The Referral Fee Ban & The SRA - The Reluctant Police Force

An article in the Law Society Gazette today by John Hyde "SRA Ponders Policing of Referral Fee Ban" http://www.lawgazette.co.uk/news/sra-ponders-policing-referral-fee-ban confirms to me that the SRA have been landed with the role of an unwilling police force to deal with the ban which is to come into effect in just over 7 months.

According to Hyde, the Authority "will set out within weeks how it intends to police the forthcoming ban on referral fees." 'Within weeks' - really? Sorry, for some reason 'My SRA' keeps coming to mind. What a wonderfully thought out and executed concept that was. Perhaps first the SRA will have to have a consultation period of 3 months to consider what is meant by a 'few weeks'. Then after that it might come to the conclusion that 'a few weeks' actually means about 12 months - and even then give or take another 12 months either way - well not either way - just one way. So make that 2 years. Perhaps then we should add in some fancy online software to help with the policing. Add 12 months for that to be implemented and then - oops - it's crashed.

After that, according to the article, the Authority will 'draw up a formal policy position in advance of a 12 week consultation starting this autumn.' '12 weeks'? Don't even let me start going there. Perhaps the idea is to just send us all mad. I can see it now - the ambulances collecting us all to be dragged off screaming and shouting  to the 'Home for Bewildered Claimant Solicitors and CMC Proprietors' (with segregated wards to ensure that no referral fees can be passed on in the exercise yard).

I jest merely - well partly.

The SRA has been given the legal equivalent of a 'hospital pass' in rugby or football. The only alternative was for the 'Ministry of Silly Claims' to become involved and of course the government just wants to lay down the law, in a fashion. It doesn't want to have the job of enforcing it's hotchpot of legislation - and who can blame it?

Anyway once this has all been smoothly implemented - whatever is being implemented, we then only have to wait on the announcement on the Small Claims Track Limit for Personal Injury, the slashing of portal fees, etc, etc. Not to worry - we've got all of 7 and a bit months for this to get sorted.

Anyway at the end of the tunnel there is light - that pot of gold called the "ABS." Why some 15 have been authorised, don't you know - or is it 20? I really don't know. To be honest I've lost the will. Apparently there is now something called the "ABS rush." Now that does sound interesting. Is it a form of legal high? Better be on the safe side. "Pass the port Miss Moneypenny - and make mine a double."

In The Court of The King

It is the year of 2014 in a far off land. A junior prince has been elevated to the post of 'King of the Realm' by the all powerful 'Council of Insurance Lords' in recognition of his great work in defeating once and for all, the Claimant Peasant’s Revolt that had been plaguing the land for 25 years or more.

Setting: The King’s Palace   

                                                                          

The King is reclining on a settee watching the Jeremy Kyle programme on TV, whilst being fed grapes by two of his servants.

A courtier enters the room.

Courtier: “Sire, the Chief Insurer is here to see you.”

King: “About time too, he was supposed to be here an hour ago. Send him in.”

The courtier leaves the room and after a few moments, re-enters, followed by a plump man with a heavy sun tan.

Courtier: “Sire, the Chief Insurer.”

The Chief Insurer walks over to the King, and thinks about bowing, but decides against it.

Chief Insurer: “I apologise for my tardiness Sire, but I was waylaid by claimant beggars outside the Palace, who pulled at my fine clothes and tried to sell me personal injury claims.”

King: “But I thought I banned referral fees last year?”

Chief Insurer: (muttering) “WE banned referral fees!”

King: “What was that you said?”

Chief Insurer: “Oh nothing Sire, I was merely clearing my throat. Yes, Sire. We, I’m sorry, you did ban referral fees and for that, I and my fellow Insurance Lords are most grateful, but there are a minority of peasants who flout the law and roam the land trying to sell claims.”

King: “You told me that the claimant rebellion had been crushed and in any case, as we reduced solicitors fixed fees under the portal to £50 and raised the small claims track limit for PI’s to £100,000, there seems no point in the peasants trying to sell claims anyway.”

Chief Insurer: “Sire the rebellion has been crushed, but there remain a few renegades to be rounded up, and  some of these older claimant peasants they have been around for so long that they know of no other means of making a living.”

King: “No matter, now pray tell me, what is the news of the reduction in the cost of motorists premiums since I got rid of the claimant peasants and their fraudulent claims?”

Chief Insurer: “Sire?”

King: “The reduction in motorists insurance premiums! That is what you promised me would happen once I had won the war against the claimant peasants. You sold me the idea that if claimant peasants no longer blighted this land with their fraudulent claims and referral fees, that that would mean that the cost of insuring a motor vehicle for the average peasant, I mean motorist, would fall significantly due to the costs savings that would be made.”

Chief Insurer: (fidgets with the collar of his rather tight shirt) “Yes Sire, we do hope to achieve that..eventually. “

King: (Loudly)” Eventually! What do you mean eventually? What HAS been the saving?”

Chief Insurer:  (Fidgets with collar even more) “Well Sire, to date there has not actually been any saving.... (Gulps) in fact premiums have risen by 50% over the past 12 months.”

King:  (Roars) WHAT?

Chief Insurer: (Beads of perspiration now trickling down face) "Well Sire, you see we have had to pay heavy bonuses to the Insurance Lords, as a reward for their efforts in.... assisting you in defeating the claimants and ...and...we have of course had to reward the insurance peasants for all their hard work."

King: (Enraged) "Bonuses! I defeated the claimants single handed without any assistance from the Insurance Lords and as for the insurer peasant workers, you always told me that the majority of them were a useless, inefficient bunch!"

Chief Insurer: " Indeed Sire, the insurer peasant workers I did refer to in such terms, but they threatened that unless they were rewarded with some of the bounty - I mean savings in costs - that they would work to rule and instead of taking six weeks to deal with the post, they would take twelve.. .. and in addition Sire, there is another problem.."

King: (By now purple of face) “What other problem?”

Chief Insurer: “Well Sire, the remaining claimant peasants have found a new fraud to perpetrate. They have started driving their uninsured vehicles into the houses of friends who are then making claims on their buildings and contents insurance to have their houses refurbished and fitted with Surround Sound, 3D TV’s, new I-Pads, leather suites and so on and so you see those insurance premiums are now increasing and thus there are no savings, as yet, to pass onto the general peasants - I’m sorry- I mean policy holders..”

King: "I’ve heard enough. Guards have him removed. Chief Insurer I sentence you to be hanged from the RTA Portal. Take him away.”

Guards take away the Chief Insurer who is heard shouting, “but what about my severance pay” as he is dragged off down the corridor.

King:  “Courtier, fetch me the leader of the renegade claimant peasants. I think he and I need to talk...”

View From The Claimant Camp - Is There Anyone At Home?

                                                                            

I have to confess that I have developed the habit in recent times, upon waking and after making the life-saving cup of tea, of switching the laptop on and diving straight into Social Media. The other day I went straight to one of my favourite sites, the excellent ‘Legal Futures’ and there it was – an article with the headline ‘Government confirms U-turn on raising small claims limit for PI claims.’ My immediate thought was, ‘where is Maggie when U-turns are being talked about by a Tory government?’

My disposition quickly turned to anger. Just a few months ago the government said that the personal injury small-claims limit would remain at £1000. That was following the ‘Solving dispute in county courts’ consultation – consultation, that’s right. So what has changed in a few short months for the government to perform a U-turn?

Furthermore the article went on to state, that in the summer, the government ’will consult on this (increasing the limit) and on the feasibility of introducing independent medical panels to replace the current assessment of whiplash injuries either by GP’s or by doctors employed by medical reporting organisations’. The Moj’s  statement justifying  this, included the now well worn chestnut of ‘transparent and consistent approach to assessment and easier identification of exaggerated or fraudulent injuries.” Ah yes, “fraudulent claims/injuries”, “exaggerated” – add to that your own list - here are a few more to help you : “compensation culture”, “blame culture” “whiplash claims” (meaning any injury that has a compensatory value of less than £5000), “genuine victims”, “No Win – No Fee” (this has to be said in a certain manner to get the full effect ie the words have to be spat out). You get my drift – sound bites.

The government spokesman went on to provide further justification for these proposed measures;

“This is part of a package of reforms, including reforms ‘no win, no fee (spit)’ and referral fees. This will reduce costs for insurers (ah, right) – savings which we strongly encourage (note the use of very gentle word – ‘encourage’) them to pass onto consumers through cheaper premiums (breath not being held.)’

To his credit Law Society President Wotton did weigh in with the following;

“Fraud is entirely indefensible and the Law Society has made it clear time and again that it is happy to work with ministers and the insurance industry on tackling fraud head on – but we must ensure that proper recourse to justice remains available for those who have been injured by the negligence of  others. We doubt that simply giving insurers what they are asking for will reduce premiums.”

So there we have it. Referral fees and ATE are to go. The reducing of the fixed fee that solicitors can claim when they deal with claims under the portal is already underway and leaked emails tell us that the insurers likely starting point will be £150.00 – consultation with the claimant lobby will take place. So £150.00 is what it will be then gov?

Look, I have been involved in this “industry “(hate the term) since the early 1980’s. I worked for and then with, the pioneering Manchester solicitor, the sadly now deceased Keith Beardsell. I worked in his small office when regular visitors would be Chris Norman and David Garner, at that time computer  salesman (of ‘tardis’ sized computers)   and Accountant respectively. The former founded what became 3 Arrows Car Hire, the latter Forward Hire, MSL and now Financial & Legal. I saw the birth of credit hire and RTA claims, as entities in their own right. No the insurers didn’t like them. To claimants’, credit hire, credit repair and efficient solicitors were great services – to the insurers an unwelcome expense. 

                              

                                                                             

In the early to mid 1990’s I was involved at the “coal face” when the insurers and their advisers turned to the medieval concept of ‘Champerty & Maintenance’ to try and persuade the judiciary that credit hire agreements were invalid in law. I was at the House of Lords, when it ruled in the test cases before them, that such agreements were valid. Bloody nose for the insurers no 1.

I had my own practice by the time that the next real test went to the higher courts and the Consumer Credit Act cases of Dimond v Lovell et al were heard. Bloody nose for the insurers no. 2.

Throughout this period and indeed up until the present day, there have been steady streams of precedent cases on “rate of hire” and “length of hire.” That is entirely healthy – some have gone for claimants, some for the insurers.

However, overall throughout the last 25 plus years the claimant “industry” has survived the legal challenges to it. Perhaps that is because it has by and large been conducted along decent, legal lines and also because it provides a very good service to genuine claimants.

To my mind, this is the crux of where we are today. The insurers have failed to defeat what they see as an insidious “industry” per se, by using the courts of the land. So their tack now?  – political lobbying. Hit the governments of the day – of whatever political persuasion – right in the solar plexus – mention ‘vote winning’.

First of all though there had to be a period of building up the right atmosphere. So there was much talk using the sound bites mentioned before “compensation culture” “fraudulent claims” “whiplash injuries”, “NoWin, No Fee (I will have to clean the study floor of all this spittle) and of course “reducing insurance premiums”. We all want lower insurance premiums, particularly those of us with children of a certain age who are desperate to get their independence from “Mum and Dad’s taxi” (I wouldn’t mind some independence for Dad either) .

Then attack – and boy haven’t they done well these insurance boys (and girls). So, it seems we are now at the stage where it’s almost mission complete and the insurers have got their way. I’m not suggesting that they have done anything wrong either morally or legally and of course the claimant camp has a voice but either it has been ignored, or as I suspect, it has not made itself heard loudly or effectively enough. I wonder where all those fighters from the 90’s have disappeared to? Probably grown into middle age and beyond as I have (I will own up to the former, not yet the latter). Possibly in their place have come those who have become complacent and if they have woken up to what is happening, they have done so too late. So like the Wolverhampton Wanderers defence have done this season, they have stood dozing on the half way line whilst the opposition has scored goals at will.

Nor am I saying that there is no need for reform. I have never liked referral fees. As a solicitor with my own practice, starting up in 1994, I built my business up  by marketing very actively – getting my hands dirty by going out to see insurance, brokers, garages, legal expense insurers and gradually growing by providing a good, honest and efficient service and gaining a decent reputation. I resisted referral fees for as long as I possibly could, but when they became permitted in the late 90’s I had to give in eventually. I recall spending what for a small practice was a not inconsiderable sum on doing some cable TV advertising (hands up who remembers cable TV?). Our advert used to go out between the topless darts and the weather girl – or was it the topless weather girl and the darts? No wonder we got some strange enquiries! I recall at the time speaking to a good friend who acted as a mentor to me , and who was the Senior Partner of a large, successful RTA practice in the north. He asked me how much I had paid for the advertising and when I told him, he said to me that for that amount, he could buy around three hundred guaranteed fee bearing case leads. I had to take that on board and accept defeat. Ultimately the bulk of referral fees end up in the pockets of the insurance brokers, garages and recovery agents (not to mention LEI’s). They do not, in my experience though, add any cost whatsoever to the claim in so far as the paying insurer is concerned. They are swallowed up as a necessary evil by the claimants solicitor.

Like everyone else, I abhor fraudulent claims. I am aware that unfortunately the practice of sham accidents and false claimants has risen over the past 10 years. I had a few scenarios when in practice where I or my fee earners suspected dodgy dealings were afoot and we got shot of them and reported them very quickly. Even as recently as the past couple of months ago,  I came across an outfit advertising for PI’s to be referred to them for a payment of many hundreds of pounds on a social media site. I played along by making some enquiries of them, but when I broached the question of seeing their MoJ authorised business number, they quickly went silent on me. I reported them via the Claims Regulation website and asked to be kept informed – however that was about 4 weeks ago, and I have not heard a word from the authority. I’m not aware if the outfit in question were involved in fraudulent claims, but as far as I could see they were not authorised to carry out claims management services as they ought to be. I simply did what the vast majority of those in the claimant camp would do, and reported them.

It just frustrates and indeed angers me that by using soundbites, vote winning words and slogans, as the government and insurers do, all claimant solicitors, all claimants, all of the smaller injuries suffered by those claimants, all AMC’s, all credit hire companies and so on, are tarred with the same very unfair brush.

Neither do we hear a great deal about the inefficiencies and at times ( I am being kind using the words ‘at times’) incompetence of insurers, in the way they approach the handling of claims. A whole book could be written on my experiences of dealing with insurers, and the quality of staff that they have historically employed, but suffice it to say that were as much attention and time poured into them sharpening up their own act, as has been put into their cosying up to the governments of recent times, considerable savings could already have been made on insurance premiums.

Anyway, in 18 months time, please folks tell the world how much your insurance premiums have come down, once those nasty claimants and their even nastier advisors have been trampled underfoot. Or will it be the case that the insurers will have to find new scapegoats as to the reasons why surprise, surprise, they haven’t really come down at all?