SRA ‘concerned’ at PI practices aiding fraud

Topics: Regulation and compliance,Insurance

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The Solicitors Regulation Authority has said it is ‘concerned’ that some personal injury firms are failing to act within the rules and encouraging fraudulent claims.

The regulator was urged in January to take a ‘tougher approach’ to rogue solicitors in the sector after a finding from the Insurance Fraud Taskforce that more could be done to reduce fraudulent claims.

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In its response, the SRA has issued a warning notice on potential fraud in PI cases, reminding the profession of its obligations.

The notice states there is concern about firms allowing third parties to cold-call potential clients, paying referral fees in breach of the 2013 ban and bringing claims without clients’ authority. In some extreme case, firms are believed to have brought claims without the knowledge of the named client claimant.

The SRA also warned about firms taking and acting on instructions from third parties without ensuring that the instructions originate from the client, and about paying damages or sending cheques to third parties without accounting properly to the client.

It is unclear from either the warning notice or the press release that accompanied it how many firms are thought to be guilty of such misconduct.

But the SRA said it wanted to remind solicitors of their responsibilities and spell out the consequences of failing to adhere to the code of conduct.

The notice added: ‘Firms who conduct cases which demonstrate one or more of these features may face regulatory action for breach of our principles or code. Further this may give us reason to suspect dishonesty by their principals or staff.’

Paul Philip, SRA chief executive, added: ‘As we said in January, insurance fraud is a serious matter and we welcome the taskforce’s report and its recommendations. We have made good progress on combating financial crime, but we know we have more to do.’

The SRA is also carrying out a comprehensive review of the PI market this year, amid some concern about viability of the sector ahead of reforms to the small claims limit.

The insurance fraud taskforce identified particular concern about the preponderance and costs of fraud in low-value personal injury claims.

The report was clear that the SRA should take a ‘tougher approach’ to combatting fraud, taking more evidence from insurers about claimant firms suspected of abuses.

Readers' comments (57)

  • Who takes evidence from solicitors firms about insurers suspected of abuses?

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  • If this behaviour is going on then it tars all PI lawyers with the same brush. The public perception will be that we are all crooks.

    I, for one hope, the SRA properly investigates this and takes action where impropriety is found.

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  • Please show us the evidence. I am sure that there are some examples of firms behaving like this but in my experience of PI work it is few and far between and the perpetrators are not always who you would expect and are often the larger firms. If you read the SRA statement it seems to be directed at firms who work with contact centres . However, I frequently submit claims on behalf of clients only to find out that a CNF has been submitted on their behalf by another firm. This is usually via a firm closely linked to an underwriter or BTE insurer. The client's I deal with frequently haven't a clue why they have done this on their behalf and I am afraid to say that one particular firm based in the North West seem to do this a lot. Similarly I have recently had to formally complain about a national insurance practice who have taken to swearing statements of truth on behalf of policyholders having not even spoken with them to establish if the facts stated are true. This looks like expediency on the part of the SRA to be seen to be doing something following the publication of the Insurance Fraud taskforce report.


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  • I was always taught only to bring a claim if I was satisfied that I had credible evidence to support it on liability and quantum. But that now would appear to be an old fashioned view now in certain quarters anyway.

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  • Who indeed, 12.24?

    I once turned up for a pre action disclosure hearing on a tripping claim. In the run up to the hearing, the insurer wrote a letter to me setting out points they mistakenly thought would obviate the need for the hearing. My response was simply to serve a copy of my costs schedule, without directly referencing their letter.

    They then wrote again, along the lines of 'Please find enclosed a copy of ours of last week, which you have clearly not received'.

    Their difficulty is that I had received it, and was intrigued to note that the purported copy was a good page longer than the original, and contained a number of new points specifically designed to save themselves a costs order.

    In fairness to the insurer, they did instruct a rather senior barrister to turn up at the hearing, admit that the document was a forgery created by the insurers to save them a few hundred pounds in costs, and to offer the insurer's profuse apology to the court, to me and to my client.

    But, of course, according to the insurers, fraud is the sole preserve of the claimant.

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  • It's obvious that the SRA views those it regulates with utter contempt; the taskforce recommended an increase in the Smalls Claims limit and this Paul Philip welcomes that? Totally out of touch with the mood of the profession.

    As for fraud, why not take the fight to where it is needed? Barely regulated scumbag CMCs that rip off the public and solicitors alike. Tackling CMCs is the answer to fraud not further restrictions on solicitors' costs. In a world without solicitors, CMCs will drive claims through the Small Claims Track with no concern for the honesty of the claim or the welfare of the client - justice on the cheap. Although I suspect the insurers will favour that.

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  • DC, you were taught a long time ago in a different age. What you were taught has no bearing on the article.

    As for the report, absolutely the practice should be stamped on, and stamped on hard and with permanency. I suspect that it will provide an excuse for reputable firms to be pilloried and/or hung out to dry for no good reason.

    As always I say ban cold calling/texting/emailing and any type of referral from one business entity to another. And stamp on BTE suppliers who restrict freedom of choice.

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  • Some interesting posts here but fraud is on both sides of the fence. As a claimant lawyer (with plenty of defendant experience) I deplore fraud but I am seeing increasing amounts of it on the defendant side of things. This ranges from writing to claimants directly after the submission of a CNF to the deliberate forgery of documents such as accident book entries and inspection records. I just want a clean fight and an even handed discussion of fraud on all sides.

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  • There are clearly three issues here, the conduct of CMCs and others recommending / referring work, the acquiescence / connivance of solicitors in dubious claims and finally the role / action of the SRA.

    The regulation of CMCs etc seems to be deeply flawed but that is a matter for separate discussion.

    In respect of firms acquiescence or even counselling, procuring etc the presentation of a fraudulent claim I have recently reported a firm for acting when the client had not instructed them.

    The SRA is investigating and I trust will take robust action, however, does the dust need to be ground so fine?

    It is one thin to find oneself in the unhappy position of having a client admit, for the first time, under cross examination that their claim is a fraudulent one but a wholly different one to routinely be acting in cases which carry all the hall marks of fraud and yet be blind to them.

    If one acts in numerous transactions which bear all the hall marks of mortgage fraud, money laundering & etc the one's ignorance as to the clients' malign intent will not be a defence before the SDT nor should it: the question must therefore be, what is different about acting repeatedly in what are clearly fraudulent claims? My answer is, very little; if anything.

    Driving out those firms who facilitate these fraudulent claims should be something that we all assist in and welcome.

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  • Damn typos, ohh for an edit function.

    Para 5 find not thin.

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