MoJ leads crackdown on claims chasers

More than 700 businesses have had their claims management licences removed by the Ministry of Justice (MoJ) in the last five years. Hundreds of others have left the sector following the launch of investigations and enforcement action.

The MoJ’s action is part of an ongoing drive to make the claims management industry fairer, more transparent and to protect consumers from the unscrupulous actions of some players in the market. An MoJ consultation into the regulation of the claims management sector, which closed earlier this month, is part of this drive.

Problems in this sector range from unfair treatment of consumers to malpractice and fraud. You can find out more in The Claims Management Regulation Annual report.

Referral fees for personal injury claims will be banned from April 2013. A surge in companies attempting to exploit this section of the market is expected before the ban begins. Once the ban comes into force it is expected that some companies will focus their efforts elsewhere, namely financial claims business.

The SRA has released its consultation of the ban on referral fees in personal injury cases. This follows the June discussion paper and consultation.

The ban on referral fees for personal injury claims will force many companies to rethink their business models. It is also a warning to the claims management sector that if they don’t get their own house in order, the Government is prepared to do it for them.

Contact Jessica Tyrrell, 020 7291 3360.