The essential guide to conduct, compliance and competence, and the Legal Services Act
23 December 2010
Crackdown on PI advertising begins
Injury: claims must be brought without upfront inducement
The crackdown on personal injury advertising started today as the Ministry of Justice unveiled plans to ban inducements to bring a claim.
The current rules for claims management companies (CMCs) only ban the offer of “immediate” cash payments or similar benefits, but a consultation issued today proposes extending that to all inducements for making a claim.
This would include offers to pay cash after the claim is accepted – which gets around the “immediate” restriction – as well as prize draw competitions that some companies run for potential customers. Cash inducements range from £20 to £500, the consultation paper says, and around 5% of CMCs offer them.
The change is a direct result of Lord Young’s review of the compensation culture, in which he described such inducements as a high-pressure marketing technique. The consultation says the Ministry of Justice did consider asking CMCs to refrain voluntarily from offering inducements, but it was “unclear” how many would do so.
This may not be the end of the restrictions. The consultation says: “Subsequent changes may arise from a further review of the Conduct of Authorised Persons Rules 2007, in order to take into account Lord Young’s wider calls for restrictions on the advertising and conduct of claims management businesses.”
Justice minister Jonathan Djanogly also said recently that the Advertising Standards Authority is considering whether or not to undertake a review of advertising to take account of Lord Young’s report, while the Solicitors Regulation Authority is looking at advertising as part of its work on the new Code of Conduct.
The consultation is only open for six weeks, rather than the usual 12, as a good deal of work has already been done on the proposal and the government wants the new rule to come in from April.
The consultation can be found here.
Tags: advertising, claims management companies, personal injury
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Legal Futures Blog
Run that past me one more time
If ever there was a “what the…?” moment since setting up Legal Futures, it was the news that the Stobart Group is entering the legal services market. The story launched many an attempt at humour on Twitter, but I will gladly put them to one side. One can see some challenges for this venture, not least that while Eddie Stobart is a well-known brand, especially among motorway travellers, it is not known for delivering any services, let alone professional ones, to consumers.
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Posted by Neil Rose, Editor, Legal Futures:
Brian Rogers of Lewis Hymanson Small raises this question via LinkedIn:
“If the aim is to stop inducing people to make claims, it must follow that law firms that bypass CMCs by offering cash inducements to clients for introducing themselves, their friends, etc., to the firm, will also be banned at some point? Do you think that will be the case?”
It’s a good point and one that could come out of the code of conduct review perhaps?