Hundreds of claims companies dealing in accident claims have left the industry as a result of a government crackdown on ‘rogue firms’ in the sector. According to the Ministry of Justice, the number of claims management companies registered to handle personal injury claims has fallen from 2,435 in March 2012 to 1,700 in June 2013.
The Legal Aid, Sentencing and Punishment of Offenders (LASPO)
included a ban on the referral fees paid between by lawyers to claims firms for cases.
- You can read the annual report of the the Ministry of Justice’s claims management regulation unit HERE.
- You can read Julie Carlisle on the crackdown HERE.
- You can read Jon Robins on the compo culture HERE and Louise Restell HERE.
‘So hundreds of firms who bombarded the public with adverts for compensation claims may well have voluntarily left the industry – but only to enter another and continue to bombard us from there. The real price of the “strong action to rein in the rogue firms” is to be paid by accident victims.’
‘For all the compo culture scaremongering, ignorance of rights causes far more harm in our society than the bringing of unmeritorious legal claims.’
‘Claims companies are – we are reliably informed by lawyers, the government and the press – the scourge of the modern age. Well, they may not all be reputable (find me a market that has no bad apples), but they have been successful because they give consumers what they want.’
Since referral fees were banned under LASPO in April, there has been a crackdown on the centre: the MoJ has visited more than 450 companies; investigated 141; taken action against seven; 13 have surrendered their licence to trade; and four firms being discovered trading without authorisation – which have now been stopped.
‘We have taken strong action to rein in the rogue firms which have gathered in this sector and the impact is now starting to show,’ said justice minister Helen Grant. ‘Ending these fees which fuelled a growing compensation culture has been an important step to reducing the cost of living for ordinary people – who have ultimately been footing the bill for them through their insurance premiums.’
The MoJ also reports on actions taken against the firms which handle PPI claims. In 2012/13 the regulator cancelled the trading licences of 211 companies, audited 129 and issued formal warnings to 285. It has now shut down more than 900 firms since being set up in 2007.