Clause 137

Legal Services Bill [Lords] – in a Public Bill Committee at 12:30 pm on 26th June 2007.

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Determination of complaints

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I beg to move amendment No. 233, in clause 137, page 71, line 34, at end insert—

‘( ) In considering what is fair and reasonable in the circumstances, the Ombudsman shall take into account the relevant levels of damages awarded by courts in similar circumstances, and relevant codes of practices, professional rules, standards and guidance.’.

The amendment relates the section headed “Determinations under the scheme” and to the clause headed “Determination of complaints”. It would add criteria at the end of subsection (1) for assessing what was fair and reasonable in respect of the ombudsman’s handling of a complaint. At the moment, the Bill says:

“A complaint is to be determined...by reference to what is, in the opinion of the ombudsman making the determination, fair and reasonable in all the circumstances”,

and the amendment would simply elaborate on that.

The amendment is supported by the hon. Member for North-West Norfolk and his colleagues. It argues that the ombudsman should take into account

“the relevant levels of damages awarded by courts” so that there is comparability between the proposed adjudicatory system and the court system where the circumstances are similar. The amendment also suggests that the ombudsman should look at

“relevant codes of practices, professional rules, standards and guidance.”

Obviously—this is one of the purposes of the Bill—the jurisdiction proposed for the Office for Legal Complaints is rather different from that currently exercised by the professional bodies. The Law Society and the Bar Council have their own methods of adjudication and determination. Under current arrangements, redress can be awarded where a client has suffered “inadequate professional service”. Under the Bill, the present jurisdiction is replaced by a much broader phrase, which refers to what is

“fair and reasonable in all the circumstances of the case.”

A sound argument exists for making that change. The proposed arrangements are similar to the  jurisdiction of the Financial Ombudsman Service, which is a regular point of reference. The service is the most similar system in place at the moment and generally has an increasingly good reputation as a reasonable redress scheme.

There have also been difficulties deciding what “inadequate professional service” means and what it should mean in terms of the determination, so it is right to move on from that definition to a new one. For example, in the case of complaints against solicitors, it was thought at one time that inadequate professional service could not cover situations in which clients suffered as a result of a breach of conduct rules by the practitioner or where a remedy for negligence existed elsewhere through the law. Those restrictions have been overcome, but there is an inflexibility.

It is important, however, that there is no unpredictability about the way in which the office for legal complaints should act. The amendment therefore suggests that there should be guidance on the approach that should be taken to ensure flexibility and consistency. In the context of legal services, it is desirable for the guidance given to the office for legal complaints to include a requirement to consider the professional obligations under which practitioners operate—that may add to or take away from the degree of infraction committed—and the way in which the courts consider similar issues. I gather that it is identical in every material sense to the Legal Profession and Legal Aid (Scotland) Act 2007, which is how similar matters have been dealt with in Scotland. The proposal is drawn from good recent precedent and I hope that it commends itself to the Minister.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Justice)

I have a 25-minute speech, which will take us to 1 o’clock, but the Labour Whip is glaring at me so I will restrict it to 2.5 seconds and say that I support the hon. Member for North Southwark and Bermondsey.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

I shall make no predictions about how long I will take. On that basis, I will not look at the Government Whip so that I cannot be glared at.

The issues that the hon. Member for North Southwark and Bermondsey raises—relevant codes of practice, professionals and so on—are all likely to be taken into account by the ombudsman when determining the complaint, but it is not necessary for them to be in the Bill. The idea is that the scheme should work as flexibly and informally as possible, which means that much of the detail of how the determination is made, what will be taken into account and the criteria that should be applied, should be set out in the scheme rules, rather than in the Bill. It will make quick and fair redress more likely and give the maximum flexibility to adapt to changing circumstances and the changing needs of consumers.

All the scheme rules made by the Office for Legal Complaints will be subject to the consent of the board before they can take effect, so safeguards are already in place to ensure that the scheme rules work in the interests of the consumer and operate fairly in terms of the regulatory objectives. That includes leaving to scheme rules the criteria that an ombudsman must take into account when determining what is fair and  reasonable. That is how the financial ombudsman service operates, providing that the ombudsman’s determination is made according to what he considers fair and reasonable in all circumstances. It leaves all further guidance to the rules. It is the model to which we have referred regularly throughout our proceedings; it is the closest to what the Bill sets up and is a great deal better than tying an ombudsman to an inflexible list of factors that may not, over time, be relevant. I am not convinced that the amendment should be included in the Bill.

On the Scottish issue, I realise that the wording in the hon. Gentleman’s amendment is similar to that in the Legal Profession and Legal Aid (Scotland) Act 2007, but like many things legal in Scotland, it is quite different from those that are set out in the Bill. For example, the Scottish system allows for a complaints commission that determines complaints and runs the complaint-handling scheme, and the members are appointed by Scottish Ministers after consultation with the Lord President of the Court of Session. It is a very different structure from that in England and Wales, where Ministers, whoever they may be, do not and will not appoint the ombudsman, who will operate in a much more flexible scheme, which is intended to provide quick, fair and final redress to the consumer.

There are arrangements for internal reviews of the complaint but the scheme will not be fettered by a long-winded appeals process, which is how the financial ombudsman service has operated. I would prefer to leave it to the OLC and the board to decide what factors the ombudsman should take into account when determining what is fair and reasonable. I hope that the hon. Gentleman agrees with me and will therefore ask leave to withdraw the amendment.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I am grateful for the Minister’s reply and I shall happily reflect on what she has said and consider the Scottish experience. I note that she prayed in aid the example of lack of co-decision between the Minister and the Lord President of the Court of Session, and no doubt she will remind us of that, although she said that it was not an exact parallel. If I am persuaded, I shall not pursue the matter later. For today, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

I beg to move amendment No. 284, in clause 137, page 72, line 25, at end insert—

‘(4A) For the purposes of paragraphs 2(d) and (e), in the event of a respondent’s failure, within a reasonable period, to act on a determination, the ombudsman may order, at the expense of the respondent, the necessary rectification to be secured or action to be taken by an alternative authorised person.’.

I am sure that the Minister will want to accept this “big tent” amendment, which appears to bear the names of everyone apart from the Liberals. The amendment could be best described as the Rayleys amendment, and it is in the interests of every good, decent and honourable solicitor and of every honourable person in the legal profession. Large numbers of cases have been brought by individuals against the Rayleys solicitors firm, which deducted significant amounts of money from those individuals.  It is clear that the money was taken—there is no ambiguity about that, and my view and the view of many other people is that it was taken wrongly.

The cases were taken through the Law Society and went through the due process. The case worker considered the cases and they went to adjudication, which was duly made. The result was that my constituents were successful. In one case, Rayleys refused to pay up. That case went to the solicitors disciplinary tribunal, which also made a ruling. Despite that, Rayleys has refused to pay out in relation to the other cases. Rayleys’ rather pathetic defences included the assertion that my constituents and others were confused and did not know what they were talking about.

I took four constituents to stand outside Rayleys’ headquarters in Barnsley, where we were warmly applauded by local people for demanding that the firm pay up. We were kindly invited inside, where, for an hour, Rayleys tried to persuade the four constituents that they were confused and did not have a complaint. They argued their case very eloquently, and pointed out that they held Rayleys accountable.

Those constituents were people who had made a complaint against the legal profession, and of all the cases that could have gone through a complaints process, those cases are the clearest in the country; they could not be any clearer. The senior partner of the firm about which the complaint was being made had the opportunity to put his and his firm’s case in open, face-to-face dialogue with the complainants. He brought in his specialists, who sat alongside and argued too, and they heard what my constituents had to say. The constituents spoke for themselves—and did so clearly, and they demanded justice. Yet still the firm has not paid up.

There is nothing that can bring the entire legal profession into greater disrepute than that example. If regulation is meant to work, then it has to do just that. What are my constituents meant to do in that context? They put in a complaint more than three years ago—three years and three months ago, in fact. They are not making a complaint in principle, although principle is involved, or to make extra money, although they might well be due extra money for all the hassle and expense that they have gone through to make their complaint. Their fundamental complaint is that they had some of the compensation that they received for their industrial diseases taken away from them. That money was not charity. If I recall correctly, the money in the cases of the four men—certainly in the majority of those cases—was compensation for bronchitis and/or emphysema. We are talking about people who are ill or dying. Some of the Rayleys cases involve people who are very seriously ill and who need the money because, for example, they would like to buy additional breathing equipment. That was categorised and quantified as what the people would spend the money on.

Unfortunately, it is too late for Mrs. Beckett, a constituent of mine. I attended her funeral. A widow, she wanted the money for a headstone for her late husband, but Rayleys refused to pay out. When Mrs. Beckett died, her family wanted the money for the  headstone. In that case, the Law Society has done a decent and honourable thing by making an ex gracia payment, but it should not have had to do so—it should have been a matter for the firm of solicitors. Not only was there no ambiguity about the case, but even the case put by the firm was straightforward, as it should not have taken the money and handed it to the NUM, because the NUM rulebook specifies that widows are not charged and that has been the case for 100 years. Mrs. Beckett’s case was the ultimate in unambiguous cases, yet the firm has not paid out, and there are no powers to force it to do so. The amendment would create the opportunity to force a firm such as Rayleys to pay out, and I commend it to the Minister.

Firms of solicitors such as Rayleys should not be allowed to continue unhindered. There is no question in my mind about the fact that the firm and its partner should be struck off. If the legal profession wishes to hold its head up high with the general public, it has to remove such firms. That is the only basis on which a self-regulating closed profession can have a future. It must remove the bad apples. People would demand such action in any other walk of life, and rightly so, and that should happen in the profession. There is no worse or more disreputable example than Rayleys, as is demonstrated by the fact that, uniquely, it has refused to pay out money that it owes to decent people who are ill and dying.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Justice) 12:45 pm, 26th June 2007

I am grateful to the hon. Member for Bassetlaw for moving the amendment. If he decided to press for a Division, we would be happy to support him, not that I wish to foment any discord on the Government Benches—I would not start trouble in such a way.

Although amendment No. 284 would be an excellent amendment, the Minister will be aware that my colleagues in another place amended the Bill in a similar way. Will the Minister reflect on whetherclause 137 goes as far as the hon. Member for Bassetlaw wishes? If she decides that that is not the case, and if the hon. Gentleman wants to press to a Division, we will support him. The amendment would certainly clarify matters and would, importantly, add detail to the clause, on which basis we support it.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

The hon. Member for North-West Norfolk is being very naughty today. I thought that my hon. Friend the Whip would continue to glare at him on that basis.

The amendment, which would allow the ombudsman to order a second lawyer to rectify the work of the respondent when they fail to comply, would not add to consumer protection. First, let me make it clear that it is unusual for the respondent not to comply with the ombudsman’s directions, because in all ombudsman schemes so far, the majority of people will respond and comply fully, so we would expect full compliance from lawyers. Any failure to do so should, as my hon. Friend the Member for Bassetlaw says, be treated very seriously and as a disciplinary matter by the approved regulators. There are enforcement powers in the Bill so that determinations can be enforced by court order if necessary.

The hon. Member for North-West Norfolk discussed what happened in the other place, where my noble Friend Baroness Ashton tabled Government amendments in response to the debate to strengthen the enforcement provisions in clause 141, so that the ombudsman can bring enforcement actions on behalf of complainants. To a large extent, therefore, the amendment is trying to resolve a problem that does not exist. Let us suppose that the relationship between a lawyer and client broke down and the ombudsman ordered the respondent to redo work, but they refused to do so. Such a situation would be likely to result in enforcement action, and would therefore certainly come to the attention of the relevant approved regulator, so there is a very strong incentive for the respondent to avoid taking that attitude.

Leaving that aside, another point that concerns me is that it is not the OLC’s role to hire lawyers on behalf of complainants. It must be clearly independent of the legal profession and so should not recommend lawyers to do the work of other lawyers who have been complained about. I understand that the amendment is intended to give further protection to the consumer, and that is very much the aim of the Bill, but it is important to get the direction right in the first place, and then to enforce it as a last resort.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

The Minister is right to say that we need to get the direction right, but what about the detail? Some of my constituents and others have made complaints against Rayleys that have by and large been adjudicated in their favour, in that Rayleys is required to make financial payments to them. How will they get the money that they have been waiting a long time for?

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

As I said, enforcement action will be possible. It is also important that if the ombudsman makes a direction and a lawyer fails to rectify an error within a reasonable time, it will be perfectly possible and right for the complainant to engage a different lawyer for whose costs the first lawyer will be responsible. The ombudsman could direct that that should happen, but the amendment puts the onus on the OLC to provide the second lawyer, and that is not appropriate. It is certainly right for the OLC to say to the complainant, “Find another lawyer and the first one will have to pay the costs,” if that is appropriate, but it should not be in the business of having a checklist of lawyers to whom it farms out complainants’ cases, which would be the effect of the amendment. On that basis, I ask my hon. Friendto withdraw his amendment. I understand the circumstances of his constituents, and I should like to ensure that such instances are covered by the Bill, but his amendment goes beyond what is appropriate forthe OLC.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

It is not just my constituents; it is constituents in Rother Valley and Selby, the 150 who attended a public meeting last week in Leigh and many more. The Minister needs to spell out in writing precisely how the cases with Rayleys will be resolved. If she can do so, people will be satisfied, but if not, the amendment will be tabled at a later stage and pushed to a vote. However, in this instance, I shall give her the  opportunity to see whether there is a route through. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

Clause 137 is quite important for consumers and aggrieved people complaining against the service, but it is hardly written in the most consumer-friendly way. First of all, it refers to “determination” rather than to a decision, which is a slightly odd phraseology. The burden of my request is to ask the Minister to ask her civil servants whether the clause can be made to read in a way that ordinary people will understand. It is about what remedies are available and what the ombudsman can do to put right things that have gone wrong.

Subsection (2) says, for example:

“The determination may contain one or more of the following”.

The first item on the list is fine—it is an apology. That is clear. The second is:

“a direction that—

(i) the fees to which the respondent is entitled in respect of the services to which the complaint relates...are limited to such amount as may be specified in the direction, and

(ii) the respondent comply, or secure compliance, with such one or more of the permitted requirements as appear to the ombudsman to be necessary in order for effect to be given to the direction”.

It is not really a remedy that somebody would necessarily recognise as something that they want, or understand even if they want it.

The third item would be better with a bit of tidying up:

“a direction that the respondent pay compensation to the complainant”.

The language of the fourth is a bit old-fashioned, and I am sure that we could tidy it up:

“a direction that the respondent secure the rectification”.

What we mean is that the respondent should put right at their own expense

“any...error, omission or other deficiency”.

The requirement is much the same. Subsection (3) gives us the definition for subsection (2)—which, if anyone is  trying to understand it, tries to explain that one can get all the money or some of it back.

I just wanted to make that request. This is one of the bits of the Bill that is not for lawyers. If someone says, “What am I entitled to if I complain?”, somebody ought to be able to say, “This.” When the Office for Legal Complaints or the ombudsman are asked, they should be able to supply a bit of paper with a quotation from the Bill that people can read. I hope that the Minister will be kind enough to consider this issue so that we can have more user-friendly legislation. That must be possible in relation to this clause.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

I am happy to consider making any legislation more user-friendly, and I take on board the hon. Gentleman’s comments.

Question put and agreed to.

Clause 137 ordered to stand part of the Bill.