THE INSURANCE BROKERS REGISTER (Hansard, 22 April 1977)

§ Mr. Roger Moate (Faversham)
I beg to move Amendment No. 1, in page 1, line 18, leave out 'and such other particulars as may be prescribed'. As the Bill stands, it states that The Council shall establish and maintain a register of insurance brokers … containing the names, addresses and qualifications, and such other particulars as may be prescribed". It will be appreciated that one of the principal features of this measure, if it becomes an Act, will be the publication of a register and list. For the public, the physical emanation of the legislation will be the register and the list. It is argued that they will give a degree of protection to the public. If an individual is purporting to be an insurance broker, the public will be enabled to check with the central register to ascertain whether the person is a registered insurance broker or, if incorporated into a registered company, is registered to transact insurance broking business.
There may be argument whether that provision offers a degree of protection to 552 the public, but the position is clear. What is not clear is why there should be any need to add to the information provided in the register any information other than the name and address of the person or company so registered.
There was an extensive debate in Committee and I was rather encouraged by the response of certain hon. Members to believe that the point made by myself and others had met with some acceptance. The Minister was not too forthcoming, but we cannot expect too much. I felt that the point was made that there was no strong case for saying that further information should be set out in the register.
In subsequent clauses the Bill sets out a number of detailed criteria that must be met by persons wishing to be registered insurance brokers. It was argued by the Minister that it was not unreasonable that the register should state clearly the qualifications that the broker had to demonstrate to meet the criteria.
I draw the opposite conclusion. I say that if a man has met the criteria and has been accepted, that is sufficient. It is sufficient that his name should be on the register. The essential matter is whether the man has passed the test or failed the test. It is not a question whether he is a good or bad broker. It is not a question whether some people think him suitable or unsuitable, or better or worse than any of his competitors. The simple fact is pass or failure.
If we are to seek analogies, let us look to the Law Society, the architects' professional body, or the Institute of Chartered Accountants in England and Wales. In those professions there is a simple situation that a person has to pass his examinations. As far as I know—I am open to correction—once a person has passed those examinations he is in a position to practise in his profession. That is a different proposition from that with which we are faced today. I refer to a proposition that applies to many of the clauses with which we shall be dealing.
I imagine that the Law Society registers a man as having passed his examinations. Thereafter that person is enabled to practise. I do not think that a string of additional qualifications should be published in as much as it might provide 553 interesting commercial information. It is the case that the public might well be interested in more information. I do not dispute that proposition. What I do dispute is that the register is the place in which to publish information that might be of commercial interest.
It might be of interest, as was argued in Committee, whether a man was expert in atomic power plants. My hon. Friend the Member for Harrow, West (Mr. Page) quoted the case of a broker who specialised in rubber factories in Dahomey, now I understand, called Benin. It is true that a person seeking insurance cover might be very interested to know who was the best broker in that class of insurance. But it is not up to a central body to decide who is most suitable. My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) is a life insurance expert, and I would not hesitate to turn to him for life insurance expertise. However, my hon. Friend the Member for Harrow, West would be surprised how quickly my hon. Friend the Member for Brentwood and Ongar would become expert in rubber factories in Dahomey if anyone offered him such business.
All brokers regard themselves as general insurance brokers, and if they have not the necessary expertise in a subject, it is surprising how quickly they can obtain it or find specialists to employ who are leading experts. I say essentially that it is not for those who draw up the register to decide whether a man is good or bad or well qualified or only half qualified. We are concerned with the simple fact of law that he has met the necessary criteria.
The next interesting matter this raises is whether there is any intention in the mind of my hon. Friend the Member for Harrow, West that the register should say whether a person is a specialist in a particular subject. One of the interesting features of the Bill is that, although it seeks to guide the public about whether a person is a good or bad broker—

§ Mr. John Page (Harrow, West)
It does not say that.

§ Mr. Moate
Perhaps I have oversimplified the point, but basically that is the position. If a person is a bad broker, he will fail to meet the criteria.

§ Mr. Page
I hesitate to interrupt my hon. Friend, but he must try to be a 554 little more factual. He is suggesting that my intention is to show that any broker who carried out insurance broking business and who was not on the register was a bad broker. Nothing could be more unfair.

§ Mr. Moate
The last thing that I want to do is to be unfair to my hon. Friend the Member for Harrow, West. I was using the terms "good" and "bad" as a shorthand way of describing those who passed or failed the criteria. If someone applies to be a registered broker and has his application declined, the reason will be that he is not good enough to be a broker. There is a dividing line to be laid down between those who are good enough to qualify and those who are not.

§ Mr. Page
There are many people who will not wish to qualify and who will not wish to go on the register. My hon. Friend is arguing that anyone who does not attempt to qualify feels that he has not the proper qualifications and is automatically a bad broker.

§ Mr. Moate
If my hon. Friend objects strongly to what I said, I withdraw it. But there is a serious point about the benefit to the public.
Let me develop the point about the life insurance expert who is approached about insurance on a factory. As I understand it, the Bill does not intend to define the classes of insurance which a broker is qualified to transact. It means that someone who is a life specialist—perhaps a practitioner solely in life insurance and a self-employed life insurance broker—will be registered as an insurance broker. Thereafter, he will be entitled to engage in any class of insurance to the extent that it is an authorised class under the 1974 Insurance Companies Act.
11.15 a.m.
I cannot see what advantage there is to the public if the register does not make clear whether a person is a specialist in a particular class of insurance. If that is the intention at a later stage—and one or two remarks have been made hinting that matters may develop in that way—the broker would be very concerned. He would want to know whether restrictions could be placed on him about the classes of business which he could transact. It may be that in the other 555 particulars to be prescribed it is not intended to lay down classes of insurance which a broker may or may not transact. If that is so, it would be helpful to have it on the record.
The next matter is of even more fundamental importance. The Bill poses the interesting problem about the practising broker and the non-practising broker. Later in the Bill, we see that there are certain criteria which a broker has to meet. To pass the pre-entry conditions, he has to pass certain examinations or to have had certain experience, or a combination of both. In a later part of the same clause, it is provided that if he is a practising broker at the time he must meet certain financial criteria. The essential word there is "if". It follows that a man can apply to be a registered insurance broker but, if he is not in practice at the time, he does not have to demonstrate that he is insured by a professional indemnity policy or that he has adequate capital resources. That being so, we have a practising broker and a non-practising broker. We have two different classes of people.
It is interesting that the Bill provides for only one register. It does not say that there shall be a register of practising brokers and another register of non-practising brokers. Nor is there provision for someone registered as a broker saying subsequently "I wish to practise as a registered broker and now I must comply with the Act, produce accounts and demonstrate sufficient indemnity insurance." It may be that I have missed the step which is necessary there, or it may be that the Bill is faulty in this respect. I hesitate to say that it is faulty because the Minister assured us on Second Reading that it was well drafted, even though 90 amendments have been tabled for Report and probably an equal number were down for consideration in Committee.

§ The Under-Secretary of State for Trade (Mr. Clinton Davis)
The hon. Member for Faversham (Mr. Moate) must allow for the fact that I said on numerous occasions in Committee that for a variety of reasons it was probable that I should be bringing forward a substantial number of amendments at this stage. The hon. Gentleman should stick to the facts.

§ Mr. Moate
I was stating a fact. If the Minister cares to look at what he said on Second Reading, he will find that he used the words "a well-drafted Bill". I am not sure whether that is a well-founded description. But is the Bill correctly drafted in this respect? In Committee, my hon. Friend the Member for Harrow, West referred to a non-practising insurance broker and to the non-practising list. I can find no provision in the Bill for a non-practising list. It may be that when we talk about other particulars as may be prescribed", we shall say whether a person appearing on the register is practising or non-practising. If that is so, it should be defined by law.
I hope that my hon. Friend the Member for Harrow, West will help me on this very important point, because he will appreciate that these are statutory rules which will apply to the practising and non-practising insurance broker. Where will the information appear? Will there be two lists and two registers—the list being of those corporate bodies registered as insurance brokers and the register being of those individuals who fulfil the necessary criteria? We must have clarification on that point. If this is not to be stated here in the other particulars as may be prescribed where will it be stated in the Bill? My hon. Friend the Member for Harrow, West, who knows his Bill backwards by now, should be able to give me a precise answer on this important legal point.
I have made my point on this amendment, but to sum up, I think that the Bill as it stands goes wider than is strictly necessary. It is not necessary to add any further information other than the name and address of the person who passes the test and fulfils the criteria for being placed on the register of insurance brokers. Any other information may be of interest to the public but it is not essential for the statutory purpose of providing a register. I hope that the House will accept that point—that to provide any further information is unfair and misleading. Hon. Members on the Standing Committee generally seemed to accept the strength of the argument, and the proposition that the register should be limited simply to the information that I have described.
557 The Bill does imply a distinction between the registered broker who is in practice and the registered broker who is not practising. Will there be two lists, and if so, where are the provisions for this in the Bill? If not, how will the information be given to the public about whether a man is in business and meets the necessary financial criteria?

§ Mr. David Weitzman (Hackney, North and Stoke Newington)
The hon. Member for Faversham (Mr. Moate) has made a very powerful case for the deletion of the words set out in the amendment. I want to support him. I hope that the House will accept his amendment.
This Bill is clearly restrictive, and it is necessary to ensure—and I use the word advisedly in this case—that details which are irrelevant or unnecessary are not inserted. The hon. Member for Faversham criticised the word "qualifications", and I would agree with that criticism.
My view is that before a person can be put on the register it is necessary to set out his qualifications for inclusion, and that is understood. But the clause itself contains the words "names, addresses and qualifications". We have not sought to delete the word "qualifications"—that remains; but we object to the words that have been added such other particulars as may be prescribed. Why are these words added? Why leave it to the Council to prescribe whatever it thinks fit to put on the register?
The simple point is that the register contains the names, addresses and qualifications. I am against the idea that the Council should have a general power to put whatever it likes on the register. These other words are very wide, and I wonder what they mean. Is it for the Council to decide what it wants to put in? Personally, I object to the inclusion of these words. The clause is all-sufficient—the register will contain the names, addresses and qualifications. I suggest that this matter is beyond argument and that the words should be deleted.

§ Mr. Andrew Welsh (South Angus)
This amendment will restrict the powers of the Council and hedge the scope for future action. Could the Minister or the sponsor of the Bill outline the sort of particulars that could be necessary in practice and give us an idea of the parti- 558 culars that will appear and the reasons why?
It is important not to create unnecessary divisions in the industry—a sort of class or tier system. In reading these particulars we do not want a sort of "Who's Who" of insurance broking, or any information which could prejudice the reader in any way other than outlining the expertise that he or she can obtain.
The basic question is whether we trust the Council to carry out with responsibility the powers in the Bill. I am always very wary of building in such freedom which, at worst, can be abused or interpreted in ways that we cannot even imagine, or can be used in a way that is contrary to what the supporters of the Bill have in mind. But in reality this is an extremely pessimistic approach. Given the nature of the insurance business and the professional standards attained by established bodies, it is not unreasonable to retain the words in the clause. These will allow the Council to take account of any future or unseen needs without the unwieldy and time-wasting Government and constitutional procedures. I oppose the amendment, although I appreciate the wisdom of having second thoughts and the caution which that underlines.

§ Mr. John Page (Harrow, West)
There are grave penalties in the Army and in the Services for those who give themselves a self-inflicted wound. This debate today is a wound inflicted on myself, as a sponsor, because of the unhappy habit of verbosity that I employed in Committee.
My hon. Friend the Member for Faversham (Mr. Moate), when he introduced this debate in Committee, described this as a kind of probing amendment to find out exactly what I thought should go on the register. Unwisely, I let my imagination rip.
The question is whether the register is exclusively a roll or more than a roll. When, as hon. Members, we take the oath of allegiance we sign a roll, and our names are there without qualifications, addresses or anything else. The question is how much information should or should not go on this register.
I hope that it will not harm the hon. Member for South Angus (Mr. Welsh) if I thank him for his intervention, which 559 expressed my views extremely well. The point is that this is a self-regulating Bill for the industry and the advantage of self-regulation is that the people involved probably know more of the details of the business they are undertaking than the man in Whitehall. We would be unwise in this Bill or in any other to try to lay down the minutiae of every activity that the business being undertaken needs for its own regulation.
However, I accept very much that the register is really a list of those who have qualified to be on that register. Nevertheless—and I do not think that it is necessary to write this into the Bill—there is no intention that the register should include the kind of business in which the registered insurance broker is taking part. I do not see that this is a necessary aspect, any more, I imagine, than that the lists kept by the Law Society, the chartered accountants' bodies or medical bodies stipulate the kind of business that the firm undertakes.
11.30 a.m.
However—this leads me to the second point made by my hon. Friend the Member for Faversham—it occurs to me that whether the individual is practising or not practising may be just the kind of information which, with deliberations within the Council, it might be considered worth while including on the register.
Hoping that the Bill may remain "The Page Bill" for the next century or two, as the guide in this field, I think that it would be rather stupid for us to make it necessary for there to be some kind of amendment or Statutory Instrument, or whatever it is, if at some stage it was decided that it might be worth while, for instance, stating the nationality, office or place of abode. If the man were the greatest insurance broker and were resident in Geneva, New York or Hong Kong, it might be worth while stating something like that.
Perhaps I have already unwisely fed ideas into my hon. Friend's mind. However, I should have thought it rather silly for us not to allow the Council, which, if the amendment is accepted, after the initial period will be elected by registered brokers, to say what should be on the list.
560 Therefore, I hope that in the probing spirit with which my hon. Friend moved the amendment, he will feel that it is sensible not to tie the hands of the Council too tightly.

§ Mr. Clinton Davis
I should like briefly to add one or two points in support of the line that has been taken by the sponsor of the Bill, the hon. Member for Harrow, West (Mr. Page).
I think that there is a case for having some form of additional powers to include in the register various other matters of information. When we were debating this matter in Committee, I cited that it might be necessary to have the sex of the broker described, because names are sometimes misleading. I cited Hilary as a name. What about Jan? What about Evelyn? All those are names that could lead to confusion. Also, the age of the broker may be a relevant consideration.
I do not know whether I am attracting the attention of the hon. Member for Faversham (Mr. Moate)—evidently not.

§ Mr. John Page
That is a pity.

§ Mr. Davis
It seems to me that he ought—

§ Mr. John Page
It might be helpful if I were to interrupt the Minister, because everything that he is saying is of such vital importance to my hon. Friend the Member for Faversham (Mr. Moate.) Perhaps it would give my hon. Friend a chance to return to his seat. I see that he is doing so now.

§ Mr. Davis
I hope that the hon. Member for Faversham heard what I was saying.
It seems to me that the age of the broker may be relevant. The date when he was first registered may be a relevant factor. Certainly on the Law Society roll that is always included, as it is in the list of barristers who are practising in the United Kingdom. The directorships that he may hold may be relevant. Whether he has actually paid his registration fee for the current year may be relevant, though I would not necessarily go to the wall on that one. However, it seems to me that these are all factors that ought to be given consideration and were omitted from the hon. Gentleman's speech.
561 I can think of another factor. What about that of being a Member of Parliament? I should have thought that any sensible client would immediately feel that it would not be reasonable to employ such a broker, who would not have the time properly to attend to his affairs. [HON. MEMBERS: "No."] I withdraw that remark. No doubt I would suffer from those circumstances if I were not a Minister.
My hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman) argued that the Council ought not to have this general power because, under it, it could do whatever it liked. That is not accurate. I ask him to look at Clause 8(2)(h), which deals with the question of rule making. That is all subordinated to the power of the Secretary of State, as set out in Clause 28(1), because the rules prescribed in Clause 8 have to receive the approval of the Secretary of State, and, furthermore, it is all subject to the possibility of parliamentary scrutiny under the negative procedure. Therefore, the Council would not have the last word in this matter—far from it. It is a matter that can come under surveillance.

§ Mr. Weitzman
When I look at Clause 8 I am a little troubled by subsection (1)(h), prescribing anything required or authorised to be prescribed by the provisions of this Act relating to the register or list. One turns back to the clause that we are discussing and the words, and such other particulars as may be prescribed. Is there not a danger there that the matter is left at large?

§ Mr. Davis
No. My hon. and learned Friend is missing an essential element. It is that these rules prescribed in Clause 8 as being capable of being made by the Council have to be read in the context also of Clause 28, which in fact provides for the way in which the Secretary of State will deal with the matter, and in turn Parliament then has the right, if it wishes, to scrutinise the position further.

§ Mr. Weitzman
May I suggest, with all respect to my hon. Friend, with his great legal knowledge, that if he briefed some other counsel he might well argue the point that I am making with some conviction?

§ Mr. Davis
My hon. and learned Friend argues all his points, both here and in the courts, with great conviction, but I suggest that he would argue this point not necessarily with success.
I hope, therefore, that the hon. Member for Faversham will feel that this is not something that he ought to pursue. However, we ought certainly to keep the matter under scrutiny. The assurances that are set out in the Bill should suffice to deal with the points made by the hon. Gentleman.

§ Mr. Moate
Will the Minister deal with the very serious point about the question of a non-practising and a practising registered insurance broker, particularly in the context of Clause 3, which clearly distinguishes between the two classes of persons, while the Bill as it stands makes statutory provision for only one list?

§ Mr. Davis
The hon. Gentleman is reinforcing the points that I am seeking to make, because Clause 2 could provide for this very point, as to being one of the other pieces of information that needs to be provided on the register—whether or not a broker is practising. I am grateful to the hon. Gentleman for pointing that out.

§ Mr. Michael Shersby (Uxbridge)
It seems to me that the essence of the amendment moved by my hon. Friend the Member for Faversham (Mr. Moate) is that there should be a distinction between registration by statute and commercial information that might be of interest to the public. My hon. Friend raised this point in Committee, and my hon. Friend the Member for Harrow, West (Mr. Page) undertook to look at it—nothing more than that.
My hon. Friend the Member for Faversham also asked for clarification about whether there would be a practising or non-practising list. The point was dealt with by the Minister a few moments ago. It seems that my hon. Friend is trying, by the amendment, very sharply to restrict the nature of the clause. My hon. Friend feels that no other information is needed and that to provide it would be unfair and, indeed, misleading. He said, and the Committee seemed to accept his argument, that the 563 Bill implies a distinction between practising and non-practising lists. The hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) questioned the need for the Council to have this power to require further information of any kind that it may like.
The hon. Member for South Angus (Mr. Welsh) made the point that if Parliament does not trust the Council to carry out its responsibilities that is a very pessimistic attitude for Parliament to take. I am inclined to that view as well. My hon. Friend the Member for Harrow, West has fairly stated that the register is a roll, not very much more and not very much less. But how much information should there be on that roll? My hon. Friend also points out that what we are discussing is a self-regulatory Bill for the insurance industry and that the insurance industry itself knows best what sort of information it needs for its own regulation.
My hon. Friend has assured the House that there is no intention of including details of what kind of business a broker is engaged in. My hon. Friend has therefore made some fair points in reply to my hon. Friend the Member for Faversham. He has said that it would be unwise not to allow the Council to say what should be on the list and that it would be wrong to tie its hands too tightly. That is a wise and sensible attitude to take towards this clause. What Parliament should do is to allow a certain degree of flexibility and to place upon the Council the responsibility to see that it uses its powers wisely and fairly in the interests of all those who are engaged in insurance broking.
I very much hope, therefore, that on reflection my hon. Friend the Member for Faversham will feel that we can reasonably leave to the Insurance Brokers Registration Council the discretion itself to decide what sort of information it requires under this clause.

§ Mr. Moate
I confess that I am disappointed with the response of the sponsor of the Bill and by that of the Minister and my hon. Friend on the Opposition Front Bench. My hon. Friend the Member for Uxbridge (Mr. Shersby) argued that we should trust the Council. Frankly, if we are to trust the Council, 564 I am not sure why we are so concerned about the details of the roll. I am not certain why we should demand that Parliament should scrutinise the details to be put on the register as provided for in the Statutory Instrument which the House will be able to consider and reject.
I do not believe that we should trust outside bodies in this way—and I do not care whether it is insurance brokers or any other group. We are giving statutory powers to a body outside this House. Thereafter, we shall have very limited powers of scrutiny or control over what that body does from day to day. Certainly we can look at the statutory instrument. I know that the Minister places immense faith in the Secretary of State to make perfect judgments. Frankly, I do not believe, either, that it is the job of Parliament to trust outside bodies or Secretaries of State. It is our job to get the law right.
11.45 a.m.
What we are saying is that the register is a statutory document which is to be set up under an Act of Parliament. Its form and content ought to be described precisely in an Act of Parliament or in the subsequent Statutory Instrument. I do not think it is sufficient to say "trust the Council". I am sure that every individual on the Council will be trustworthy and honourable, but it is up to Parliament to get it right.
I do not believe that the case has been advanced for saying that the Council should be free to include interesting information which may be of advantage to the public. The Minister said that it would be of interest to the public to know how old a man was. But why should the Council advertise the fact that a young man has just started up in business? From what the Minister said, I deduce that the fact that he was only 24, compared with a mature broker of middle age, would be regarded as a disadvantage. Otherwise, what does it mean?

§ Mr. Shersby
Does my hon. Friend not agree that anyone seeking to consult a medical practitioner is perfectly free to look up in the register of qualified medical practitioners full details concerning that practitioner, including the date on which he qualified? From that information a person would quite clearly know 565 when the man qualified and what sort of age he was.

§ Mr. Moate
I think it is up to Parliament to specify what information should be on the register. There may be a case for putting the date of admission. That is fairly standard practice with regard to the Law Society, the RIBA and others. We know roughly when the person qualified and whether we are dealing with an octogenarian or a young man. I think that should be specified here.
It is up to us carefully to define what information is to be on the register. If my hon. Friend the Member for Uxbridge wishes to move an amendment, or to persuade the sponsor of the Bill to accept an amendment, stating that the date of admission should be on the register, so be it. What I do not like is the suggestion that commercial information should be included on the list which would help the public make a judgment about one man or another. The young man has already passed and fulfilled all the criteria set down in a subsequent clause. He has proved that he has had the necessary years of experience, and that he has the necessary qualifications. Apart from that, I do not think any other information should be given.
I should have thought that Parliament should define what goes into this statutory document. My hon. Friend the Member for Harrow, West (Mr. Page) was helpful in one respect. He made a positive statement that there would be no intention of describing the class of business for which a particular broker was qualified to act. However, I do not think that that answers my main point. If a man is a life broker, does it help a member of the public, when going for motor insurance, to know that he is simply a registered broker? I should be loath to see any such description given, because a life broker might soon claim to be an expert if presented with a worthwhile volume of business.
This is supposed to be a measure to provide consumer protection, but it does not give any information to protect the consumer except in this one specific respect. I do not think that that point has been answered. I welcome the assurance that there will be no question of distinguishing between one broker and another as to the class of business that 566 he is qualified to undertake—that is a helpful statement—but I do not feel satisfied with the answer given by the Minister about the non-practising and practising list. One can argue that this information should be included in the register under the terms of the phrase and such other particulars as may be prescribed". But that is not good enough, because the Bill goes to considerable lengths to define the list or register. My hon. Friend the Member for Harrow West has referred to a practising list.

§ Mr. John Page
When, where and how, I wonder, have I made such a reference?

§ Mr. Moate
I shall speedily turn to the Committee proceedings. I can assure my hon. Friend that I am right and that he did refer to a practising list. He may not have meant to, but I think he was right to use those words, because the Bill makes quite a distinctive provision for a practising and non-practising insurance broker. It is important to the member of the public to know whether that man is practising or non-practising. If he is non-practising, he does not, or may not, have the requisite professional indemnity insurance, or reserves, or adequate financial backing.
It is not enough to say that that can be put into "any other information", when we go to such lengths to prescribe what is and what is not in the list. There is here an important legal point, and I suggest to my hon. Friend that it is a failing of the Bill that it has not been properly drafted in that respect. When the Bill goes to another place—if it does—some attention should be paid to making sure that there is proper legal provision to show whether a man is a registered broker in practice, or a registered broker not in practice.
I am disappointed that my hon. Friend has not seen fit to accept my amendment. Had he done so, he could have gone on to prescribe much more clearly and tightly the information that he thinks should be in the register, and we could then debate that. I repeat that I am disappointed in my hon. Friend's reply, but I do not wish to take up too much of the time of the House by unnecessary Divisions—at this stage at any rate—on a point of relatively minor importance. There are many more important matters 567 to come. Thus, disappointed though I am with the reply that I have received, I beg to ask leave to withdraw the amendment.