Government cracks down on ‘no win no fee’ companies
“No win no fee” claims management companies have been given one last chance by the Government to get their house in order.
Constitutional Affairs Secretary Lord Falconer today told them to take urgent action to improve the service they provide to consumers and to avoid potentially misleading advertising and sales practices.
If self-regulation fails, the Government will consider how formal regulation could be introduced.
The move is part of a Government strategy to stem the development of a “compensation culture”.
Key to this is tackling the perception that “there is easy money just waiting to be had” as some claims management companies suggest, Lord Falconer said.
Genuine claimants should be able to get compensation from those at fault, he continued. “But there is not always someone else to blame. Genuine accidents do happen. People should not be encouraged to always ‘have a go’ however meritless the claim.”
The Government dismissed claims that Britain has a compensation culture to match the US. Figures show that litigation costs are 0.6 per cent of gross domestic product in the UK compared to 1.9 per cent in the US.
But it recognised that action needs to be taken to allay people’s fears.
In addition to cracking down on claims management companies, the Government will discourage “distasteful” advertising in hospitals encouraging claims against doctors, which increases the fear of being sued.
It will also improve the system for dealing with genuine claims, promote the availability of affordable insurance and improve health and safety measures to stop accidents occurring in the first place.
Action against Medical Accidents, which supports people affected by medical accidents, welcomed much of today’s announcement, but stressed that “it is a complete and utter myth to suggest there is a compensation culture amongst patients.”
AvMA chief executive Peter Walsh said: “We agree that it is inappropriate for solicitors firms to be advertising for clinical negligence claimants in hospitals, but the hospitals themselves can decide what advertisements they accept. There is no evidence, as far as we are aware, of the NHS failing to provide treatment as a defence against litigation”.
A steering group led by Constitutional Affairs Minister David Lammy will ensure the regulations are taken forward across Government in a co-ordinated way.
The measures are the Government’s response to the Better Regulation Taskforce report “Better Routes to Redress”, which examined the compensation culture in the UK.
