Across the UK 735 registered companies that handled personal injury claims have closed in the wake of the introduction of tighter restrictions and tougher laws.
Figures show that the number of companies fell from 2,435 in March 2012 to just 1,700 last month, a drop of 30%.
Released by the Claims Management Regulation Unit (CMRU), the figures in part reflect the changes in the law on promises made by no win no fee solicitors. Previously, it had been reported that some firms had signed people up to such promises on the basis of verbal agreements alone; one introduction of the law subsequently banned firms from taking customer fees before a written contract had been agreed and signed.
The new law, introduced in April, also included a ban on referral fees between lawyers and claims management firms. Speaking on the reforms, Justice Minister Helen Grant said: “We have taken strong action to rein in the rogue firms […] and the impact is starting to show. 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 laws are also intended to stop successful claimants keeping all damages awarded in full and making the losing side pay their legal costs as a “success fee”. Under the new rules, it is the claimant who now pays the success fee upon winning, though this can total no more than 25% of the overall compensation they are granted.
As the new legislation further tightens the noose on ‘ambulance-chasing’ claims firms the hope is that the number of bogus claims and professional misconduct cases will drop significantly. However, statistics released last year show that, despite a fall in traffic accidents overall, the number of people making road traffic accident claims actually rose by a fifth, at a cost of a further £400 million to the insurance industry. It will be interesting to see how the law continues to evolve to incorporate the continued rise of these statistics.
If you believe you might be entitled to compensation then contact Blackwater Law today on 0800 083 5500. Our professional and friendly team have years of experience in a variety of claims and will be happy to assist you with your concerns and queries.