By Jonathan Rayner


Fresh evidence has emerged suggesting that solicitors, rather than claims management companies, are largely responsible for breaches in personal injury referral arrangements, in a report published by the Ministry of Justice's (MoJ) claims management regulator.



The MoJ's first study measuring the impact of regulation since it was introduced for claims handlers in April last year - seen exclusively by the Gazette - said non-compliance with referral rules had been 'displaced' to solicitors.



The report stated: 'To the extent that there are problems in respect of the handling of personal injury claims, these are now largely problems caused not by the claims management companies, but rather by solicitors.'



Speaking to the Gazette, Kevin Rousell, head of the MoJ's claims management regulation unit, claimed increased regulatory activity had resulted in solicitors going directly to 'informal referrers' rather than authorised companies. Solicitors who do not ensure they deal with authorised or properly exempted claims handlers face disciplinary action.



The impact report quoted statistics compiled by the Solicitors Regulation Authority (SRA) following a survey of 149 referral arrangements at the end of last year.



The SRA found that in 48% of arrangements examined, solicitors had failed to obtain an undertaking from introducers to comply with conduct codes, while 46% involved failing to provide clients with all relevant information.



Rousell said: 'Solicitors are pivotal to the process. If they are not buying, then nobody is selling.'



The report also called for the SRA to be given 'better regulatory tools to deal with malpractice'.



An SRA spokesman pointed out that the Legal Services Act will enable the SRA to fine solicitors up to £2,000 for breach of conduct rules by the end of the year.



He added: 'The key to success will be a working partnership between the claims management unit, the SRA and the profession.'