This bit of info was e-mailed to TDO, and the author asked me to put it up for him.
Alex
The last few years have seen a huge growth in the number of Claims Management Companies or “Claims Farmers" as they are sometimes called. These are companies offering “No win No fee” services to people who have had accidents particularly RTA’s and who often offer large fees to people who refer such claims to them.
Unfortunately all too many of these Claims companies are not reputable and can indulge in dubious practices or even criminal activity. One of the worst examples was the infamous “Accident Group” which, at it’s peak, employed over 2,000 people. The practises of this company however left a lot to be desired and included encouraging people to make fraudulent claims, misleading people who had genuine claims, and signing everyone up to loan deals which meant, even if their claim was successful, most of the money went to pay of the loan. Because of these types of abuses the Government decided to clampdown and has brought in the Compensation Act. This takes the radical step of making the activities of anyone involved in accident claims illegal as from next April unless the company has successfully applied for registration and agreed to abide by the some rules and regulations.
Applications for registration under this Act are being accepted now and the deadline for having applied is February 2007. Anyone who hasn’t applied by the deadline will have to stop trading in April or risk committing a criminal offence which can attract an unlimited fine or up to two years imprisonment. Not something to be taken lightly then!
It is thought that a lot of the Claims companies are likely to be caught out by this and it is expected that up to 2/3rd of Claims Management Companies may go out of business.
Also it is not only Claims Management Companies who are caught. Anyone who receives money for referring a personal injury claim is caught even if it is not their main business. This may include the body shop or the taxi firm controller who gets a “kick-back” of a few hundred pounds for referring someone who has had an accident to a Claims Company.
There are some organisations who are exempt from registration under the Act as they are already regulated effectively by other means. These include:-
1) Lawyers. All solicitors are exempt from regulation as they are regulated already by the Law Society.
2) Trade Unions. They often deal with accident claims for their members and they are exempt.
3) Insurance companies. They will often arrange help with injury claims for their insured and they are exempt as they are regulated already by the Financial Services Authority.
The message for anyone who needs to make a claim is; be careful. Make sure whoever is dealing with your claim is exempt (a solicitor or trade union) or that they have successfully registered. If you are not careful you may find the company you use going out of business or being shut down and that is not going to be good news for your claim.
If you have any queries about this you can get free advice from Lucas & Co, a specialist firm of Personal Injury solicitors on 0800 136 795.
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