The Government revealed in the 2015 Budget this week that there would be a further ‘major review’ of the regulation of claims management companies (CMCs). It has also pledged to cap the amount that CMCs can charge to their customers.
In April 2013 the Government introduced a referral fee ban aimed at stopping claims management companies drumming up claims and selling them on to solicitors. This practice had raised concerns in a number of respects – widespread encouragement to bring claims and expand the feared ‘compensation culture’, individuals being cold called and pressured into claims, and the impact on legal costs as firms buying work need to allow for the cost of doing so. The quality of work being done was also a concern with a lack of public awareness of the difference between claims management companies and specialist solicitors.
Charlene McAuliffe, an associate in the personal injury team at Penningtons Manches LLP, said: “There are of course many genuine claims management companies out there which provide a good and honest service, but the reality remains that for a number of years some parts of the personal injury industry have continued to generate a bad reputation for personal injury claimants and their lawyers. Not only is there still the assumption of a compensation culture and frivolous claims, but even individuals who are not victims of personal injury are subject to nuisance communications from claims management companies and automated voicemails.
"We welcome the further review of the practices of claims management companies and the implications that these practices have on personal injury claimants. The industry requires continued regulation so that the importance and benefits of specialist advice can be promoted.”