The Civil Liability Bill had its second reading in the House of Commons yesterday evening, in which the principles of the proposed legislation were debated.
Pointing to rising whiplash claims in the context of reducing accident numbers and improving vehicle safety, the Lord Chancellor noted “Our reforms are focused on ensuring that genuine claimants have access to justice, receive a proportionate amount of compensation and that the system works for all who use it honestly.”
Despite the provisions being strongly opposed by Labour, even being labelled as 'bogey man' legislation in relation to the spectre of fraudulent claims, the Government showed no signs of backing down on many of the provisions. Labour advised they would not support the Bill unless it is substantially amended, with battle lines being drawn for areas of likely amendment during Committee Stage.
The whiplash provisions were hotly contested during the debate and some concessions were made.
The Lord Chancellor accepted at the outset that vulnerable road users (cyclists, motor cyclists and pedestrians) will be excluded from both the tariff system and the small claims track increase. The Ministry of Justice had previously conceded in the Lords that such users would be exempt from the tariff, but not the small claims increase. This is a sensible amendment given the added complexity of such cases which comprise only a minor proportion of total claims.
The Government also pledged to ensure that insurers will pass on savings to motorists, whilst avoiding any undue administrative burden. This is supported in principle by insurers. The Treasury has already consulted on proposed provisions and final draft Regulations are expected to be published at the Committee Stage.
In relation to medical reports, which will now need to be obtained in all cases prior to settlement, it was also confirmed that medical examinations would be face to face rather than via the telephone. There had, however, been no previous indication that examinations would be anything other than face to face under the existing Medco system.
The tariff system was also scrutinised, with Labour echoing calls by Lord Woolf to remove this provision from the Bill. In the alternative, Labour called for the levels to be set by the Judicial College. The Government has accepted that the Lord Chancellor will consult the Lord Chief Justice on the tariff, however, it remains to be seen whether this will go far enough for the opposition. The tariff system is central to the aims of the Bill and any removal would likely see current claim levels maintained.
Labour also proposes to lay amendments to the Bill to reduce the period for which the compensation tariff applies; to one year, rather than two, noting that it is much less likely that fraudulent cases will be those lasting for the longest time. Such an amendment would place many claims outside of the new regime and would likely prompt claims inflation to bring further claims outside the remit.
Much of the debate concerned the proposed small claims track rise. The Lord Chancellor noted, “By and large, these are very straightforward claims. We want to ensure that support is there so that people are able to bring the claims in person".
Labour called for the SCT increase to be included on the face of the Bill (despite this being set by secondary legislation), and that the increase should be inflationary only; £1,500 for both RTA and EL/ PL claims. A failure to elevate the limit in motor claims would see a large proportion of current cases retained in the fast track, maintaining current legal cost levels.
Bob Neill, Conservative chairman of the Justice Select Committee, questioned the wisdom of the EL/PL increase, noting, the Government "should consider where we should set the appropriate limit in relation to employment liability and public liability, which almost invariably create more complex issues… It is much harder to expect people, on an equality of arms basis, to deal with issues arising collaterally from the main point in such cases".
Given the additional complexity of such cases, it may be that the Government looks again at the limit; however the £2,000 proposal appears to strike the right balance and achieve the Government's objectives.
There were also calls from both sides of the aisle to improve the regulation of CMCs, particularly in relation to cold calling, with Labour rightly cautioning that the provisions may inadvertently enhance CMC activity in this area.
Labour called for an outright ban on cold calling. The Government noted it was already taking action in relation to CMCs, which has already seen them be subjected to FCA regulation. The Government and the FCA both recently consulted on the future regulation of CMCs. Final rules are awaited prior to the FCA becoming the regulator on 1 April 2019.
Section two of the Bill, in relation to the discount rate, had an easier ride.
Labour advised they would be proposing amendments to strengthen safeguards in the Bill. The only specific amendment mentioned was ensuring the expert panel would be consulted on the first review. This would undo a previous Lords amendment allowing the first review to be carried out without the expert panel under the guidance of the Government Actuary, in order to expedite the setting of a new rate. Accordingly, it is hoped this will not now be reversed.
The Government did acknowledge that Periodic Payment Orders (PPOs) could be introduced more frequently, particularly in relation to vulnerable claimants, although it remains to be seen how this will be dealt with in the Bill. Thankfully, there was no discussion of this being mandatory, nor will there be a presumption to utilise a PPO as the starting point.
The Bill will now proceed to the Committee Stage, where a group of cross party MPs will scrutinise it in detail and consider what amendments are required. Whilst it has not yet been scheduled, the Committee has to complete its review by 9 October.