The Financial Services Authority will decide this month whether to launch an investigation into the insurers’ practice of acting for non-policyholders through ‘third-party capture’.

Ken Hogg, director of the insurance sector at the FSA, said it was currently undertaking ‘exploratory work to gather information on the issue’.

In a letter to Linda Riordan MP, who has pressed the FSA to regulate insurers when they deal direct with members of the public who have, for example, been injured in a collision with a motor insurance policyholder, Hogg said he expected to decide if any ‘further investigation’ is warranted ‘by the end of September’.

He noted that insurers had to follow the FSA’s ‘principles for business’.

He added: ‘Out-of-court settlements are a way of settling personal injury claims without involving lawyers, particularly in cases where the probable amounts of compensation are well-established. Doing so may keep the cost of the claim down and provide faster compensation for the injured party.’

Saffora Choudri, one of the founding members of the Accident Compensation Solicitors Group (ACSG), said justice secretary Jack Straw had declined invitations to discuss regulating against third-party capture. ACSG was collating data from members, she said.

The development comes amid fresh evidence that insurers continue to engage in the practice. Solicitor Paul Aberdein of Liverpool firm Bartletts said one of his clients had been contacted directly by a third-party insurance company following a motor accident. The insurer suggested the client may want to proceed with her claim without her lawyer’s involvement. Aberdein warned that insurers are ‘a law unto themselves’.