The Solicitors Regulation Authority has said it is ‘concerned’ that some personal injury firms are failing to act within the rules and encouraging fraudulent claims.
The regulator was urged in January to take a ‘tougher approach’ to rogue solicitors in the sector after a finding from the Insurance Fraud Taskforce that more could be done to reduce fraudulent claims.
In its response, the SRA has issued a warning notice on potential fraud in PI cases, reminding the profession of its obligations.
The notice states there is concern about firms allowing third parties to cold-call potential clients, paying referral fees in breach of the 2013 ban and bringing claims without clients’ authority. In some extreme case, firms are believed to have brought claims without the knowledge of the named client claimant.
The SRA also warned about firms taking and acting on instructions from third parties without ensuring that the instructions originate from the client, and about paying damages or sending cheques to third parties without accounting properly to the client.
It is unclear from either the warning notice or the press release that accompanied it how many firms are thought to be guilty of such misconduct.
But the SRA said it wanted to remind solicitors of their responsibilities and spell out the consequences of failing to adhere to the code of conduct.
The notice added: ‘Firms who conduct cases which demonstrate one or more of these features may face regulatory action for breach of our principles or code. Further this may give us reason to suspect dishonesty by their principals or staff.’
Paul Philip, SRA chief executive, added: ‘As we said in January, insurance fraud is a serious matter and we welcome the taskforce’s report and its recommendations. We have made good progress on combating financial crime, but we know we have more to do.’
The SRA is also carrying out a comprehensive review of the PI market this year, amid some concern about viability of the sector ahead of reforms to the small claims limit.
The insurance fraud taskforce identified particular concern about the preponderance and costs of fraud in low-value personal injury claims.
The report was clear that the SRA should take a ‘tougher approach’ to combatting fraud, taking more evidence from insurers about claimant firms suspected of abuses.