The BBC has reported that 735 claims management companies that handle personal injury claims have closed from March 2012 to June 2013. It is thought that this is a result of tougher laws on the practices of those companies. The ban of referral fees in April 2013 has clearly had an impact on claims management companies and one of the reasons behind the closing of so many firms this year.
The Claims Management Regulation Unit (CMRU), under the Ministry of Justice are responsible for regulating these companies and have undertaken a more robust stance on ‘rogue firms’ says Justice Minister Helen Grant who believes the ‘impact is beginning to show’.
On reflection, the government’s policy drive towards curbing the compensation culture in the UK, using reforms such as the new laws on no win, no fee agreements combined with the no nonsense stance of the Ministry of Justice mean that the fall in personal injury companies was inevitable.
The number of registered companies fell from 2,435 in March 2012 to 1,700 in June 2013.
In addition, the CMRU issued formal warnings to 285 companies and removed the licenses of another 211 indicating that the regulation of firms dealing with personal injury claims is much stricter. The reforms are aimed at reducing the cost of personal injury claims but also the amount of claims made each year, but only time will tell to what extent the reforms will achieve their aim.
Melanie Chisnall, Graduate Paralegal