Tuesday, 29 March 2016
MALADMINISTRATION AT THE DEPARTMENT FOR TRANSPORT
Just over three years ago the Department for Transport posted its February 2013 consultation setting out its proposals for revising the MIB agreements. Stephen Hammond MP was the Under Secretary of State for Transport who unwittingly lent his name to this ill-conceived paper. His covering letter stressed the importance he attached to ensuring that the MIB schemes ‘are fully up to date’ with European law.
The MIB agreements are the contractual arrangements between the minister and a consortium owned by the UK motor insurance sector: the Motor Insurance Bureau (MIB). They provide the legal framework for two separate schemes for ensuring that victims of uninsured and untraced drivers actually recover the compensation they are entitled to.
Unfortunately the consultation’s terms of reference were highly prescriptive both in the limited nature of the proposed changes and in the issues it raised. Whilst many of the proposals were welcomed (indeed for the removal of a raft of unfair and oppressive procedural strike out provisions was something that this author had been calling since 2008), much needed reform was overlooked. Unfortunately, rather than taking the European law minimum standards of compensatory protection for accident victims into account, it appears to have completely ignored them. The department later admitted, in an official announcement in July 2013, that its proposals were the product of extensive negotiations with the MIB over three years. It is clear from this and from what has subsequently transpired that a deal had already been struck with the MIB in private on the modest procedural changes that motor insurer’s were prepared to countenance. So, for this ‘consultation’ to have lived up to its description, it would also have needed to take into account the views of the various special interest groups who represent the road users and motor accident victims that these two schemes are supposed to serve; particularly where they identified substantial illegality.
What is striking about this exercise is that the department and the Under Secretary of State for Transport (who has since returned to backbench obscurity) were both warned by several respondents that the consultation was poorly conceived. They were told, in effect, that they were asking the wrong questions. Several well informed respondents warned that the review should not be confined to the procedural changes contemplated. They were advised that the department needed to undertake a root and branch review of the entire national law provision for third party motor insurance as well the compensatory schemes for victims of uninsured and untraced drivers: this needed to include the primary and secondary legislation governing compulsory third party insurance as well as both MIB agreements as they were closely interrelated and interdependent. It was explained that this was necessary because all this law, which the department is responsible for overseeing, contained unlawful provisions that conflict with the minimum standard of protection required under the relevant European law that the UK is obliged to implement. These were serious issues that were explained, at least by me, in exhaustive detail with reference to the primary and secondary sources of European and UK law.
Yet the department, and officially the minister, chose to ignore these responses. The department’s reaction was to park the entire review process; rejecting calls for a dialogue from the respondents. Nothing moved for over two years. It was evident that the 2013 ‘consultation’ had been an empty exercise.
Then in July 2015 his Department announced, as a done deal, its original proposals, with a few additional measures which had every appearance of emanating from the motor insurers who enjoy such a cosy working relationship with his department. The one concession to European law being the revision of an unlawful exclusion of liability following their most recent defeat in Delaney v Secretary of State for Transport  EWCA Civ 172 but even here some of the changes seemed contrived to deliberately mislead the unwary: in the way it reintroduces the illegal constructive knowledge provisions associated with one of the MIB’s exclusions of liability under the feeble guise of conformity: see ‘A call for (more) reform’.
This disingenuous behaviour undermines public confidence in the impartiality and good faith of those involved. There is a growing appreciation that we don’t have open and accountable governance, let alone efficient administration, at the Department for Transport. The minister responsible for this deplorable situation is the Rt. Hon. Patrick McLoughlin MP (the minister), who has presided over this shambles since 2012.
The chronology of obfuscation provided in the accompanying post, Action Not Words, speaks for itself.
Innocent motor accident victims continue to be routinely short-changed by ‘at fault’ motor insurers and the MIB, which these insurers own and run, because the minister has chosen to ignore calls to review the shambolic and anachronistic national law provision for compulsory third party motor insurance. In some instances innocent victims are left empty handed due to petty technical knock-out clauses that serve no purpose other than to provide insurers with windfalls.
This is a highly unsatisfactory situation. It is one that successive ministers have condoned for decades. However ignorance that might have been pleaded in earlier years, is unsustainable in 2016. It has been made increasingly obvious, undeniable even, that these anomalies are unlawful because they are not permitted under European law. The Delaney and Vnuk decisions referred to above, as well as other earlier authorities such as Churchill Insurance v Wilkinson and ors  EWCA Civ 1166, leave us in no doubt that the UK’s statutory and extra-statutory provision is inconsistent with the European law it is supposed to implement. In fact this problem is systemic as our national law provision in this area is not only riddled with illegal exceptions and restrictions but it also contains basic design flaws that are inimical to the original legislative objective of the Road Traffic Act 1930 of protecting accident victims.
Take for example the way the relevant legislation (The Road Traffic Act 1988; The European Communities (Rights Against Insurers) Regulations 2002; The Third Parties Rights Against Insurers) Acts of 1930 and 2010 and The Contracts (Rights of Third Parties) Act 1999 all preserve elements of the common law third party rule that expose accident victims to the vagaries of contractual restrictions in cover that they as strangers to the contract have no ability to influence. This makes no sense from a social policy perspective and it undermines the original 1930 legislative aim. Furthermore, under European law, a third party victim’s right to compensatory guarantee is a free standing right. This is one of those situations where the European law that our government is supposed to implement is not only clear, unequivocal and, for the most part, sensible but also much closer to the original policy aim that initiated compulsory third party insurance in this country 85 years ago.
It is little short of scandalous that our government encourages accident victims on its website to apply to the MIB direct, in the certain knowledge that its contractual arrangements with the MIB (and the schemes it operates) fail to confer their proper legal entitlement to the compensatory guarantee required both by common sense and European law.
Law abiding motorists and road users have endured three more years of what might most charitably be described as institutionalised incompetence at the hands of the complaicent technocrats at the Department for Transport. What they need right now is for the minister to step up to his constitutional responsibilities.
The time for deliberation and consultation has long past. The minister’s refusal to act promptly and decisively to bring UK national law provision into line strikes this author as Wednesbury unreasonable: in the sense that it is blatantly defiant of both law and logic, quite apart from being morally indefensible.
If the Department for Transport is unwilling or unequal to the task of assisting the minister in driving through this long overdue and necessary reform, then perhaps it would be better for all concerned if the Ministry of Justice assumed this responsibility.