Industry Updates, Market Round-up

Market Review, June 2018

Reading time: 5 mins

Neil Rose, editor of Legal Futures, June 05, 2018

All eyes at the moment are on the passage of the Civil Liability Bill through the House of Lords. Come 12 June, we should have a much better idea of whether it can be successfully attacked by claimant interests.

That is when the bill has its report stage, where peers will push amendments. Dozens were put down at the previous committee stage too, but these were ‘probing’ amendments aimed at eliciting more detail on the government’s thinking.

So what can we guess might happen? There’s already been one concession – that non-motor vehicle users will not be subject to the new regime, although they will still be caught by an increase in the small claims limit.

There was strong support among peers for putting the definition of ‘whiplash’ on the face of the bill, rather than in secondary legislation, where the government says it will be easier to amend as needed.

The Motor Accidents Solicitors Society should take credit for putting the pressure on over this issue, as it drew the attention of the House of Lords’ delegated powers and regulatory reform committee to the bill.

The committee then issued a report recommending that both the definition and the compensation tariff should be on the face of the bill, and also suggesting it should be judges, rather than the Lord Chancellor, who should set the new tariff of damages.

But those hoping that this process could remove the back and shoulder from the definition are likely to be disappointed. In the committee stage, Ministry of Justice (MoJ) spokesman Lord Keen said this would “significantly reduce” the number of claims subject to the bill and “encourage claims displacement into other areas to avoid them being subject to the tariff. That would be a serious issue”.

Frustratingly, if not unsurprisingly, Lord Keen ignored repeated questions from Liberal Democrat frontbencher Lord Sharkey to outline the evidence that sat behind the figures in the tariff.

Lord Keen also rejected the calls for judges to set the compensation levels: “I want to emphasise that this is essentially a matter of policy to deal with a very particular problem. It is a political decision; it is not one that we consider is for the judges; it is one that is ultimately for the Lord Chancellor to deal with in his capacity as a minister.”

He was similarly unmoved at the idea of reducing the scope of the scheme to injuries lasting up to a year.

He did at least appear to acknowledge concerns that more needed to be done to hold the insurance industry to account for its promise to pass on any savings to consumers through lower premiums – various amendments sought regular reviews: “I hear the message from around the committee about the need to put further discipline in place with regard to these savings, and that is a matter that we will consider.”

So now we wait, but in the meantime, claimant lawyers received a big boost with publication of the justice select committee’s report on raising the small claims limit.

It could not have been much more damning. The committee concluded that the small claims limit for PI should rise by inflation to £1,500, finding little credibility in much of the government’s case for lifting it higher.

But even if the government pressed ahead regardless, the committee said it should delay implementation by a year to April 2020 to get the technology right.

The report said it was in any case “illogical” for the government to propose further reforms to the PI claims process before its review of part 2 of LASPO has considered the effectiveness of the earlier reforms – the government recently revealed that this review would be published by the end of 2018.

The committee also highlighted a series of other concerns, including: the absence of reliable data on insurance fraud; “the lack of robust evidence and the unenforceable nature of insurers’ promises to reduce premiums”; “no policy justification” for including vulnerable road users within the reforms; and the MoJ’s failure to estimate the potentially substantial impact on the PI legal sector, particularly in the North West.

The government is normally expected to publish a response to a select committee’s report within 60 days. It is hard to imagine that the MoJ will roll over, but it makes the possibility of concessions more likely. But then again, the MoJ has form for ignoring the committee’s recommendations, most recently in relation to the discount rate.

The other developments of note in recent weeks have been around cold-calling. First the Financial Claims and Guidance Act 2018 received royal assent in May. This allows for a ban on cold calling in relation to claims management services except where the receiver has consented to such calls being made to them.

Then in late May, the government – to much fanfare in the tabloids – announced a consultation that would allow it to levy fines for nuisance calls on the directors of the companies responsible for them, and not just the companies themselves. This was actually first announced in October 2016 but nothing happened. Here’s hoping it finally does.

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