MoJ to assess impact of small claims hike

Topics: Costs, fees and funding,Personal injury & clinical negligence,Government & politics

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An impact assessment of government plans to increase the small claims limit will be published alongside a forthcoming consultation, the Ministry of Justice has said.

Chancellor George Osborne proposed in November that the limit should rise for personal injury claims from £1,000 to £5,000 – effectively removing lawyers from the process altogether.

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The policy was packaged on the basis that motor insurance premiums would come down, as insurers would pass on savings on legal costs.

The government is also considering a proposal to scrap general damages for ‘minor’ soft-tissue injuries.

Labour MP for Birkenhead Frank Field (pictured) asked justice secretary Michael Gove earlier this month what assessment he had made of the potential effect the proposals would have on access to justice for people on low incomes.

Responding to the question yesterday, justice minister Dominic Raab said the government will consult on the detail of the new reforms ‘in due course, including any necessary safeguards’.

Raab said the consultation will be ‘accompanied by an impact assessment’.

At a meeting between the MoJ and the Association of Personal Injury Lawyers some weeks ago, officials made clear that work was being carried out to ensure claims management companies do not move into any space vacated by lawyers, with a report on CMC regulation due out in March or April.

Readers' comments (31)

  • A small but positive move, thankfully Gove and Raab are both intelligent and will give proper consideration to the effects of the proposals and we can start having an effective dialogue.

    Now perhaps we can also have disclosure of the meetings between the ABI and the SPADs / HMG.

    As for CMC regulation, yes indeed, well overdue.

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  • Hmmmm... Drop of water on a forest fire?

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  • We have to be positive at least in the fact that a relatively well-known MP is raising this issue. I've never known Frank Field to be afraid of expressing his opinion regardless of who he thinks it'll upset either. I suspect he'll keep his powder dry in that regard pending the assessment.

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  • I hope this won’t lead to a u turn. The mass whiplash claims industry is a scandal and needs to be stopped

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  • Its good that the MOJ (who have been caught on the hop by this announcement by the Chancellor of the Exchequer) are looking at the issue but what can they honestly conclude? We all know it will be a disaster for firms large and small and thousands of people will be disenfranchised from the legal system unless they want to employ a CMC / Mackenzie Friend to do the job for them at an inflated rate. Insurers will not pass on any savings by way of reduced premiums. This issue has been considered many times over the last decade and it has been kicked into the long grass every time as bad idea. Nothing has changed. if anything the evidence in favour of keeping the limit as it is stronger eg reduced claims volumes, lower costs settlements, inequality of arms and reduced amount of fraudulent claims. Both claimant and defendant's agree the limit should not be raised. I hope common sense prevails. There are also much bigger reforms about to hit in respect of fixed fees across the board.

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  • Annon @ 12:55 thanks for your insightful comment it really helps to stimulate dialogue and debate on this professional site.

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  • One of the main points that Osborne fails to address is that the value of the claim is only ONE governing dynamic in decided track allocation.

    I acted for a Claimant where his claim was worth £2000.00 but he was wrongfully accused of fraud (not being in the vehicle) Now, this allegation did not surface until the Defence was filed.
    The case settled on the morning of the Trial. C was completely 100% innocent.

    The point I make is, under these reforms, this Claimant’s case, ( Based on a £2000.00 value) would probably not be dealt with by a firm of Solicitors. With a £2000.00 value, the claim would have been risk assessed as small claim and financially an unattractive piece of litigation.
    Can you imagine the mess of a McKenzie Friend or CMC assist a litigant in person against a fraud allegation or LVI defence. The value is only one indicator of the complexity of the proceedings.
    Of course Osborne and the lay, adopt the position that “well , it is a £2000.00 claim, how complicated can it be” ??? It can be very complicated. But of course the insurers will still use lawyers on the SCT leaving the innocence victim with a mountain to climb

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  • Anon @ 12:55 When the insurers come out with such drivel they at least have a financial interest, when Osborne (who is very bright and is an excellent Chancellor) comes out with the drivel he at least has the excuse of being briefed and as our lefty friends would suggest have the donations to the party in his mind: however what has persuaded you to spout such vacuous clap trap?

    Personally, what I think is scandalous is how insurers try to inflate premiums at renewal only then to offer a much reduced rate when one indicates one is likely to go elsewhere: however as a fair minded intelligent Tory I don't see it as being the proper exercise of government to intervene into the insurance market.

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  • Anon @ 2.06. You are the one spouting clap trap . You have no evidence for saying the Government is proposing these reforms because of donations from insurers.

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  • You're right, anon 2.40pm. (I'm not anon 2.06, by the way). It is merely coincidence that this government and the last legislated according to the ABI's wishlists. It is mere coincidence that Djanolgly's job came to an end when it was revealed that his office was funded by insurers. It is mere coincidence that the ABI host fringe events at ever Tory conference where their puppets are plied with wine and propaganda.

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