Claims management companies should be properly regulated when dealing with cases funded by conditional fee agreements (CFAs) - but solicitors are no angels when it comes to providing a poor service and eating up clients' compensation, Citizens Advice has warned.

Launching a report on CFAs last week, the charity said clients were reporting zero or negative returns on accident claims pursued via claims farmers, and called for urgent action to address the 'regulatory gap'. However, it argued that owing to legal costs, 'the problems do not stop once the personal injury claim has been passed to a legally-qualified professional'.


The report accused solicitors of delaying proceedings - leaving interest accruing on the client's loan agreement - because their success fees would be low. It also claimed that solicitors fail to explain clients' options or keep them informed about the progress of their cases. Many low-value cases should never have been taken on in the first place because of the costs, it argued.


CAB: solicitors are no angels

A spokeswoman for the Department for Constitutional Affairs pointed out that it had set up a ministerial steering group to look into claims issues arising from the Better Regulation Task Force report earlier this year. It has given the claims industry a year to set up self-regulation. But Citizens Advice legal head James Sandbach argued: 'We really need more than [that].'

The Association of Personal Injury Lawyers welcomed the report's verdict on claims farmers; president Colin Ettinger said it was essential to 'curb the aggressive sales methods used by many claims farmers, and to ensure injured people receive the full amount of compensation to which they are entitled'.


Meanwhile, research by independent analyst Datamonitor has shown that although legal fees have been rising, personal injury claims overall have remained static. The report said accident claims have dropped by almost 10% from 612,000 to 557,000 in 2003/2004, and any rise is unlikely to hit more than 0.1% in the next few years, with predictable costs schemes contributing to keeping costs down.


Law Society chief executive Janet Paraskeva said the research proved that there was no US-style compensation culture. 'The government must protect the public by regulating claims companies,' she added. 'Until that happens, we would urge anyone bringing a claim to go directly to a solicitor.'