Claims management companies could remain outside statutory regulation for a further 18 months even if the Compensation Bill is fast-tracked through Parliament.

In the week that the long awaited Bill was published, the Department of Constitutional Affairs (DCA) confirmed it could be up to 18 months before a regulatory body is announced even if the legislation is passed before June.

The Lord Chancellor, Lord Falconer, implied that the Claims Standard Council (CSC) was the frontrunner to become the regulatory body until it comes under the auspices of the proposed Legal Services Board.

The DCA has commissioned an independent expert to review the CSC's credentials as a candidate.

Meanwhile, the Constitutional Affairs Committee has launched an inquiry into the 'compensation culture'. Committee chairman Alan Beith MP said the inquiry would look at the effects of moving towards 'no-win, no-fee' agreements and "go further" than the Better Regulation Task Force's report in 2004.

Firms give up CSC membership
CSC chief executive Tony Burns-Howell confirmed the council had already been affected by the introduction of the Compensation Bill, with six firms leaving its membership.

"Equally, we have had an increase in people wishing to join - and not just claims farmers, but organisations that were regulated by the Law Society," he said.

Andrew Wigmore, CSC policy director, said: "The rogues seem to be running for the hills. Once the Bill receives Royal Assent in January or February, it will be law. By the time a regulator is in place they will have to abide by its rules."

The CSC expects the final draft of its code of practice to be approved by the Office of Fair Trading before the end of November.