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Government Extends Inducement Ban to Third Parties

First, it was the claims management companies (CMCs), then the personal injury law firms and now the Government are looking to further strengthen their remit on how claims are acquired by imposing the ban on inducements for claims on third parties.

The ban was introduced amid the Justice Secretary, Lord Faulks’ fears that solicitors have been all too often able to operate as part of  a larger circle of companies to circumvent their own ban through subsidiaries or links.

He told the House of Lords: “Those subsidiary or linked companies are not always regulated, and it would be relatively easy for, say, a solicitor to route an inducement through an unregulated company, thus avoiding the ban.”

“The intention is to ban any inducement which encourages or might have the effect of encouraging a person to make a claim, including so-called welcome payments, free gifts and cash advances.”

Lord Faulks also stated that he felt the measure was a ‘proportionate’ way to improve the effectiveness of the inducement ban.

Scott Rees and Co Partner David ByrneSpeaking about the ban, Scott Rees and Co Partner, David Byrne, said: “Most solicitors do not really believe in inducements so a wide scale ban has to be welcomed.”

“However the motives for removing the ability to offer inducements are fundamentally wrong. There has never been any evidence that the practice has any impact of the number of fraudulent claims, so in many aspects I feel that the Government are perhaps wasting time and resources on the wrong areas in the fight against fraud.”

Earlier in the same debate, Lord Faulks threw out an appeal by Conservative Peer, Lord Hunt of Wirral, to amend the rules surrounding claimants who have been found to be fundamentally dishonest.

The suggested clause was to extend it to more than just injury claims, but Lord Faulks claimed that this would ‘unnecessarily complicate the clause and have unintended consequences that would not be desirable.’

If you would like further advice about whether or not your accident merits a claim, visit our personal injury section for more information. Alternatively, you can speak to one of our advisors by calling us on 0800 61 43 61.

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