The number of businesses entering the claims management market has risen by 60% in the past year, new figures show, while the industry’s regulator said solicitors were responsible for malpractice in personal injury claims-handling.

The Claims Management Regulator’s 2009 impact assessment revealed that 2,885 businesses were authorised as claims managers this year, up from 1,778 in July 2008. In the past year, 293 businesses voluntarily suspended their authorisation, 93 had their authorisation terminated by the regulator and seven are currently suspended. Claims management revenues grew to £361m, up from £280m in 2008.

Overall, personal injury claims were by far the largest sector for claims-handlers, with 2,232 firms operating in this field, and a combined annual turnover of £287m. However, the report also noted a ‘major new market’ in claims relating to consumer credit contracts, whereby claims firms argue on behalf of consumers that credit agreements are deficient and not enforceable. Kevin Rousell, head of Claims Management Regulation, said: ‘Solicitors are not unlike the claims management companies themselves. The majority of firms are trying to comply [with the referral code], others are not very good at what they do and can’t comply, while a few are attempting to get around the rules.’

He added: ‘Solicitors should be intelligent [purchasers] of claims, not victims. There is no excuse for hidden referral arrangements – transparency is all – because the solicitor’s role is to give best advice. Solicitors cannot be constrained by hidden contract terms.’ SRA chief executive Antony Townsend said solicitors must be confident that clients are not being misled and may face disciplinary action if they do not follow SRA guidance on referrals.

Have a read of this article from Claims Management Magazine…

A new agreement to collect and share data on criminal syndicates and solicitors involved in personal injury compensation scams has been made between the Ministry of Justice and the Insurance Fraud Bureau (IFB).
The agreement will allow both bodies to swap details on the suspected fraudsters before requesting police raids.

The news comes as a high-level group of regulators attempts to cut bureaucracy and share fraud data more freely. Chaired by the IFB (the industry-funded fraud investigator), the high-level strategy group comprises the MoJ, Financial Services Authority, Solicitors Regulation Authority, Association of British insurers, the Serious Organised Crime Agency, the National Fraud Strategic Authority and several police forces.

Kevin Roussell, head of claims management regulation at the MoJ, said: “The aim is to make it a more hostile environment for fraudsters. If you get some success, it creates a ripple effect. “We both hold intelligence on lots of businesses – claims management companies – and we get intelligence on people linked to these too, like lawyers, engineers and doctors.” He added that intelligence on suspected fraudsters would be shared with other enforcement agencies where appropriate information sharing agreements are in place, as with the IFB. “If the police are interested, raids could follow, and maybe charges and eventual prosecution. You need hard evidence to make progress.”