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Compensation (Exemptions) Order 2006

My Lords, let me begin with the question asked by the noble Lord, Lord Kingsland, which specifically concerns the British Insurance Brokers Association. As he rightly indicated, BIBA requested an exemption. My officials met with BIBA to discuss the reasons, which were very carefully considered. The noble Lord indicated that BIBA made the case for exemption on the basis that brokers are regulated for other activities and that further regulation brings with it greater burdens. We have decided that is not a reason for exemption. A broker dealing with a claim which is not under a policy arranged by him or on behalf of a client is not regulated by the financial services Act. This is most likely to occur when a broker is aware of a possible personal injury claim by a client for whom he has arranged a multi-policy. If the broker chooses to deal with that claim by referring him to a solicitor, this activity is not regulated by the financial services Act. We therefore need to regulate it under the Act. The noble Lord referred to a possible extension of the financial services Act. That would take primary legislation and it is not appropriate to waste time on this. We need to regulate properly now. I know BIBA is aware that this is the case and I believe we can work closely with it to ensure that the regulation works effectively. As it says in the order under Article 12, where brokers refer fewer than 25 cases per calendar quarter they will be exempted by the introducer exemption. I am grateful for the chance to explain our reasons. The noble Baroness, Lady Harris, raised the question of mutual societies, et cetera. I am sorry my honourable friend was not able to answer it. They are either voluntary, so excluded on the face of Bill, or they are not for profit so they are exempted. I hope that gives Mr Simon Hughes the answer he is looking for. The noble Baroness asked me too about the process by which people could complain if things went wrong. We have set in place slightly different systems for trade unions and companies. An individual who feels a company has misbehaved can get in touch with the company, which will be required to have a complaints procedure, or we have set up a monitoring compliance unit through the regulation process. That unit will deal with complaints; it will investigate; it will also do mystery shopping and spot-checks through trading standards. We are also working with the Solicitors Regulatory Authority to put together a memorandum of understanding so that we can intelligence-share in order to get information. If the rules have been breached, there can be an oral warning, a public censure, and a suspension of the authorisation; we can put conditions on the authorisation, or ultimately cancel it. I hope that gives the noble Baroness the answers she is looking for. On Question, Motion agreed to.