The Solicitors Regulation Authority (SRA) has recently spoke out to a major national news publication in regards to the referral fee bans being implemented to reduce the number of whiplash injury compensation claims and other types of personal injury cases. The decision on the fees ban was due to the excessive volume of whiplash injury claims earning the United Kingdom the title of whiplash capital of Europe. One of the core components of the rise in whiplash injury compensation claims was a small number of semi-legally run claims companies setting up shop in order to sidestep Information Commissioners Office (ICO) regulations, gaining business by sending unsolicited text messages and referring claims to solicitors. The referral fee ban is aimed at stopping the problem at its root cause.
However, The SRA, which is responsible for regulating over 120,000 solicitors firms in both England and Wales, has said that the changes may not affect the situation in the desired fashion. Executive director, Richard Collins has stated that “We will do everything we can to make the ban effective in terms of stopping the payment of referral fees in these cases but I think the bigger question will be whether actually enforcing that ban properly, as we will aim to do, will actually have the wider social impact the government may be looking for.”.
The legalisation of referral fees was initiated by the Labour government back in 2004. The boom in whiplash injury compensation claims and other personal injury cases happened as a result of some people finding ways to sidestep ICO regulations, meaning that over the course of have a 10 year period, whiplash injury claims and personal injury claims made by UK inhabitants had doubled to £14 billion in the decade.
One of the first causes of concern were the astronomical increases in the average driver’s motor insurance premiums, which have now reached an average cost of £1,000 per for the first time ever. Councils, businesses and hospitals were left to pay off legal bills totalling several million pounds. The concern is that companies are able to apply for alternative business structures (ABS). The idea is that this way, the referral fee bands will be sidestepped and many claims management firms will carry on doing in whiplash injury compensation claim cases as usual in a way which is perfectly legal and compatible with the referral fee ban. The real way to close down the cowboys is the stop them making unsolicited text messages and coercing people into whiplash injury compensation claims. This way, they won’t have any business to refer. You can read more at The Telegraph , here.
Jim Loxley is a Director at trusted compensation claims specialist, My Compensation