My Lords, the end is in sight. I am very grateful to the noble Earl, Lord Kinnoull, for his amendment and for the kind words he said about me. It has been a very constructive dialogue to seek to get this bit of the Bill right.
The amendments in his name seek to extend Part 2 of the Bill to Scotland. As noble Lords will be aware, the Government worked closely with the Scottish Government during the development of this policy to ensure that the FCA’s regulatory regime not only achieves the aim of strengthening claims management regulation but is proportionate to the needs of the sector and its consumers. Having sufficient evidence of malpractice by CMCs in Scotland is essential to justify extending regulation across the border. Our initial discussions with the Scottish Government revealed that they did not want regulation of CMCs to be extended to Scotland. Their view was that there was limited evidence of malpractice. We had powerful contributions in our debate in Committee which put forward a contrary view.
Because CMCs in Scotland have tended to be solicitor led, they are often regulated by the Law Society of Scotland. The decision was therefore made to replicate the current scope of claims management regulation to England and Wales only. However, following the very useful debate which we had on this issue in Committee, we have continued discussions with the Scottish Government, and their views are evolving.
The Scottish Government have not yet requested that claims management regulation is extended to Scotland, but I say to the noble Earl that, should we receive ministerial confirmation that the Scottish Government wish to extend claims management regulation to Scotland, we would be ready and willing to table a government amendment to that effect. So we will continue to engage with the Scottish Government and we will keep our position on claims management regulation in Scotland under review.
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On the issue of arbitrage, under the current regulatory regime the requirement to be authorised is not dependent on where the CMC is located but on where it carries out the regulated service—for example, a CMC based
abroad will still be regulated for the services that it provides in England and Wales. We intend to replicate this approach as far as possible under the new regime.
It seems churlish to end by noting that the amendments tabled by the noble Earl would not have the effect of extending FCA regulation of claims management to Scotland; they would amend only the extent of the claims management provisions and would not amend the regulation to encompass claims management services provided to consumers in Scotland. Given that somewhat technical objection but, more importantly, against a background of the ongoing conversations with the Scottish Government, I hope that the noble Earl will feel able to withdraw the amendment.