Whiplash reform: statute needed
The government has indicated that its plans for personal injury reform [1] will not become law for well over a year.
It potentially gives some breathing space to smaller PI firms in particular, whose viability is threatened by the proposed rise in the small claims limit and removal of general damages for minor cases – as recognised by the Ministry of Justice [2] (MoJ).
Though the government has pledged to press ahead with the changes as soon as possible – the consultation closes on 6 January – all of the various changes put forward, except for the small claims limit increase, require primary legislation.
The difficulty this poses is tacitly recognised in a separate consultation paper issued on Friday, on the level of regulatory fees for claims management companies (CMCs) for the year from 1 April 2017.
This said: “While a number of reforms have been proposed that are likely to impact on the claims market, it is unlikely these will have any substantive impact in 2017/18.
The reforms include: capping the fees that regulated CMCs can charge consumers for PPI claims; introducing a time bar on the making of PPI complaints; and any proposals to remove the right to claim for cash compensation for minor whiplash claims and raise the small claims limit for personal injury claim.”
It is not known at the moment whether the government would consider pressing ahead with the small claims limit in isolation – changing it can be done by the Civil Procedure Rule Committee and the MoJ.
Meanwhile, NAHL Group – owner of National Accident Helpline – was the only listed legal business with a strong personal injury element to see its share price suffer in the wake of Thursday’s announcement. It fell from 225p on Wednesday to 202p by close of business on Friday, having been 196p on Thursday.
The shares of Redde – owner of NewLaw – and Fairpoint, which owns Simpson Millar, barely moved. Slater & Gordon’s shares in Australia were also seemingly unaffected.
NAHL was also the only one to issue a statement on the announcement, reinforcing its statement earlier in the autumn [3] that it has purposefully reduced case volumes in anticipation of reform and was looking at a new business model that involved it having a greater role in cases.
It said: “NAHL… has been fully supportive of the government’s work in tackling insurance fraud via its involvement in the Insurance Fraud Task Force and we welcome the increased clarity the consultation will bring, which, from an initial review, we believe to be in line with the group’s expectations. The group will now be reviewing the content of the consultation in detail and responding appropriately.
“The group has continued to plan for a range of potential outcomes and remains committed to providing high-quality advice, support and access to justice for genuine claimants.
“As announced at the group’s interim results, we have been building closer relationships with our key panel law firms, and expect that the new regulatory environment will give us the opportunity to play a more pro-active role in the entire conduct and financing of a PI case in the medium to long term.
“The group is currently trialling an initial small proportion of our enquiries through different commercial and structural arrangements to those we normally deploy.”
The Ethical Marketing Charter group, organised by National Accident Helpline, last week also called for this week’s Autumn Statement to include a ban on cold calling [4].