MoJ announce ban on lawyer’s offering inducements

This article was published on: 06/9/14

Chris Grayling of the Ministry of Justice

The Ministry of Justice (MoJ) has announced that they are to ban lawyers from offering inducements to potential clients in exchange for their business, as they look to toughen up on the fight against insurance fraud.

As part of a new wave of reform in personal injury, which includes the banning of insurance firms making pre-medical offers and the newly proposed expert medical panels, legal firms will no longer be allowed to offer cash advances of gifts such as iPads to accident victims, to encourage people to make claims.

Explaining the changes, Justice Secretary, Chris Grayling (pictured), said that it was all to do with the Government helping to put money back into the pockets of motorists.

He went on to say: “Insurance premiums have fallen by record amounts over the past year, as we have turned the tide on the compensation culture but there is more to do. We are continuing to go after the fraudsters who force up the costs for honest drivers.”

The additional reforms surely have to be seen as a direct response from the Government to figures released by the Association of British Insurers (ABI), which claimed that the amount of dishonest motor claims had increased by a record 34% over the course of last year.

The changes will be greeted with a predominantly positive response from the personal injury lobby, as they have pressured the Solicitors Regulation Authority to an inducements for the past year.

The SRA has held firm over the use of inducements ever since the ban on claims management companies (CMCs) offering them last year, claiming that there was no proof to suggest that they had any adverse effect on the nature of how claims are retained.

However, following the government’s announcement, they have reacted and reassured that they will be taking concerns over the practice seriously in the coming months.

SRA Executive Director for Policy, Crispin Passmore said: “We made the decision not to ban inducements based upon our regulatory objectives and better regulation principles. We have been made aware of some increasing concern and will be looking at this afresh over the coming months.

“We will be asking various interested parties for any evidence they hold or are aware of so that we make a good evidence-based decision. Our remit is narrowly focused on what Parliament has asked us to do as a regulator, but Parliament may choose to ban inducements for wider public policy reasons that we cannot take into account.”

They went on to say that they would happily work with the Government and stakeholders to ensure that such proposals are thoroughly thought through and that the intended objectives are delivered.

It wasn’t just inducements that the Government were taking a hard line at either, with the MoJ proposing that moving forward; Judges should throw out any case, in full, where it is deemed the claimant has been fundamentally dishonest.

The only exception to this legislation would be if the decision to throw-out the claim would cause substantial injustice to do so.

A spokeswoman for the MoJ said: “The court will have to be satisfied that the dishonest goes to the heart of the claim. We would anticipate that the requirement would be satisfied in cases where, for example, the claimant was found to have deliberately exaggerated the extent and consequences of the injury, to try to obtain a far larger award than the court finds is warranted.”

Overall personal injury solicitors will be relatively supportive of the Government’s latest raft of reform but may have slight concerns over the fact that already they seemed to be being swayed by the ABI report on dishonest claims from last month when it comes to making decisions.

It is hoped that the ban on inducements will be the limit of the influence these findings will have on the Government’s outlook over the personal injury claims profession, especially as it is widely viewed that these findings were made with very little outside thought.

Image source(s)

1. Wikipedia; Chris McAndrew;