Armstrong: Sharpening our focus
The Solicitors Regulation Authority (SRA) is developing materials to help law firms handling high-volume consumer claims (HVCC) improve how they onboard clients after major research showed significant shortcomings.
A survey of 15,247 adults found that while 72% of people said they were satisfied with the outcome of a claim they had brought with the help of a law firm, compared to 55% of those who used a claims management company (CMC), only 51% were happy with the service they received.
Some 54% of consumers overall reported problems with the process when using either a law firm or CMC.
The research indicated widespread regulatory breaches, such as cold-calling and inadequate upfront information.
Only 21% were told how much it would cost to pursue a claim when they were onboarded, 14% about potential liabilities they may face and 13% whether there was a cooling-off period.
HVCCs have become a priority area for the SRA – which currently has 94 open investigations relating to 68 HVCC firms – and this work to understand the consumer perspective is the latest stage in its efforts to address concerns.
The SRA commissioned YouGov to conduct the research, which took the form of the survey, stakeholder interviews with consumer organisations and law firms and 30 in-depth interviews with consumers who had made a claim in the last five years.
Some 21% of those surveyed had made a claim in the last five years, while a further 26% believed they were eligible but chose not to claim.
Motor finance, flight delay and diesel emissions were the most popular types of claim, followed by data breach and holiday sickness, while data breach was the most common category where people felt eligible but did not claim.
Four in 10 progressed the claim themselves, 29% primarily used a CMC and 27% a law firm. The rest could not remember.
Advertising, particularly online and through social media, played a strong role in driving claims. But 18% of people said they were contacted directly by a CMC and 9% by a law firm, most commonly through unsolicited emails, telephone calls and text messages. SRA rules prohibit cold calling consumers.
A further 5% of those contacted by law firms reported it coming from door knocking, higher than the 2% who said the same about CMCs.
YouGov said: “Many assumed that beyond initial sign-up, the process would not require much from them, which often was a selling point when it came to choosing a CMC or law firm to pursue a case, as opposed to approaching it independently.
“Claims were often framed as ‘easy money’, particularly if related to PPI, flight delays and diesel emissions, with participants pointing to adverts on social media and TV that highlighted the ease and likely gains.
“Such adverts were perceived as misleading, misrepresentative and ‘predatory’ by some of the participants – encouraging people to pursue claims they would otherwise not have done, amidst persistent advertising and cost-of-living pressures.”
The majority of those who used a law firm or CMC said they were not told that they could have progressed with the claim themselves.
While nearly a third of consumers used online forms to check their eligibility to claim, some signed up to progress a claim without realising.
“Interviews show that consumers tend to have modest expectations of HVCCs, often assuming that the process will be slow and bureaucratic.
“Although many feel they have little to lose by submitting a claim, uncertainty around compensation and fees remains a significant concern. This uncertainty may be tolerated for smaller, low-complexity claims but is more problematic for those dealing with stressful or higher-value issues.”
Overall, information from law firms was considered clearer than that provided by CMCs, and those using law firms felt more consistently informed.
Dissatisfaction often stemmed from delays, limited communication or unexpected fees, particularly when the experience did not align with what had been presented at the outset.
“Participants valued being able to ‘hand off’ responsibility for the claim, but many reported having to chase updates and resubmit evidence they had already provided. Successful claims reinforced confidence in consumer protection and the ability to hold large organisations accountable,” YouGov found.
“Conversely, disappointing outcomes – particularly those related to unexpected fees (experienced by 11% of claimants) or a perceived lack of justice – reduced trust and willingness to engage in future claims.”
YouGov concluded by highlighting the need to improve clarity from the outset, strengthen proactive communication, streamline and standardise processes and strengthen regulation.
“Clear expectations around how fees, including any caps, are calculated and presented to claimants could deliver a more consistent and transparent experience for CMC claimants in particular,” it said.
There also needed to be greater protection for vulnerable groups, including lower social grades, those with disabilities or those living in deprived areas.
“They tend to have a limited understanding of fee structures and experience greater emotional strain during a process where they often feel misled.
“This research highlights the need for targeted consumer protection measures including clear communication standards and transparency requirements to make sure vulnerable claimants are not disadvantaged or exploited.”
Aileen Armstrong, the SRA’s executive director of strategy and policy, said: “Hearing directly from consumers is vital to understanding where this sector is not working as it should and where people may be at risk of harm.
“These insights are helping us sharpen our focus as we tackle problems in the high-volume consumer claims market, building on the action we are already taking through investigations, supervisory work, engagement with law firms, and close working with other regulators and stakeholders.”
The SRA said that, building on the research, it is now developing and testing a range of onboarding materials, including checklists and key fact documents, and would pilot them shortly.
“We will continue to act on issues in this sector, including consulting shortly on another key aspect – law firms’ obligations when utilising third-party litigation funding for claims.
“Our overall aim is to ensure consumers understand their rights and any risks they need to be aware of to make an informed decision, and have a fair and clear experience when pursuing claims.”
Aileen Armstrong will be talking about the SRA’s work on HVCCs at Claims Futures on 21 October in Manchester. Early bird tickets are now on sale.
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