Market Round Up: June 2024
What will the likely election of a Labour government mean for personal injury reform? It won’t be top of the agenda, it’s fair to say, but it could yet have significant early impacts.
Just hours before Rishi Sunak called the election, Lord Chancellor Alex Chalk told Parliament in a written statement that he had completed his review of the Whiplash Injury Regulations 2021, following the call for evidence earlier this year. Under the Civil Liability Act, he was required to review the whiplash tariff within three years of implementation of the Official Injury Claim (OIC) portal, which was on 31 May 2021.
He said he would lay a report outlining his review and conclusions after the Whitsun break but this was derailed by the election ‘purdah’ period. Would a Labour Lord Chancellor just wave this through or take the chance to change the figures, or even the whole process?
Earlier this year, the Ministry of Justice (MoJ) rejected all but some technical changes to the OIC put forward by both claimant and defendant representatives, which included support for introducing alternative dispute resolution into the system, as was originally proposed.
Other ideas that came out of a series of industry roundtables last summer that were not accepted included allowing the recovery of counsel’s fees and enabling claimants to go to court with liability and quantum disputes concurrently, rather than consecutively as now.
The former would “fundamentally change” the small claims track into a costs-bearing environment and the MoJ said the case for it had not been made. The latter, meanwhile, would be a “fundamental departure from the process set out in the RTA small claims protocol” and it was “difficult to justify” merging these two separate court processes, “especially considering potential wider implications for other types of claims”.
If nothing else, Labour would be unlikely to have much truck with the Association of British Insurers’ ‘Roadmap to tackle insurance costs’ that I wrote about in the last newsletter.
The other immediate question mark is over the introduction of fixed recoverable costs for clinical negligence claims worth up to £25,000 that settle pre-issue. They were meant to be introduced in April but are now scheduled for October. It remains up in the air, however, whether the rules will be approved in time and, in any case, might a new government want to stop them?
I’ve heard it speculated that Labour would not, as the prospect of saving the NHS money might appeal too much.
The other big issue rumbling in the personal injury world right now is whether medical reporting agencies should separate out their own fee from the expert’s. Judicial sentiment seems to be moving in favour of requiring it and some have taken the chance to express their frustration with injury claims, most notably His Honour Judge Saggerson in Central London County Court in the case of Aminu-Edu v Esure.
He said: “This little micro-industry of unknown and unknowable commissions or referral or arrangement fees underscores the risk that litigation is pursued in the interests of an economic ecology far removed from the interests of justice or the protagonists. This is not an unknown problem. The racket that is claims for ‘Hire Charges’ illustrates how this sort of remote ecology can get completely out of hand to the benefit of nobody but lawyers and insurance companies.
“In my judgment, any adjudication on proportionality, in all its various component parts, demands transparency. Such an adjudication should not be hijacked by empty grandiloquent protestations of ‘macro-economic’ factors. The unavoidable suspicion is that the absence of transparency indicates that the agencies have something to hide. I entirely exclude from my thinking any unworthy suspicion that cross-commissions (‘back-handers’) are in play in this process. If I am wrong, the agencies will no doubt be pleased to demonstrate so.”
HHJ Saggerson predicted that, if claimant solicitors required breakdowns, the market would “soon adjust” to provide them.
Beyond injury into consumer claims more broadly, the SRA published a warning notice on high-volume financial services claims, together with guidance on claims management activity. It said it was “particularly concerned” about firms handling bulk financial product mis-selling claims taking proper instructions from clients and supervising staff.
The SRA said the move followed discussions with the Financial Conduct Authority (FCA) and Financial Ombudsman Service amid the possibility of a surge in new claims around car finance mis-selling, which has been described as the new PPI.
There was also an interesting High Court ruling that ‘Google-spoofing’ by claims management companies – where they pay for prominent Google adverts to trick consumers – does not necessarily involve “anything illegal” in the absence of misrepresentation or fraud.
The case arose when a man attempted to notify his insurer, Hastings, after being in a car accident. He Googled its name and rang the first number in the list of search results – unbeknownst to him, he was in fact speaking to a claims management company. Mrs Justice Dias said that, if there was “anything objectionable” in Google-spoofing, “it may well be that this can only be addressed by Parliament, the FCA or one of the other industry regulators”.
Finally, the SSB scandal rumbles on, with MPs increasingly vocal about the need for government action to protect those facing costs claims, litigation against the firm’s insurers looming, and the SRA continuing its investigation, both into what happened at the firm and into whether it has highlighted broader faults with after-the-event insurance. In the meantime, the Legal Services Board is investigating whether the SRA did its job properly in supervising SSB.
This could yet prove to be a very damaging episode for SSB, its clients and its regulator.
Neil Rose is the Editor of Legal Futures
