As expected, the UK government has announced that it is to ban the payment of personal injury referral fees.
The Ministry of Justice said referral fees have encouraged a personal injury compensation culture in the UK that has led to high costs and a growing industry that chases claimants in order to make a profit.
Supporters of the ban have been saying that insurance companies pass the costs of personal injury claims on to motorists and this has forced up the cost of living.
Jonathan Djangoy, the justice minister, explained that the no win no fee system had pushed us into a compensation culture where the only winners are the middle men, such as claims management companies. Motorists have seen insurance premiums sky rocket as insurers pass on the costs of settling personal injury claims, many of which are spurious at best.
He went on to say that unscrupulous people encouraged claimants to sue, leaving businesses, individuals and schools in fear of ending up in court.
The ban is the latest government move to reform the cost of civil litigation following Lord Justice Jackson’s review last year.
It is not yet known when the ban will come into force and a breach will constitute a regulatory offence rather than a criminal one. The chief executive of AXA, Paul Evans, welcomed the news but urged the government to order an enquiry into the fixed fees personal injury solicitors charge for minor claims.
However, Ross Clark from FirstAssist Legal Expenses said he thought the ban would not put an end to the selling of victims’ details as enterprising lawyers would find alternative ways to profit from injury actions.