Hundreds of claims management companies have closed following the introduction of stricter laws to regulate the industry, the Government has said.
The number of firms registered to deal with personal injury claims fell from 2,435 in March last year to 1,700 in June this year, figures by the Claims Management Regulation Unit (CMRU) show.
Extracting the bad apples
Changes to the law around no-win, no-fee* deals were passed by the Government last year and brought into effect in April to reduce negligence in the industry.
These include a ban on referral fees paid between lawyers and claims firms, while claims management companies are also not allowed to take fees from customers before a written contract has been signed.
The claims industry has seen a lot of malpractice in the past, but clients of
Accident Advice Helpline can rest assured they will receive a professional and risk-free service.
The CMRU, which is based at the Ministry of Justice, is responsible for regulating companies which advertise for claims and handle them on behalf of people seeking personal injury compensation.
Personal injury sector
CMRU head Kevin Rousell said: “It is our absolute priority to protect customers and we are making certain that firms are following the rules at a time of major change for the claims management industry.
“We do not tolerate bad practice and continue to take action against companies which break the rules, including removing their licence to trade. We shut down more than 200 last year.”
Justice minister Helen Grant said: “We have taken strong action to rein in the rogue firms which have gathered in this sector and the impact is now starting to show.
“Ending these fees which fuelled a growing compensation culture has been an important step to reducing the cost of living for ordinary people – who have ultimately been footing the bill for them through their insurance premiums.”