Claims farmers would be banned from offering cash inducements and other benefits to the public, under proposals put forward by the Ministry of Justice in a consultation paper.
In a move to implement one of Lord Young of Graffham’s recommendations in his October report on the ‘compensation culture’, the MoJ said that it wants to ban such inducements from April.
Claims regulation rules currently state that claims management companies and law firms cannot offer immediate cash payments or similar benefits as an inducement to make a claim, but that does not prohibit them from offering inducements to be paid after claims have been vetted and approved.
The MoJ said that its proposals would lead to a diminution of the ‘perceived compensation culture’, and would ‘go some way to improve the overall quality and content of advertising and marketing in the industry’.
Kevin Rousell, MoJ head of claims management regulation, said: ‘We have accepted Lord Young’s report and plan to take the necessary steps to ensure that the concerns raised about the marketing practices of some claims management businesses are tackled at the earliest opportunity. This consultation is an important step towards tackling irresponsible marketing.’
Young said in his report that offering inducements to potential claimants is a high-pressure marketing technique.
The consultation closes on 10 February, with a response scheduled to be published by the MoJ in March.