I am very grateful to Mr. Speaker for allowing me to initiate this debate. The subject is of interest to many right hon. and hon. Members who represent mining and former mining constituencies.
I am very proud that the Labour Government put in place the coal handling agreement, which compensates miners and former miners who were affected by their exposure to dust. Thousands of miners and former miners and their families have been compensated for having their health ruined by exposure to coal dust, but no amount of compensation can restore the health of those men, or make up for the heartache that many of their families went through in watching their loved ones die. However, it helps, and in my constituency the scheme has paid more than £18 million to miners and their families. That is evidence that the Labour Government recognise the injustice that was done to those men, and are trying to put things right.
Proud though I am of the scheme, the way in which some solicitors and, more sickeningly, claims handlers have sought to exploit it and the victims—who are often elderly or dying—disgusts me and many of my parliamentary colleagues. I am at a loss to know why their sickening and cruel practices have not been highlighted or given more publicity. I can only repeat what I said in this Chamber on
To highlight the appalling way in which claims handlers exploit coal claim victims I shall describe the case of Mr. R. Jobes of Tanfield in my constituency and his dealings with an Ashington-based company, Industrial Disease Compensation Ltd, which is now known as Freeclaim IDC. Mr. Jobes, a former miner, had just over £3,000 of his compensation deducted by IDC. It passed his case to a firm of Liverpool solicitors, Silverbeck Rymer, which, on completion of the claim, deducted the money to recover "IDC's costs" under the agreement that Mr. Jobes had signed.
Silverbeck Rymer was first instructed on
I reported Mr. Jobes' complaint to the Law Society, and I would like to record my thanks to the case officer, Mr. Ian Roberts, for his work on Mr. Jobes' behalf. The adjudicator considered the report, found in Mr. Jobes' favour and directed Silverbeck Rymer to pay Mr. Jobes £3,775, including £250 compensation.
In what I can describe only as a highly critical judgment, the adjudicator is clear that Silverbeck Rymer should have advised Mr. Jobes that there was no risk in his case and that there was no need for the agreement with IDC. His report states:
"I have concluded that they did not explain matters to Mr. Jobes so that he could properly understand the funding arrangements and he was not, therefore, in a position to give informed consent to the deductions made by them later".
In this case, there was no risk to IDC. It simply gained £3,000 for passing the case from its client to Silverbeck Rymer. I shall go into this further later on, but clearly the relationship between claims handlers and solicitors is important; claims handlers could not exist without the collusion of some solicitors. A question that still remains is what else did IDC get from Silverbeck Rymer? Did it buy the case and get a fee? I shall highlight a case shortly in which a fee was paid by a solicitor to a claims handler.
Although IDC has changed its agreement since Mr. Jobes' case, there must be many hundreds of claimants in the north-east and nationally whose compensation, like that of Mr. Jobes, has been plundered by IDC. I strongly urge them to come forward, because their cases need to be investigated. What IDC did in Mr. Jobes' case was unjustified and there must be many other people in a similar situation.
Freeclaim IDC is still operating and, according to its website, is
"one of the leading compensation claim funding specialists in the UK."
It goes on to claim that it is
"genuinely 'win no fee'. . . There is no need for a client to pay the registration fees, administration fees. . . or start-up costs levied by other compensation service companies."
If that sounds too good to be true, it is. Certainly, Mr. Jobes' dealings with the company were not "win, no fee": he lost more than £3,000. Later, when it changed the agreement, it charged those registered with it an administration fee of £35. To say that its service is "win, no fee" is absolute rubbish, and it is certainly not true in relation to its latest product.
Having satisfied its bank balance by milking the victims of coal health handling agreements, Freeclaim IDC is now targeting asbestos victims by charging £587 for a CT chest scan and getting people to take out £1,500 loans for insurance policies to cover unsuccessful cases. I have real concerns about unqualified individuals asking people to have CT scans. Will the Minister ask the relevant Department to look into those activities? It worries me that a company with no medical expertise is exposing people to high levels of radiation.
Clearly, contrary to the claim on the website, the service is not "genuinely win no fee". I have read the agreement, which states:
"In the event of a successful claim Freeclaim IDC guarantees the maximum of £399 will be deducted from your compensation to cover legal expenses which cannot be recovered from your opponent".
It goes on:
"This includes a fee of £100 + VAT to cover administration costs in arranging for the CT scan."
The sting in the tail is:
"Please note—" it says in very small print—
"that if you are a Trade Union member and if the court considers that it would have been more appropriate for you to pursue a claim via your Trade Union, IDC reserves the right to raise the £399 maximum deduction from your compensation to £800".
Surely, solicitors should advise their clients—as they should have in Mr. Jobes' case—that there are alternative ways of funding and pursuing their cases. For example, if they are members of a trade union their cases can, in most cases, be handled for nothing. Likewise, if they look at their household or other insurance policies, they might find that they are covered for legal expenses. Why are solicitors not advising people that there are alternative ways of pursuing cases? Asbestos victims are still finding themselves out of pocket.
The Newcastle Evening Chronicle highlighted the case of a trade union member who went to IDC but decided to pursue his case through his trade union, Amicus. He has been left with a bill for more than £500.
The Law Society needs to take an urgent look at the relationship between its members and claims handlers. It is not good enough for it to state that claims handlers are unregulated; the actions of its members are allowing claims handlers to operate, to the financial detriment of individuals who could get access to justice more cheaply and, in many cases, more effectively.
I thought that I had come across every scam there is in relation to miners' compensation claims, but there is a new firm operating in the north-east. An advertisement from a company called Mineworkers Compensation Services appeared in last week's Sunday Sun in Newcastle:
"Do you have an ongoing compensation claim against the coal board? Transfer your claim to us and get £100."
It is not clear from the advertisement whether that is from a Government organisation, so I rang the freephone number and posed as a potential client. What I have to expose alarms me greatly. I spoke to a Mr. Philip Rogers, who was very helpful and forthcoming. He gave me a lot of information. I understand that he is a partner in a claims handling company. He stated that he set it up because a lot of law firms had taken on too many cases and, he said, could not deal with the backlog. I asked him whether he and his colleagues were solicitors. "No," he said, "but we have a close relationship with a North Shields-based company called Hindle Campbell." I asked him what would happen if I moved a claim to his firm. He told me that I would be given £100 straight away for transferring it. I asked whether anything would be deducted from the compensation. He replied, "Oh, no, certainly not—we get our fee from the solicitors." The firm of solicitors is paying his company to steal cases from other firms dealing with such cases, which is scandalous.
The more worrying point arose when I asked Mr. Rogers about his relationship with Hindle Campbell. He told me on the phone, less than half an hour ago, that he works for both organisations. He is a partner in the company that he has set up, and he also works for Hindle Campbell. That is against Law Society rules, and it demonstrates that claims handlers—in this case, Mineworkers Compensation Services—could not exist without the collusion of, if not working in partnership with, firms of solicitors.
I also asked about Hindle Campbell's record in miners' compensation. Is it an expert or large firm? I understand that it is a small practice in North Shields that does personal injury work like any other company, and that it has no expertise in miners' compensation work. I shall certainly write to the Law Society about this, but I must also ask the Minister whether he will have a meeting with the Law Society, or at least raise with it the issue of collusion. None of these claims handlers could operate if they did not have firms of solicitors working with them.
The Government must regulate claims handling firms. Self-regulation has been tried and the Claims Standards Council has been set up, but it is not acceptable to me. On its website, it claims to ensure
"that its members deal with consumers on the basis of decency, probity and fairness."
It claims also that it is "independent from the industry" and
"achieves this by . . . Vetting . . . organisations seeking membership".
I am not sure what vetting is performed, because on the same website one finds that one of the council's members is Freeclaim IDC. Under the membership section, the website goes on to say that members
"must be able to demonstrate their integrity and financial probity as well as their being 'fit and proper' for membership."
If Freeclaim IDC is a member of that organisation, that is a clear joke.
I am concerned that the Claims Standards Council is recommended on the website of the Department for Constitutional Affairs. It should be removed at once. If those companies are involved, I would love to know how the organisation vets them. I would not want the Government to give the organisation any credibility whatsoever.
I understand that the Claims Standards Council has applied to the Office of Fair Trading under the OFT's consumer code approval scheme for the approval of its code of practice. I urge the OFT and the Minister to resist any moves by the council to have its code endorsed while a company such as Freeclaim IDC is allowed to be a member.
The activities of Freeclaim IDC and other claims handling firms are a scandal. Innocent and often poor people are being exploited because of their ignorance of the legal system. That must stop. Many of us in this Chamber went into politics to fight injustice. In my experience, there is nothing as unjust as the cases that I and other Members have come across, and the way in which claims handlers have exploited the old, the vulnerable and the weak.
Legislation is urgently needed. Action is urgently needed. I plead with the Minister to introduce regulations for those organisations and, in the meantime, consult the Department of Trade and Industry to see whether some of those groups can be closed. Some of their advertising is misleading; they make out that they are solicitors when they are not, and the Law Society is turning a blind eye to the activities of some of its members. I find that appalling.
I am grateful to the hon. Gentleman for the way in which he is highlighting the abuses. Would he go so far as to say that the people who represent individuals in legal matters should be professional lawyers, or is he saying that there is a role for a person who is not legally qualified to give legal advice? Does he have any thoughts on the idea that seems to be emerging from the Clementi review that non-lawyers should be able to own legal practices?
As someone who for 12 years practised in industrial tribunals and was not legally qualified, I accept the Clementi review. Certain things can be done without legal qualification. The important point is that regulation is required. It is woefully lacking in terms of the Law Society, and the organisations I have mentioned are outside its remit. They must, however, be regulated.
I urge the Government to act, because if they do not, the scandal that has gone on for the past few years over miners' compensation will continue. With new scams being invented, it is clearly continuing. More importantly, the vultures are moving into other areas of compensation, and the poor, the weak and the vulnerable will lose out.
I am delighted to follow my hon. Friend Mr. Jones. I shall not follow his path of highlighting individual cases; I merely want to speak to the principal issue that claims handlers should be regulated, not self-regulated.
This is an ideal time for the Department for Constitutional Affairs to act. We have already heard about the Clementi review. I note with interest the comments made by the Lord Chancellor yesterday, and I want an assurance from the Minister that claims handlers will not fall outside the net. They are cowboys: they are making false claims, raising false expectations, taking money out of people's pockets who cannot afford it, and on many occasions leaving people in debt. Enough is enough.
The Minister knows well about those complaints. He told the House not long ago that claims handlers were in the last chance saloon. My hon. Friend John Mann and I went to see the Lord Chancellor earlier this month, and I am delighted that the Lord Chancellor has taken up the opportunity to go to the heart of the Nottinghamshire coalfield to Thoresby miners welfare this Friday—Good Friday, a public holiday—to talk directly to the people involved. The claimants will talk with strong voices about the way in which scams have operated on them.
The time has come to act, and we cannot delay any longer. I hope that the Minister will be impressed by today's debate. I am sure that the Lord Chancellor will be impressed by the voices of men and women in Nottinghamshire who have been quite bluntly given false hopes and expectations. The problem is simply this. People in coalfield areas are honest and hard working. Many of them have given their health and, in many cases, their lives working down the pits to keep us warm. Although there have been difficulties, the two coal health schemes have been enormously important in north Nottinghamshire. My hon. Friend the Member for North Durham quoted figures for his area; in Nottinghamshire, the two schemes together have brought in £265 million to former miners because of injuries to their health. Of that £265 million, however, a significant amount is simply being siphoned off.
My hon. Friend talked about claims handlers, and one body of claims handlers is the trade unions. I have talked to a variety of trade unions in the coal sector: the National Union of Mineworkers, the Union of Democratic Mineworkers, the National Association of Colliery Overmen, Deputies and Shotfirers, the deputies' union, and the British Association of Colliery Management—Technical, Energy and Administrative Management, the managers' union. All of them make some charge for handling coal health claims.
The BACM makes a small charge in lieu of trade union membership. I do not object to that. It is right that if a trade union operates for somebody outside the membership, it should charge a membership fee. I fundamentally object to companies such as Vendside, which is connected to the Union of Democratic Mineworkers, in effect double charging. Let us be clear that with coal health claims the union gets its fees from the Government, and they are significant and substantial fees. I am at a loss to know why any trade union should be ripping off members and former members by double charging and taking a fee out of the compensation awarded to miners. That is wrong, it must stop, and those bodies, which are about fraternity, ought to act more sensibly.
"The individual will end up with a fraction of what they will get. The general procedure is that miners go through their union because it will back their claims and we have the miner's interests at heart"?
Does my hon. Friend think that Bleddyn Hancock would be on sounder ground if NACODS South Wales were not deducting 10 per cent. from claims?
I have taken a great interest in the matter. That individual does not operate only in south Wales; his organisation operates in the Kent coalfields, and significant sums are being made. I know also that the gentleman concerned was a trustee of the miners pension scheme and made some fairly outrageous comments and false promises about that. Organisations ought to look after the people they represent, and the double-claiming in the trade union movement is quite wrong and should stop.
As my hon. Friend the Member for North Durham said, given the tremendous amounts of money coming into the coalfields, claims handlers are casting their net wider. Asbestosis has been mentioned. One area of operation is the making of false promises to women who used to work in the textile sector over their deafness claims. Many of those individuals are claiming through Vendside, many of them have taken out loans, and many of them have been left with loans when they cannot make payments on the cost of an unsuccessful case. Instead of no win, no fee, it is no compensation and real debt. That is most unsatisfactory. I say to the Minister that that is a real scandal and the time has come to act.
The second scandal is the issue well illustrated by my hon. Friend—the unsavoury relationship between some claims handlers and some firms of solicitors. I am delighted that the Law Society has begun to consider the matter more closely; I am sorry that it has taken so long for it to act; and I hope that it will act with vigour, so that those claims handlers who have a relationship with firms of solicitors, leading to the conning of people in the Nottinghamshire coalfield, are dealt with appropriately. Professional people who ought to know better are letting the desire for money work against their public interests and, more particularly, their professional interests. If that is the case, they should be disciplined.
This is the biggest, richest and best industrial injury compensation scheme in the world. It has already benefited miners and their families in my constituency to the tune of about £60 million, but on the margins is a problem that will become the biggest scandal in British legal history—the solicitors who have routinely ripped people off. The Government have not given it proper attention, but they need to do so—not least in the Lord Chancellor's Department.
A subsection of the biggest scandal in British legal history is the claims handlers; they are the dirtiest side of it all.
May I first pay tribute to my hon. Friend Mr. Jones for securing the debate? More importantly, I pay tribute to him for taking the lead and exposing solicitors and claims handlers, irrespective of the pressures and threats that they may bring to bear on him, me and others.
I join my hon. Friend in paying tribute to my hon. Friend the Member for North Durham.
My hon. Friend Mr. Mann was moving from the problem with solicitors to that with claims handlers. I wonder whether his experience has been similar to mine. It has been easier to get money back from solicitors, but the danger is that we do not know how many people might have been double charged by solicitors. Would he support the Government's conducting a systematic trawl through the people who have received final settlements to find out how many have been double charged, so that we can get their money back for them?
I would wholeheartedly endorse that. The problem is that people feel that once they have signed a piece of paper they are legally bound. The solicitors who are given the work by the claims handlers write and tell the individuals, and take a dual instruction—one from the claims handler and another from the claimant. I have letters, received in the past week, from the largest firm of solicitors when it comes to outstanding claims, Beresfords, warning people of the danger of not paying money to claims handlers. That is a routine feature of the system.
Let me explain how claims handlers go about their business. I can give a good example. Only two weeks ago, I was on the Larwood estate in my constituency. A widow aged 92 had received a knock on the door. A claims handler had gone to a pensioner's bungalow—it would be a good bet in Worksop that a miner or a deceased miner would be related to the person living there—and asked: "Has anyone in the household or any of your relatives worked in the mining industry since 1954? There's money due to you and we can get it."
In the miners' welfare clubs, it is the same. I suspect that some miners' welfare clubs were paid to put leaflets out. Men, some of whom have retired, and widows of men who may have died many years ago were told that they could get some money at no risk to themselves. The companies said that they would do the work and that those people need do nothing. It seems perfectly reasonable, on the face of it, that there should be a payment for the work that has been done.
I have referred more than 700 cases to the Law Society in which solicitors were negligent about advising that, with this scheme, uniquely, the defendant had conceded the costs and they would be paid in full.
Does my hon. Friend agree that the case of Mr. Jobes against Silverbeck Rymer highlights that point exactly? The company was working not in the best interests of Mr. Jobes, as solicitors should, but in its own best interests to get the fee or the work.
My hon. Friend makes a pertinent point. Who are the solicitors who work for such companies? For example, Moss Solicitors threaten me and my constituents, but, having read an adjudication from the Law Society, it has been repaying money in the past week as a good will gesture. Why is it repaying a good will fee to my constituents if it has done nothing wrong?
Moss is the firm of solicitors that told my constituents that, as the Law Society has confirmed in writing, I—as the MP—was "playing politics" by challenging it. I do not know whether we have the advantage of free libel advice in this place. If we have, I appeal to a solicitor who is an expert in libel law to come forward, because anything that I can win from Moss Solicitors I will donate to the miners who have not received at least £500. That is an offer that a decent firm of specialist solicitors might like to take up.
Why do I have only 700 cases, when there are thousands in Bassetlaw alone? People believe that because they signed on the dotted line, they are legally bound. They do not understand, even when they read my column in the Worksop Guardian, that they did not have to sign and that the advice was negligent. In the case of those who understand, another factor comes into play. People come in dribs and drabs, because of embarrassment. They feel that they have been made fools of, and that is a key consideration.
Does my hon. Friend agree that a claims handling company that calls on a home in a mining community and encourages people to sign on the dotted line but fails to inform them that the DTI would pay the legal fees is culpable and should have to make a refund?
I have demanded that. My hon. Friend mentioned IDC. I have dealt with similar cases, and I have written to suggest such a refund but the company has declined to correspond with me. There is PR Associates; large amounts of money have been taken from claimants when they have rightfully won their compensation.
Another such company is Union and General Services. I would like to sue that firm but, of course, I cannot do so because it has gone into voluntary liquidation. So, who can we find? Mr. A. J. Revill was the owner. We can do something to him, because information provided to me in the past few days suggests that Mr. Revill is a member of a party that I know rather well. Should it be the same Mr. Revill—I apologise to my fellow party member if it is not, but the details seem remarkably similar, as the address is near to that of Union and General Services in Thorne in Doncaster—our party should expel him forthwith because he is not fit to hold a party card of the Labour party, or, indeed, of any party.
My hon. Friend is making a commendable speech. Does he have any sympathy with IDC? The article that I mentioned from 1998 cites IDC's managing director, David Towler, who said:
"We only take a 32 per cent. cut on a small proportion of claims. Our average cut is 11 per cent.".
Does my hon. Friend not have any sympathy with that?
It is money for old rope.
The name, Union and General, sounds reputable—it sounds like the kind of company one might go to: the deal, to the individual, sounds good. It will take only 10 per cent. or so. The fact that the defendant had conceded the entire payment of the fees was not made clear, and that is the point of law.
The biggest firm, Vendside, was mentioned by my hon. Friend Paddy Tipping. Many interesting things will begin to emerge about Vendside in the next few weeks, I am certain. One issue that my hon. Friend the Minister could consider referring to his friend, the Chancellor, is the VAT charged by the claims handlers. In the case of Vendside, is there an input VAT as well? Are there union costs? Is a company being set up to maximise tax benefits that would not be available if so-called membership or union fees were being paid? Union membership fees are not "VAT-able". The Inland Revenue needs to address that imminently.
Does my hon. Friend agree that one of the confusing features of such cases is that people who were associated with trade unions—including Mr. Towler, who started off in the unemployment centre in Sunderland but now drives a nice new Mercedes and lives in a big house in Northumberland—have given legitimacy to some of the claims handling companies? Frankly, we cannot blame a lot of people for thinking that the companies are part of the trade union and labour movement. Until recently, I understand that Freeclaim IDC was registered in Guernsey.
Such companies have that legitimacy. Claims handlers and solicitors are swapped between companies. I believe that some of those connected with Vendside worked elsewhere, including for Capita Insurance Services—or Aon IRISC, or any of the various names that it has gone under. That should be specifically investigated by the Minister to see whether there is any impropriety about data protection and the exchange of information and whether Government contracts have been suitably worded to stop people illicitly transferring information or knowledge from one organisation to another. I do not know, but with all the claims such things need to be considered.
There are other solicitors: Moss, AMS Law, Beresfords, Frank Allen Pennington, Robinson King, Kidd Spoor Harper, Mincoffs, and Watson Burton. Those are merely the ones I have referred to the Law Society. They are not tin-pot, diddly-squat organisations, but big, rich, wealthy solicitors, who are bringing down the good name of solicitors across Britain. We need stronger action against them from the Law Society and the Government.
In my view, the Government could do more. We cannot just wait. Frank Allen Pennington repaid £705 only last week to one of my constituents. This week, it refused to pay.
We cannot take cases in dribs and drabs and ones and twos at the whim of any solicitors who have conspired with the claims handlers to take money illicitly, in my view, from our constituents. The Law Society should be doing a lot more and should also be considering that collusion. I have handed some of my files to the fraud squad. I do not believe that everything is in order and have suggested that the fraud squad investigate. It is one of the biggest scandals I have ever seen.
Order. Let me stress that nobody has broken the rules yet, but if any of those cases has been submitted to the court it becomes sub judice and falls under that rule. No one has broken it yet, but this is a wee health warning.
Mr. Deputy Speaker, I have a list of cases but I have no intention of referring to a single one. The generalities are the issue. The DTI could and should have done more, and should be doing more. The Lord Chancellor's Department is, rightly, answering the debate, so may I suggest to the Minister that his Department look at funding test cases against each of the claims handlers to prove to our constituents that the money should never have been taken? That would open the floodgates. Rather than each individual having to take civil action at risk to themselves to prove the point, the Government should take test cases to show that in the spirit of the agreements such people should not have been deducting the money.
Finally, for other kinds of claims, such as the textile, deafness and knee claims, we clearly need a system that works far better. Having been enticed into making a claim, a constituent has found that having won the claim they owe money because of the interest that has built up under the insurance policy. I am challenging that, and I believe that our challenge will succeed. However, we should not have to challenge it, as regulation should be much tighter—at least as tight as the Financial Services Authority's remit over insurance sellers and others. Claims handlers should fall within the ambit of the Law Society, which should have increased powers to deal with them. We need to get the money back for our people from those hideous organisations.
Claims handlers came on to the scene just after the two compensation schemes were widely publicised. My hon. Friend John Mann referred to some of the names that claim handlers use, such as Union and General Services, the Miners Welfare and Compensation Agency and PR Associates. Many of those names are meant to mislead. Many people in mining communities associate the Miners Welfare and Compensation Agency with the Coal Industry Social Welfare Organisation, and they associate Union and General Services with the trade unions. People have been misled into putting their claims with solicitors through go-betweens—claims farmers—which have taken large amounts of money.
Let me give an example from my constituency. I shall not name the widow because the case is likely to proceed to court, but she was visited by the Miners Welfare and Compensation Agency. She thought that it was an official organisation related to the Coal Industry Social Welfare Organisation, and she gave it permission to take her case. It lodged the case with a firm of solicitors called Lopian Wagner of Manchester. That lady had £9,000 taken from her total compensation, and the company went as far as making a deduction from her bereavement payment. It took the full weight of this place and the focus of the media to force the company to refund her.
Claims farmers need to be controlled, and I urge the Minister to think about how that can be done. I suggest that it can be done through the way in which the Law Society controls solicitors. We could make the solicitor taking on the work from a claims farmer responsible for paying the fee, rather than the claims farmer being able to charge the client. If we controlled the system through the solicitor, we would get to grips with this scandalous operation, and solicitors would be extremely wary of taking on a contract with a claims farmer.
It must also be pointed out that there are two ways in which claims farmers deal with solicitors. Sometimes they take cases and charge a solicitor for delivering the cases to them, but on other occasions they come to an understanding—almost a contract—that the solicitor will pay their fee from the compensation the claimant receives before the cheque is sent on to the claimant. If we tackle the situation first through ensuring that claims farmers, like solicitors, have to have insurance, and secondly by controlling them through the solicitor by making the solicitor responsible for the way they behave, we could get to grips with the problem. However the Minister decides to proceed, this scandalous problem must be dealt with.
I join others in paying tribute to Mr. Jones for securing the debate and to all other hon. Members who have spoken and reinforced, with many local examples, the points that he made. The importance of the debate is shown partly by the fact that it is one in a long series of debates over the past few years that hon. Members have raised about claims handlers and solicitors double charging.
As we have already heard, it is an important issue because of the number of people affected and the amount of money involved for people who are often elderly, sick or bereaved and are gaining compensation for injuries or deaths in the family resulting from work that was performed. In Chesterfield alone, up to January more than £6.6 million was paid in compensation just for respiratory diseases. About 2,300 claims have been settled or are in the process of being settled, with interim and outstanding settlements, and there are about another 1,800 after that. It is a major problem in ex-coal mining constituencies, and it results from the way the system has been so disgracefully exploited and abused.
We have heard many stories of disreputable behaviour, initially by solicitors double charging, and we heard today about claim handlers or firms, which are exploiting people who, as we have heard repeatedly, are often elderly, sick or from families of miners who have died. We have heard examples of their activities, such as cold calling, misleading claims of no win, no fee, and conning people into paying for expensive insurance, which makes a mockery of the idea of no win, no fee.
We are fairly lucky in Chesterfield in that my constituency case load and my talks with the local unemployed workers centre yesterday reflect the fact that there do not seem to be any problems with the main group of NUM solicitors—Graysons—which deals with most cases in my area. There are complaints, though not on the same scale as those that some Members have reported, about claims handling companies operating in the area. We are relatively lucky, but we do experience many of the problems that we have heard about.
Part of the difficulty is that we do not know the real extent of the problem. In all the cases in my constituency in which we have tried to get money back from lawyers, we have been successful, but we have not been so successful with claim handlers. However, I have no idea whether I have seen the real extent of the problem; the Government need to trawl through so that we know the extent of the problem.
I agree absolutely with the hon. Gentleman: we do not know if we have dealt with or uncovered the tip of the iceberg or a substantial part of the problem. We simply have no idea how extensive the problem is.
We are scratching the tip of the iceberg. It was estimated that one of the biggest claim handlers in my region—NACODS South Wales—had raised £13 million by the middle of last year. That is only one organisation with 40 members, so where is the money coming from? The Minister must take on board and feed back to the DTI the fact that we need a root and branch investigation of what is happening with claim handlers, because I think that millions of pounds are being skimmed off from miners.
I agree that we do not know how big the problem is. I have come across examples of elderly people who either do not want to pursue the matter because they are too old, or are embarrassed because they feel that they have been made a fool of and ripped off. Unless we find the people responsible, we will not know how many are out there, because there are many hidden cases.
We have heard lots of details today and in previous debates about what happens and about individual cases, and I will not rehearse that. I want to talk about why it happens and what we can do about it. As we all know, unscrupulous people in any area of activity will always exploit loopholes to make money, even when that means exploiting elderly and sick people. Some abuse has been immoral but legal and within the scope of the law. What can and should the Government and the Law Society do to minimise such abuse?
The original 1997 agreement could have explicitly prohibited the charging of an additional fee for solicitors' work, as has been done in other cases, but the Government did not do so. That led to the exploitation of double charging. The rules were changed later, which has led to most, but not all, solicitors stopping double charging.
Reimbursements by solicitors who double charged are being made, but often only when the individual, perhaps through their MP, pursues the case. Some firms of solicitors have made a lot of money out of double charging, but are not systematically going through their files and automatically reimbursing the money. Individuals bringing cases forward are, again, just the tip of the iceberg.
Last year in Westminster Hall, I raised the case of a company in Newcastle, Mark Gilbert Morse, which has about 29,000 claims, but has reimbursed only about 50 individuals. I have tried to urge the Law Society to trawl that company's books to see who it has not paid back. Would the hon. Gentleman support the Government taking action to force that company and others to pay back every single penny, not when people complain to them, but as a matter of course?
The hon. Gentleman touches on the point that I was going to raise at the end of my comments. We need to consider what the Government can do to close loopholes and enforce compensation or reimbursement if people have been exploited. Between them, what can the Government and the Law Society do? Rather than wringing their hands and saying, "This is terrible, but it has happened and it wasn't totally illegal", action must be taken. It is almost worthless for a law firm to deal with only 1,000 individual cases that have been brought to its attention out of a total of 19,000, because the vast majority of people who have been exploited and ripped off are not getting the compensation they deserve. The Law Society could have been more proactive earlier, and I ask the Minister what the Government and the Law Society could do.
Claim handlers, which we are specifically discussing, can flourish only when solicitors work with them by buying claims from them—otherwise there would be no point in having claims handling firms. Therefore, by using such firms, solicitors are endorsing their activities. Many people criticise the Law Society for being ineffective in policing itself and its members, and I have a lot of sympathy with those criticisms, but at least it is willing to talk about the need for better regulation of groups other than lawyers and solicitors.
The Law Society has talked about claim handlers and claims management companies needing greater regulation. It points out:
"Before March 2004, solicitors were not permitted to pay third parties for the referral of cases. The rule was designed to ensure that there were no improper influences constraining the independence of advice given by solicitors to their clients. However, the rule was subject to significant criticism from the Office of Fair Trading (and some solicitors' firms) as being anti-competitive."
The rule was changed in March 2004, but with certain conditions—for example, that there should be no cold calling, although we have heard that that still happens on a large scale. Will the Minister tell us where we are in reviewing that change made a year ago, and whether the Government plan to reverse it to prevent claim handlers from selling on bulk cases to solicitors, which was prohibited under the original rule?
The Law Society also states that, for some years, it has been
"pressing the Government to introduce effective regulation of claims handling companies. The Society has suggested that this could be done by amending the definition of litigation in the Courts and Legal Services Act 1990, so as to cover advice given in contemplation of litigation."
That suggestion would mean that
"only those who were qualified to conduct litigation could operate claims handling businesses on a commercial basis."
Alternatively, the Law Society suggested that
"regulation could be achieved through the Office of Fair Trading."
Will the Minister tell us where the Government have got to on that subject, and, in the light of Sir David Clementi's review, what action they plan to take to control claims handling firms and stamp out the abuses that we have heard about?
It is not enough to complain about the exploitation of the elderly, the sick and the bereaved in our constituencies, as has so eloquently been described today and in previous debates. What action will the Government take to close legal loopholes and stop abuses, especially with regard to claim handlers, and, if necessary, to enforce action to ensure that all firms of solicitors refund double charging that they have legally extorted from people in the past? Surely solicitors who abuse the system and refuse to refund the money, or are difficult about doing so, should be struck off, because they are not fit to continue practising.
We have had a most useful debate; I congratulate Mr. Jones on securing it, and on speaking as he did. He exposed a range of abuses in the coal health claims system, under the two schemes that were started following the success of the group actions in 1997 and 1998.
It is worth reflecting that, having established liability—the unions must take a good deal of the credit for pursuing the cases in the way they did—the handling agreements were a major step forward. At least in principle, those agreements should mean that the people who suffered, their widows and their dependants receive the money much more quickly than they would if everything had to go through court. However, there are still well over 400,000 claims to be dealt with, so there is still some way to go.
One aspect has not yet been mentioned, and I would be grateful if the Minister commented on it. It is the criticism in The Northern Echo earlier this year about Capita IRISC, if it is still called that, a claims-handling business that the Government use to deal with claims through the Department of Trade and Industry. According to senior civil servants, a memorandum disclosed to The Northern Echo suggested that
"the work of Capita Irisc should be put out to public tender as soon as possible, to allow other companies to bid for the contract."
The article went on:
"Capita Irisc 'has been causing concern' over the years and successive officials 'have not grasped the nettle'."
I accept that some of us have a slight advantage over the hon. Gentleman, as we have lived and breathed this issue for a while, but I point out that Capita is not a claims handling company, although I concur with some criticisms of how it handled the coal claims dealt with by the DTI.
Capita IRISC is described as the claims handling company for the DTI, but, of course, it does not play the same role as the claims handlers that the hon. Gentleman is talking about.
Capita IRISC seems to be criticised substantially for
"allowing 'a paper mountain to develop within the system' with 'layer upon layer of low grade staffing'."
It has been suggested that there is a
"clearcut breach of the department's procurement rules" in allowing it to continue to do its work over such an extended period.
I sympathise with criticisms about IRISC. The criticisms that the hon. Gentleman read out appear to come from the DTI, but if there are real criticisms to be made, they are of the DTI itself for not giving clear guidance on policy and for badly miscalculating the number of claims that would be made. The real problem is not with IRISC; it is with poor policy advice that initially came from the Department.
The point that I was about to make—and it ties in with what the hon. Gentleman says—is that it looks as though there is a case for a review of what happens at the DTI, to see whether it can speed up what it does. The hon. Gentleman makes the point that the initial estimated number of cases was wrong. I think that the Department estimated there would be 100,000, and in the end there were about 750,000, so no one could argue with that.
The schemes are very important, and the points that have been made by hon. Gentlemen today are important, too. If, as it seems, people have been given false hope, and told that claims were worth while when they were not, that needs to be addressed. There has been substantial double charging, and not just in relation to the £2,000 that the Government provide; in addition, substantial proportions of claims were taken by solicitors and claims handlers. That needs to be addressed, too.
The issue is much wider than one of claims-handlers encouraging would-be claimants to think that their claim would be much more substantial than it was. There has been any number of cases in which they encouraged the gullible claimants or their descendants to exaggerate or fabricate the evidence or extent of the illness or injury caused by mining. That is utterly reprehensible, is it not?
Yes, indeed. Every time a false or hopelessly exaggerated case is brought, it slows the payment of claims to those who desperately need the money, many of whom are elderly.
I agree that we should look at the relationship between solicitors and claims handlers. It is welcome that the Law Society has said that double charging is unethical, and has asked firms to pay back the money that was double-charged. I agreed with the point made by Mr. Clapham: the Law Society might be the best focal point, in terms of trying to achieve some control over the whole system. It would be well worth the Minister's while to consider that, and to see whether there is some way in which solicitors' rules can be tightened to ensure that the claims handling side of the system works better.
May I postulate a way forward that the hon. Gentleman might want to consider? It arises from Sir David Clementi's review. He sets out six broad guidelines on how legal services should operate, and they include matters such as the protection and promotion of consumer interest. However, what is not mentioned in those six points is ethical behaviour and ethical standards, although he does talk about them later, and says that they should be in the regulatory framework.
Does the hon. Gentleman believe that anything that comes out of the review should result in us putting the need for ethical behaviour from solicitors in regulations, and right at the top of those regulations, too? Does he agree that there should be an ethical duty on solicitors that forces them to avoid getting into the same situation again, a situation in which some of the most vulnerable constituents—let us not beat about the bush—are being ripped off by solicitors?
As I said in an intervention on the hon. Member for North Durham, there is concern about what happens once we say that people who are not professional can represent others in legal proceedings. I practised in industrial tribunals as a lawyer for many years, but I know that often the trade union representative knew more about the matter than I did. There was some excellent representation on offer from the trade unions, and indeed employers. However, we want to be sure that people are given good quality advice. I am worried by the idea of an organisation that does not have a person trained in legal matters undertaking work when it is not skilled in what it is doing. The trend at the moment seems to be towards allowing more of that sort of approach.
Huw Irranca-Davies said that there has been a change, and that previously solicitors were not allowed to buy in great classes of cases. One could argue that there were good reasons for that. All movement seems to be towards opening up legal practice to more competition from people who are unqualified. Although there might well be a case for that, I agree with the hon. Gentleman that ethical conduct, high professional standards and all those aspects of the matter should be at the centre of our concern.
Does the hon. Gentleman feel that ethical conduct should be set out as a duty in regulations? That is the strongly held feeling of many hon. Members; such conduct should be a duty for those involved—whether they are lawyers, solicitors or a management organisation—and not something implied.
Certainly, one needs to achieve that outcome. We are still considering the Clementi review, and I imagine that the Government are doing the same. If one follows the logic of the review, which is that people who are nothing to do with the legal world can own solicitors' practices, it opens up the possibility that one of the claims handling firms that has been discussed could buy a firm of solicitors and operate it, even though it was not legally qualified in any way, and might not have the same standards as the solicitors' profession would normally expect. It is important that we act in a way that retains the ethical standards of the solicitors' profession, and I agree that it is important to focus on the Law Society and its role.
I would have thought that, by and large, trade unions probably provide a pretty good service in this area. However, if there are concerns about how trade unions are operating, there should not be any barrier to ensuring that they are properly regulated like everyone else.
There seem to be concerns about how the DTI and solicitors operate. That needs to be addressed, and perhaps that is also true of claims handlers, through the Law Society. Perhaps the trade unions need to raise their game, in some cases. I will be extremely interested to hear how the Minister intends to accomplish all that.
I congratulate my hon. Friend Mr. Jones on securing this good and important debate. I particularly thank my hon. Friends the Members for Sherwood (Paddy Tipping), for Bassetlaw (John Mann) and for Barnsley, West and Penistone (Mr. Clapham) for their powerful and passionate contributions.
The debate is, in effect, about justice—social justice. It is about what all of us in this Room went into politics to do: assist people who are vulnerable and who cannot speak up for themselves. Therefore, it is most definitely about the role of our solicitors in society, and the claims management industry that has grown up over the past few years. Central to that discussion is the subject of regulation, particularly of our solicitors.
We expect the highest standards of our solicitors and lawyers; on the whole, they are respected across the world, but it is the practice that we are debating today that goes furthest towards undermining that reputation. That is why the Government made the decision, which they announced yesterday, to accept Sir David Clementi's recommendation on the regulation of solicitors: that is, to separate their representative function—their function as a trade union of solicitors—and their regulatory function. It is precisely because of some of the frustrations that we have heard about this afternoon that that decision had to be taken. There is an issue about how our solicitors are regulated, notwithstanding the work that the Law Society has done and is doing on the issue. I will come back to that.
The sharp and wicked practices in the claims management sector must stop. My hon. Friend the Member for Sherwood reminded me in the House a few months ago that the sector was in the last chance saloon; the saloon door is now closed. The Government are moving to regulate that area. It really is outrageous what some of our vulnerable constituents have had to experience.
Obviously, I do not represent a former coal mining area, and particular issues arise in those constituencies. However, what my hon. Friends and I share is the fact that we represent some of the poorest constituencies in this country—the constituencies that come high up in the index of deprivation, the constituencies where over 50 or 70 per cent. of children are on free school meals. We understand what that means for those people. We understand the incomes that they have, and we understand what it means when someone knocks on the door, advertises in the newspaper or appears on television, wearing a suit, and says, "Look, I can provide this service." We understand what it means to those very hard working people who take on face value what professionals claim to offer before moving on to exploit people.
When we talked about the issue, we tended to assume that claims handling is a dry, technical or legal issue, and we heard in this debate that it is far from that. It is not about legalese; it is about the everyday lives of some of the most vulnerable people in this country, especially in former mining areas in the north, and in the Welsh valleys and other areas.
This issue is about access to justice. It is about ensuring that people have honest, accurate and effective legal support that does not raise expectations but is fully committed when a client has a genuinely good case. People must have proper routes to redress, where redress is required, and compensation must be targeted on those with genuine cases who deserve the full weight of our support. The Government's position on this issue is clear. We need to tackle the practices that help to encourage false expectations of compensation, and to improve effectiveness and efficiency for people who have a genuine claim.
Let me explain why some of the practices of claims management companies have been unacceptable. Their methods of dealing with potential clients are often inexcusable. Some of them use the hard sell, putting the squeeze on people even if there is little chance of them receiving compensation. Their practices are even worse because of the kinds of people they approach—ordinary working miners and former miners, and people who work in the textile industry and factories. They are vulnerable people who expect more from lawyers, and from people who operate with lawyers and the insurance industry. The law can seem like a minefield, and it is the job of legal professionals to help people plot their way through it. At its best, the legal system in our country is the finest in the world, providing honest, transparent and expert advice. However, claims companies have failed to live up to that standard. Many of them earn money by using complex systems of referral fees and charges, and, ultimately, the losing party picks up the cost.
I welcome today's announcement on the regulation of claims handlers, although it will take some time to come into effect. Meanwhile, I would like the Minister to urge the Office of Fair Trading and other organisations to act against some of the claim handlers. Will he agree to join me and other Members who are present in meeting the Law Society and other organisations to see what we can do to clamp down now on some of their sharp practices?
Absolutely. I will meet all colleagues in this Room and beyond who want to continue to take action on this issue before a regulatory framework is put in place. I will continue to work with the Claims Standards Council to see what more we can do, and I would be happy to meet the Law Society, which is doing work in this area. We must do more with solicitors, too.
Members have raised issues to do with the Department of Trade and Industry. The Trade and Industry Committee is looking at this issue, and it is due to report shortly. Colleagues in the DTI will want to wait and see what its report says before taking action. All across the Government, the pips are squeaking for this group of people; that is happening because of pressure applied by Members who are present.
All Members for mining areas and former mining areas will welcome that announcement. Will the Minister clarify whether the regulation he mentions will operate within the terms of the Courts and Legal Services Act 1990, to which Paul Holmes referred, so that the definition of litigation is widened to include advice given in contemplation of litigation?
It might be. We are moving forward: we are accepting the Clementi recommendations; later this year, we will publish our White Paper; we have stated that we are bringing the claims management sector into the loop. As we continue to introduce legislation, we must look closely at the key issues. As we move to regulate the claims management industry and to set up a new regulatory framework for our lawyers, we must look at any gaps that exist, and at how to get the best legislation possible.
Everybody will have been glad to hear the Minister say that the saloon door is closed. However, although I do not want to mix metaphors too much, unfortunately, in many cases, the horse has already bolted. There are many cases throughout the country—thousands we suspect, but we do not know precisely how many—where people have already had the money taken from them. That is a serious problem, and changing the legislation now will not affect those cases. Will the Minister look into how we can establish the precise level of this problem in our country? That might be a matter for the DTI, rather than for his Department.
Colleagues in the DTI continue to look into that, and, as I have said, the Trade and Industry Committee is working on it. Many people who are caught up in this way are out there in the system. In its newsletter to former coal miners—not just individually, but through their networks and organisations, and through the citizens advice bureaux and other organisations—the DTI has called for people to come forward. There are problems caused by the fact that some of these cases began a long time ago; people might have moved or died, for example. However, that work is going on, and through the networks and the concerns voiced in this debate, colleagues in the DTI might be able to take it forward in a more strategic way, regardless of what the Trade and Industry Committee says. We should not underestimate the size of this issue, or how long some of these cases go back.
I have spoken a little about the effects of some of these practices—the cold calling, the hard sell, the aggressive behaviour, the unprofessional conduct—on vulnerable people in our communities. We have heard a lot about that from Members today. The Government have favoured self-regulation, and I welcome the steps the Claims Standards Council has taken. It has attempted to produce comprehensive rules and consumer and commercial codes of practice—although I was concerned by what my hon. Friend the Member for North Durham said about the fuzzy line of some of that practice between solicitors and claims managers, and I will look into that.
I have enjoyed the Minister's contribution, and I welcome what he has said, but how can the Claims Standards Council have any credibility when organisations such as Freeclaim IDC are founding members? That is not merely akin to giving Dracula the keys to the blood bank; such organisations have been given a say in how to construct the council. It can have no credibility at all if the very companies that are ripping off my constituents and those of other Members are founder members.
I hear my hon. Friend's frustration. We said that we would move to self-regulation; that has happened within the last year, and I said that such companies were in the last chance saloon. I know that my hon. Friend will accept it in the right spirit when I say that for all regulatory frameworks—for those covering doctors as well as solicitors, and, indeed, for the rules governing the professional conduct of Members of Parliament—there will always be bad apples. However, the Claims Standards Council has been in a position where it can ill-afford its own members to be engaged in some of the conduct that my hon. Friend has done so much to bring to the attention of the Government and the country. That is why I take what he has said in this debate very seriously.
I also welcome much of what the Minister has said. However, I want to make it clear that many Labour Members feel that this is not a matter of the occasional bad apple; the whole barrel is stinking and rotten.
With regard to the adoption of the Clementi principles and the review that the Minister has carried out, he has talked about extending into the regulatory framework the claim handlers. Does he also want to include the unions in that?
A separate set of regulations governs the unions. They would be surprised if the Government were to suggest that they should be brought within the regulatory framework for solicitors. However, I have heard what has been said about some associations that operate in and around the unions.
It is also important to acknowledge the good work that unions do for poor people throughout the country. I have met enough union members, leaders and solicitors who have made representations to me about things like small claims to know that the unions do a lot of good work, and I would not want them to be tarnished by a few bad apples.
I entirely agree with the Minister's sentiments. I am not asking him to consider pulling the unions within the entire regulatory framework, but where unions act as commissioning agents to solicitors, they must fall within it, because no other framework will regulate their activities in that regard. NACODS South Wales raised an estimated £13 million from people, and many of them now want their money back. That can be achieved only if the union falls within this framework.
That is right, where there is a clear crossover. That reminds me that lawyers are often employed within our unions, and that they deal with solicitors and with claims managers, and that all of that behaviour must come within the scope of proper professional conduct. That is what my hon. Friend Huw Irranca-Davies wants. When we produce our legislation, he and his colleagues will be keen to ensure that it contains the principles and language that provides that professional conduct.
It has also been said that we should emphasise the concept of ethical behaviour. That has always been at the heart of what we expect of a lawyer in this country, along with independence, honesty and integrity. That is why the Government take this matter so seriously. This activity is damaging that perception. I say that with no self-interest as a consequence of being a lawyer myself.
Some people think there are too many of us, as my hon. Friend says.
I have explained our position on self-regulation. We must carry on working with the Claims Standards Council, while investigating what my hon. Friends have mentioned, but we must also continue moving towards regulation. I encourage my hon. Friends to engage in that process.
I agree with the DTI about solicitors or claims handlers who overcharge. Those charges are unethical and immoral. The DTI has advised claimants to make sure that they check the charging policy, and that they should not sign anything without having read it first. It has also asked claimants to seek advice from an independent source, such as their local citizens advice bureau.