The Solicitors Regulation Authority is plotting a fresh clampdown on the claims sector which could see the cancellation of the ‘no win, no fee’ term.

The regulator will shortly issue a new warning notice to firms around the use of the phrase and is actively exploring whether more needs to be done in this area.

‘We are concerned the "no win, no fee" label doesn’t give consumers an accurate view of what could be involved when pursuing a claim,’ the SRA said in a new consultation document. ‘In particular, the risks to the consumer and potential costs they might incur if a firm doesn’t manage a claim appropriately or a claim is unsuccessful.’

The term has become synonymous with high-volume claims and has come under scrutiny in recent years as clients of certain firms in this sector were ordered to pay five-figure defence costs.

The SRA believes it requires ‘robust action’ to deal with a sector concentrated in areas including housing disrepair, data breaches, flight delays, diesel car emissions, motor finance commission and other financial services.

There are likely to be further duties imposed on firms running these claims around marketing, advertising and onboarding of clients.

No win, no fee sign

The 'no win no fee' term has become synonymous with high-volume claims and has come under scrutiny in recent years

Source: Alamy

Consumers should, as standard, be told the likelihood of success, how much they might receive if they win and how the firm or any third party will get from a successful claim.

Of particular concern is firms taking a ‘one-size-fits-all’ approach to new clients using a standardised and uniform sign-up process without ever considering their needs.

‘We are alert to the potential risks of a ‘tick box’ approach that doesn’t encourage a firm to consider a client’s individual needs and circumstances,’ said the regulator.

The SRA is already investigating 76 law firms involved in such claims and has recently written to more than 500 other firms asking them to complete a mandatory declaration of compliance.

Anna Bradley, chair of the SRA board, said the risks and issues being found in the high-volume claims market are ‘unprecedented’.

She added: ‘Too many firms don’t have their house in order, so we need to use all the levers at our disposal to protect consumers and identify poor practice.’