Claims management companies win ABS status as SRA launches referral fee ban guidance

Dave Newsham Team: sponsored by ALPS (above rear wheel)

A company that provides both claims management services and legal expenses insurance has joined forces with a law firm in an alternative business structure (ABS) that needed a waiver to allow a 27-year-old solicitor to be its head of legal practice (HOLP).

It was one of two ABSs involving claims management companies approved by the Solicitors Regulation Authority (SRA) this week.

Auto Legal Protection Services (ALPS) has joined with the legal team of JLP Solicitors to form Alps Legal Practice Limited.

ALPS is a Cheshire-based company offering brokers and intermediaries motor claims and road rescue services, together with before-the-event legal expenses insurance. Last year it won the service provider of the year category at the Insurance Times awards, and sponsors leading British Touring Car Championship driver Dave Newsham.

The SRA had to confirm solicitor Michelle Field as the HOLP because she was just short of her three years’ post-qualification experience. At 27, Ms Field said she believed she was one of the youngest HOLPs of any ABS.

The head of finance and administration (HOFA) is Carole Ashman, a director of ALPS. Ms Field, together with Craig Jones, who was principal solicitor of JLP, are the two lawyer-directors of the new ABS. A further four non-lawyers are directors, including ALPS’s managing director, Julian Tomlinson.

Ms Field said the firm had had a close working relationship with ALPS for a long time and she did not foresee any difficulties with the ABS’s solicitors being outnumbered by non-solicitor directors. “We know each other well and haven’t had any problems working together.”

She confirmed the ABS would not be seeking external investment.

Also granted an ABS licence was Clifford James Consultants, a claims management company based in Northumberland which has been in business since 2005. It describes itself as “one of the UK’s leading vehicle diminution specialists”.

The company’s commercial director, Emma Bell, said: “This is a fantastic step for the firm which will allow us to provide an even faster, more efficient service to all our clients claiming back the loss in value of their motor vehicles.”

The joint HOLP and HOFA is solicitor Stewart Fairhurst, who has been a director of the company since March 2010. Mr Fairhurst and Ms Bell are married.

Other claims management companies to receive ABS licences so far include and Carbrooke Accident Management.

Meanwhile, a new section on the referral fee ban went live on the SRA’s website yesterday, which will in time include case studies on compliant and non-compliant business models.

The SRA is writing to all those firms where personal injury (PI) work makes up more than half of their business to further outline the changes to the PI market and pointing them to the support on the website.

Agnieszka Scott, SRA director of policy, said: “The most common theme arising from our consultation on enforcing the ban was the need for clarity about the activities that will be permitted and prohibited. The information available on the website should help with any firm that has still not fully considered the impact the ban will have on them.

“Responses to our consultation included requests for us to pre-approve arrangements before the ban came into force. It is not for the SRA to provide safe-harbour advice or approve business models.

“There are so many possible variations of how referrals could work and an infinite number of business models; some will be compliant, some will not. It will therefore be for individual firms to review their current business models and identify whether they are compliant with the ban. Those with concerns about their firm’s ability to comply with the ban or the impact the ban will have on them should contact us through our Supervision function so risks can be identified and managed at an early stage.

“Firms need to remember that the ban comes into immediate effect on 1 April. There is no transitional period.”


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