CODE OF CONDUCT (Hansard, 22 April 1977)

§ Mr. Moate
I beg to move Amendment No. 17, in page 7, line 43 at end insert— (3) The statement shall in no respect seek to restrict competitoion between registered insurance brokers".

§ Mr. Speaker
With this we may also take Amendment No. 18, in page 7, line 43, at end insert— (3) For the purposes of this section an insurance broker seeking to retain any moneys paid to him on account of a fee or commission for his services when his instructions have been withdrawn before any introduction has been made shall be guilty of unprofessional conduct".

§ Mr. Moate
Amendment No. 18 is in the name of my hon. Friend the Member for Wirral (Mr. Hunt), who is not here at the moment, but I hope that he will return before we finish the debate on this amendment.
I am concerned that there should be some discussion on the question of the code of conduct. My amendment seeks to place a limitation upon the provisions of the code of conduct in one respect that has caused concern and that still 615 causes me some concern. The code of conduct will obviously be a vitally important part of the operations of the process of registration.
This is another example of where the House has to deal with a matter by statutoray instrument. The code of conduct, as I understand it, is to be drawn up by the Council. No doubt there will be discussion and consultation with the Department, and what will be regarded as a satisfactory code of conduct will be produced and put before the House in the form of a Statutory Instrument.
The Minister believes that that process could produce good results, but those of us who have bashed our heads so many times against the brick wall of Statutory Instruments know that it is not a satisfactory procedure. When the Statutory Instrument has emerged it gains almost the strength of a tablet of stone and is certainly unamendable. Yet this code of conduct will gain the force of statutory approval and will then be presented to the insurance broking world as a fait accompli.
I have no doubt that the code of conduct will be drawn up in such a way that it will be of advantage to the public. I know that everyone who is likely to be involved is desperately concerned with the good image of insurance broking and to ensure that we maintain the highest possible standard. I have never sought to maintain otherwise.
What concerns me is that the code should not be so restrictive in certain ways as to be a disservice to the public. The example illustrated by my amendment is one area where there is great room for doubt and certainly great room for debate. The amendment seeks to ensure that the code shall in no way restrict competition. I hope that the Minister, who has some responsibility for restrictive practices and monopolies, will endorse that sentiment. It is a commonplace and truism that everyone should accept this as a general intent, but this is not always the case. There are insurance broking codes of conduct already, and some of these codes of conduct have been causes of contention. Codes of conduct drawn up by reputable people of good intent are not automatically accepted by the profession as being non-controversial.
616 I have before me the regulations of the Corporation of Insurance Brokers, and I think that the House will understand from these regulations why I have tabled the amendment. The regulation dealing with competition was amended by resolution on 4th October 1966. If it has been amended since then, I apologise to the Corporation. The regulation on competition states: Members are required to respect the business of other members. When in contact with the insuring public it is the duty of a member to inquire whether the insurances are handled by another incorporated insurance broker or incorporated life insurance broker. If so, the member must withdraw unless the insured expresses dissatisfaction with his present insurance broking arrangements. This proposition has caused a number of brokers not to join the Corporation because it is undeniably a restraint upon competition between members of the Corporation of Insurance Brokers. It is an eminent and highly reputable body, which I am sure does an absolutely first-class job in raising insurance standards and, generally speaking, its rules and criteria must be set only so as to enhance the status of the profession in the eyes of the public.
This provision has upset certain insurance brokers. From personal experience I know that a number of brokers have said, "I am sorry, but I regard one of my intentions as being to take a little bit of business away from my competitors". That seems a very healthy state of affairs. They say, "I do not subscribe to an organisation which says that I should be restricted from so doing unless I can persuade the customer or client to express dissatisfaction". Someone who does not conform to that standard renders himself liable to expulsion, suspension or a penalty. So the rule has teeth.
I am concerned about such provisions creeping into codes of conduct. This code of conduct will have statutory effect. If it is drawn in that way it will be unfair to many concerns who may find themselves under the threat of suspension or expulsion. That is probably putting it too high. I hope that the code will be fairly relaxed on such matters.
In this clause, as in so many others, provision is made for proceeding by Statutory Instrument. The code need not be so exhaustive as to prevent it from being set out in the Bill. I believe that it should 617 have been set out in the Bill. The amendment goes some way towards that, as does the amendment tabled by my hon. Friend the Member for Wirral. It seeks to prescribe certain modest conditions. The code of conduct for the Corporation of Insurance Brokers is not long. Many of the points dealt with therein are already taken up in the Bill—for example, the requirement as to personal indemnity.
If the sponsors had so wished, it would have been possible to incorporate into the Bill many of the points that are subsequently to be dealt with by Statutory Instrument. It has been pointed out that the Bill requires the use of Statutory Instruments in nine separate cases. This is one such case. If the code of conduct had been incorporated in the Bill we could have considered whether it was reasonable to apply such a code to registered insurance brokers.
I should find it very helpful if my hon. Friend the sponsor of the Bill would tell us whether a draft of the code of conduct is available and whether we shall have an opportunity of considering some of its features before we reach a conclusion on the Bill. I do not like the modern tendency of having enabling Bills, which means that the House is prevented from considering many detailed points of law. This Bill is a bad example of that.
I can understand the dilemma of the draftsman. He must decide whether to make a Bill massive and unwieldly, and therefore expose it to an excessive number of Government amendments on a Friday, or to proceed by way of Statutory Instrument to such an extent that the power of the House to consider points of legal importance, is reduced.
Has my hon. Friend seen a draft code of conduct? Can he share with the House some of the points in that code? Will he say, for example, whether any comment has been made on the chances of the Corporation of Insurance Brokers regulation being part of this general code of conduct?

§ Mr. Clinton Davis
The hon. Gentleman may speculate on all sorts of permutations for the code of conduct. He has made his point, that he thinks that the code of conduct should have been brought before the House. The fact is that it has not been brought before the House, I think for very good reasons. This is a 618 matter that must be worked out after prolonged consultation. I do not think that it is appropriate for the Bill itself at this stage.
Is it the hon. Gentleman's intention now to postulate this tremendous number of permutations that would be available for the code of conduct? If it is, he can go on until 4 o'clock. Alternatively, does he agree that it is appropriate that this matter should be invested with the expertise and experience of those in the professional body concerned, that it should come before the Secretary of State for scrutiny, and that it should then be available for the House to scrutinise and assess? The choice lies with the hon. Gentleman.

§ Mr. Moate
I only wish that the choice lay in my hands. Clearly it does not. We do not have the code before us. We do not have the prospect of dealing with an endless series of permutations—that would be out of order. The Under-Secretary should realise that we are discussing a precise amendment dealing with the restraint of competition between brokers. I am not dealing with other permutations. I am saying that on this very point the House should accept my proposition.

§ Mr. Clinton Davis
Speaking for myself, I understand and am not in real disagreement with the sentiment behind the hon. Gentleman's proposed amendment. I assure the House that the Government Will have close regard to their policy on restrictive practices when considering the code of conduct with a view to approving it. I hope that the hon. Gentleman will accept that assurance.

§ Mr. Moate
I am not quite sure what the Under-Secretary is saying. If he wishes to intervene again, I shall be quite happy to give way. Is he saying that he will accept my amendment?

§ Mr. Clinton Davis
No. I did not say that I would accept the amendment, for the reasons that I have given. I said that the code of conduct must be very carefully scrutinised and considered in the context of the Government's policy on restrictive practices, which is not vitally different from the point of view of the Opposition and of the previous Tory Government. I should have thought that that assurance would be adequate for the hon. Gentleman.

§ Mr. Moate
The only assurances that I like are amendments written into Bills. Assurances flow fairly thick and fast during Committees and Report stages, but it is subsequently difficult to translate them into legislative form. If the hon. Gentleman believes that the amendment enshrines an acceptable proposition and he agrees with the sentiment behind it, I should have thought that there would have been no harm in this proposition being embodied in legislative form.

§ Mr. Clinton Davis
No, because there is no end to it. If one were to accept this proposition because one had sympathy with it, one might have sympathy with many other matters that could be included in, and were more appropriate to, the code of conduct. That is where these matters must be worked out, not on the Floor of the House on Report. I do not deny that the hon. Gentleman has the opportunity of continuing upon this path of frustrating the passage of the Bill.

§ Mr. Moate
The Minister is wrong. Of course there is an end to it. The end lies in the fact that there is only one amendment before us. We do not have available to us an endless series of remedies. The code of conduct is not before us. We are not considering an endless series of amendments dealing with various aspects of the code of conduct. The House is considering one amendment, dealing with one sentiment—with which, as I understand it, the Under-Secretary has sympathy—on a point of detail that has caused concern to insurance brokers.
I could quote examples of brokers who have not joined the Corporation of Insurance Brokers because of the existence of the provision to which I have referred. I am sure that endless numbers of other organisations and individuals have adopted a similar view. I think that the regulation is unworkable in practice. Why does the Minister not accept the one proposition that I put to him, with which I gather he is in general sympathy?
This is not a matter of no concern; it is a matter on which brokers have expressed concern to me. Their minds would be put at rest if a provision were accepted that would ensure that the 620 council would not be able to incorporate into its code of conduct a provision to the effect that there should be a restraint on competition between brokers.
I do not understand why the Minister is so confident that our proceedings for considering Statutory Instruments means that the House can give them proper consideration. I should have thought that it was self-evident that they did not give any such assurance. That is why I think that the code of conduct could properly be considered at this stage.
2.30 p.m.
There is a further and stronger reason why I think that my amendment should be accepted. This is because the point about non-competition has lately been the subject of some controversy, on a matter with which the Minister might be familiar, namely, the question of the insurance of solicitors. As we know, about a year or so ago the Law Society introduced a scheme that required solicitors to insure through certain insurance brokers, and therefore through a certain channel.
This was hotly contested, so the Law Society held a referendum of all solicitors to find out whether the proposal met with majority approval. In the end, it did, but only just. Nevertheless, many solicitors were very unhappy at being forced to change their insurance brokers, with whom they had been dealing satisfactorily for many years, and being directed to other insurance brokers, which was not always necessarily to the solicitors' advantage.
In the context of this compulsory transfer, the point was made that members of the Corporation who were securing this business were doing so by taking business from other brokers with whom a client had not expressed dissatisfaction. The solicitors felt that this was in breach of the code.
It obviously seemed that there was a conflict that did not have any legal significance, because the code had no legal backing. In future, it will have legal backing and these matters will have to be settled by the courts. It would not be right to leave these matters in such a state of doubt that they would have to be settled by the courts.
My amendment, if added to the Bill, would do two things. First, it would 621 avoid the possibility of future legal conflict. Secondly, it would put at rest the minds of those many brokers who have in the past expressed dissatisfaction with that feature of the code of conduct of the Corporation of Insurance Brokers.