Further Government Moves to Ban Compensation Claims Incentives
The Justice Minister, Lord Faulks, recently announced further plans to clamp down on third parties offering incentives and inducements to people thinking about making a claim for personal injury compensation. Direct offers of inducements to claimants by solicitors or claims firms has already been banned, but the Ministry of Justice are worried that increasing numbers of legal firms are operating as part of larger groups.
According to Lord Faulks, subsidiary or linked companies are often unregulated and solicitors have the possibility of offering incentives through a third party rather than directly. It is sometimes common practice in the claims industry to offer welcome payments, cash advances or free gifts in return for starting the claims process, which is felt to drive up the number of trivial or bogus claims. There are already concerns though that some companies in the compensation industry are already looking for ways of wriggling round the new ban.
“Lord Faulks added that the measure was a ‘proportionate’ way to make the ban more effective.
Faulks said the practice of offering up-front payments or gifts for personal injury claims is currently more prevalent among solicitors than non-regulated companies.
But there is a feeling that third parties – particularly those from what he called the ‘first notification of loss teams’ used by insurers – would seek to find ways round the ban once it was introduced.”
Picture source : : Reuters/James Boardman