The government has moved to strengthen the proposed ban on personal injury firms offering inducements for claims.
Justice minister Lord Faulks yesterday secured an amendment in the House of Lords to the Criminal Justice and Courts Bill which will ban any inducement made through third parties.
Faulks said there was concern that it is increasingly common for solicitors to operate as part of a larger group of companies or to have subsidiary or linked companies.
‘Those subsidiary or linked companies are not always regulated, and it would be relatively easy for, say, a solicitor simply to route an inducement through an unregulated company, thus avoiding the ban.’
He added that the measure was a ‘proportionate’ way to make the ban more effective.
Faulks said the practice of offering up-front payments or gifts for personal injury claims is currently more prevalent among solicitors than non-regulated companies.
But there is a feeling that third parties – particularly those from what he called the ‘first notification of loss teams’ used by insurers – would seek to find ways round the ban once it was introduced.
He added: ‘The intention is to ban any inducement which encourages or might have the effect of encouraging a person to make a claim or seek advice about making a claim, including so-called welcome payments, free gifts and cash advances.’
Earlier in the same debate, Conservative peer Lord Hunt of Wirral failed to secure an amendment to the same bill to tighten the rules around cases where the claimant has been fundamentally dishonest.
In July, the House of Lords voted in favour of a clause in the bill that gives courts the power to dismiss personal injury claims where the claimant has been ‘fundamentally dishonest’.
The clause allows a court to dismiss a personal injury claim if it is satisfied the claimant has been ‘fundamentally dishonest’ in the course of the case – even if the claimant would still have been entitled to damages.
A new clause will extend the remit of the bill to cover not only injury claims but claims where any dishonesty was involved – for example in credit hire or damage to property.
Faulks said the clause had the potential to ‘unnecessarily complicate the clause, and could have unintended consequences that would not be desirable’.