggestion that one should use the Press Complaints Commission as the yardstick for deciding what we should do in this scheme. That commission invented its own scheme. If relevant, I would happily join in the debate about the unnecessary omissions from that scheme. I merely state that is not the yardstick.

On the provision in Clause 224(4)(b), where costs can be awarded in favour of the scheme operator if the complainant is responsible for unreasonable delay, would it not be more appropriate to provide that his complaint should be dismissed? If he is responsible for unreasonable delay, I do not understand why everybody should be put to the trouble involved.

Lord Walker of Worcester: In support of the amendment in the name of my noble friend Lord Saatchi, the situation of an unauthorised person and a consumer involved in a procedure, where only one of them is bound by that procedure, is an uncomfortable one. The Minister's main argument appeared to be that consumers are small people with limited resources and authorised persons are large people with plenty of resources, although sometimes it could be the other way around. There are plenty of small insurance brokers and small financial advisers, who are perfectly honourable and who may have wealthy clients who are in dispute with them. In that situation, the ability to meet future legal costs is totally the other way around.

In my view it would be advantageous if the ombudsman could say to both sides, "If you wish to pursue my procedures the result will be binding on both sides". That could also result in many people seeking redress before the ombudsman before seeking redress in the courts because the cost would be small, the procedure speedy and they may achieve a quick result. In the event, plenty of people, perhaps against legal advice, may go to the ombudsman.

I hope it will not embarrass the noble Lord, Lord Taverne, if I support the Government in their opposition to his amendment. From his opening remarks this afternoon, I thought that there would be total agreement between the Government and the Liberal Democrats on all issues. However, I believe that the noble Lord, Lord Lipsey, was correct in his criticism of the potential effect of this. I hope that that amendment will be withdrawn.

Listening to the noble Lord, Lord Taverne, I was reminded of a letter written many years ago by AP Herbert of The Times, in which he said that the Liberal Party is as a herring: the backbone is to the left or to the right depending on which way you open it!

Lord Elton: The noble Lord has made it clear, as does the Bill, that the decision of the ombudsman is binding on the respondent. I understand that that is

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the case only if the respondent accepts the award. If the respondent goes to court, is there a provision in the Bill that makes this an alternative, or is it an additional recourse? I assume that it is not an alternative and that it is the expectation that the complainant will appeal against the award of the ombudsman. However, there is nothing to stop the complainant seeking an award against the practitioner, thus having two bites at the cherry. Surely there must be a protection for practitioners against such a situation.

As the award is not binding on the complainant, the result is that there will be two classes of decision within the compulsory jurisdiction. In many respects, although not in all, I take it that the ombudsman is expected to conduct himself--I speak of him collectively--as a court. To what extent are his--or its--decisions binding? To what extent must decisions taken on Wednesday be consistent with decisions taken on Tuesday? Is there any difference between a decision that has been accepted by the respondent and one that has not and, therefore, has not been put into force? Is the ombudsman bound by that when a similar case comes up in the future?

Such matters may seem small now, but they are cumulative. Down the years a considerable body of what we would otherwise call "case law" will build up, and it is important to know how that will build up.

Lord Donaldson of Lymington: The noble Lord, Lord Borrie, knows far more than I do about this. However, I know quite a lot about the bank ombudsman scheme and people do not have trial runs in front of the ombudsman. One may think that they would, but they do not. Furthermore, there is no doctrine of precedent. The operation is much more like that of a mediator. Indeed, as I understand it, in practice the banking ombudsman used to issue a draft award, so to speak, so that the complainant would know what would happen if he pursued the matter and usually that settled the issue one way or the other. The answer is that it works, although intellectually that may be a little surprising.

Lord Elton: The noble and learned Lord treats the experience of the banking ombudsman as though it were precedential. Can we be assured by the Government that this scheme will operate in the same way? If not, from where will that reassurance come?

Lord Borrie: Perhaps I can add a helpful point of fact. The insurance ombudsman, a position that has existed since 1982--a precursor of the other private sector ombudsmen--from time to time has published quite detailed case law in terms of loose-leafed volumes of decided cases. I understand that they are not strictly speaking precedents in the same way as decisions of the Court of Appeal under the Master of the Rolls are regarded as binding precedents, but they are useful both to later ombudsmen and to the industry.

Lord Elton: That is helpful. Does that mean that a complainant can look through the records and,

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through the ombudsman, apply the same principle to his case as was applied in a decision taken three or four years ago?

Lord Borrie: The noble Lord is speculating about something I do not know. I know that there is availability and, therefore, a very bright complainant may well check. It may be that one of these days such information will be available on the Internet and many people will see these "precedents".

Lord Elton: The noble Lord mistakes me. In any case, I am asking the question in the presence of those who know everything: the Government and their advisers. The question I am asking is not whether people will appeal to previous cases for precedent, but whether in fact they will be entitled so to do. The noble Lord, Lord McIntosh, looks as though I am straining rather far, but I am not. I have been on the edge of these affairs. It is quite important for those making the decisions to know whether a decision made today will be held to under different circumstances on another occasion in the same way as is a court. The noble Lord may want to write to me about this; I would like an answer.

Lord Bach: I have nothing further to add to the letter I wrote; I should just be repeating myself. In each case, the ombudsman must be fair and reasonable, given the circumstances of the matter before him. If one of the parties to the case wants to refer to whether it is a "loose leaf" precedent or not, that will be his or her right. No doubt the ombudsman will take note of that, but he will decide the case on what is fair and reasonable to that particular complainant and respondent. That is all I want to say on the matter.

Lord Elton: The noble Lord said that in fact it will not form a precedent and presumably will not be justiciable as such. A precedent is something by which one is bound. I beg the noble Lord's pardon, it will not form a binding precedent and therefore it will not be justiciable as such, which is what I wanted to know.

Lord Saatchi: I am grateful to all noble Lords who have spoken in this short debate about the ombudsman. His role is probably one of the most important aspects of this Bill. Therefore, we shall want to come back to this issue on Report. The noble Lord, Lord Sharman, made some very interesting points as regards the ombudsman in relation to a previous group of amendments. I am grateful to noble Lords who have spoken to this point.

The striking thing about the very short debate that we have had is that one gets a slight impression that the Government's position is that the authorised persons--namely, the firms--are like naughty school children. There is a presumption that that is what they are. However, we should remember for a moment that it is the authorised persons who are paying for this scheme. It is their money that is being contributed to making the ombudsman scheme work. I believe that

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we could give them a little more credit than has been apparent in some of the comments we have heard this afternoon.

Lord Bach: There is no way in which we believe the authorised person, to use the expression of the noble Lord, to be like a "naughty person" in all this. As I understand it, already many people will voluntarily become authorised and use any ombudsman scheme that is now available because it has been found to be a practical and satisfactory way of dealing with disputes. There is absolutely no bias set into this scheme at all. We want to see the problems sorted out as quickly, flexibly, and cheaply as possible.

Lord Saatchi: How can the Minister say that there is no bias? The two parties who come before the ombudsman--namely, the authorised person and the complainant--do not have the same rights. Therefore, bias is built into the structure of the Bill. Nevertheless, I shall not delay the Committee any longer. We shall return to this matter on Report. I am grateful for what noble Lords have said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 250A and 250B not moved.]

Clause 222 agreed to.

Clause 223 [Awards]:

[Amendment No. 250C not moved.]

Clause 223 agreed to.

Clause 224 [Costs]:

[Amendments Nos. 250D and 251 not moved.]

Clause 224 agreed to.

Clause 225 [Ombudsman's power to require information]:

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