Claims companies are to be banned from offering vulnerable personal injury clients cash and other inducements to use their valueless services in a government clampdown on the industry that is rife with bad practice.
In a report by the Justice Minister Jonathan Djangoly it was revealed that 409 poor practising claims companies were investigated leading to 260 being shut down. That is a very significant number and goes to show how the industry is rife with bad practice.
The Minister went on to announce that claims companies will be banned with immediate effect from offering an inducement in cash or other benefits to clients to sign up with them. This is a welcome change in the regulations of a industry which many view as out of control.
Claims companies only make money by advertising for people who have had accidents and are considering a claim. As they are not subject to such strict rules on advertising as solicitors they often use scurrilous techniques to attract clients such as sending unsolicited text offering precise amounts of compensation. Once they have hooked an unsuspecting client they then sell their details to puppet solicitors who are prepared to pay them the highest amount.#
The law is also set to change and will hopefully see an end to their business model altogether. The Legal Aid, Punishment and Sentencing of Offenders Act is due to come into force in April. The title of the Act is confusing as it contains provisions about banning claims companies from being able to sell cases on to solicitors. This will hopefully see an end to an unnecessary industry. The problem is that they all know right now that their days are numbered so the bad practice is likely to escalate as they attempt to make the last quick buck before the axe falls in April. It would appear that the regulator is going to have a busy winter.