Conditional fees too complicated, says report

The Better Regulation Task Force (BRTF) has recommended that the UK should consider a move to contingency fees, as revealed exclusively by Insurance Times on 20 May.In delivering its Better Routes to Redress report, the BRTF, chaired by David Arculus, described conditional fees as "notoriously complicated". It said that despite a consultation to be held over the summer by the Department of Constitutional Affairs (DCA) on proposals to simplify conditional fees, the DCA should also carry out research into the impact and effectiveness of contingency fees in the UK by next May.Arculus said the report aimed to examine the question: "Does litigation provide the best redress for personal injury?"He said that with the number of registered accident claims falling and awards in most cases at less than £3,000, one of the BRTF's most "controversial" findings was that a compensation culture does not exist in the UK. "But there may well be lots of people willing to have a go," Arculus said. The BRTF also recommended that the DCA should research the impact of raising the limit under which personal injury claims can be pursued through the small claims track to £5,000 from the current limit of £1,000. Another of the report's key recommendations was that the ABI should extend its Making the Market Work initiative, which was developed out of the employers' liability (EL) crisis, to other organisations such as schools, hospitals and local authorities. Under the initiative, trade associations submit details of their health and safety schemes to an ABI committee of EL insurers for assessment. Details of each are then fed back to the trade body and circulated to EL insurers so that they can be taken into account when assessing individual risks.Head of general insurance at the ABI John Parker said that while he supported extending the initiative, it could prove difficult in sectors where an overseeing body, which can set the standards for each industry, such as a trade association, does not exist.

The Arculus report: recommendations

  • The Claims Standards Federation should get its Code of Practice approved by the Office of Fair Trading by September 2005. If not, the Department for Constit-utional Affairs (DCA) should directly regulate claims management companies.
  • The DCA should complete research by next May into the impact of raising the limit under which personal injury claims can be pursued through the small claims track, possibly to £5,000.
  • The Chief Medical Officer should lead a cross-departmental group, to report by February 2005, assessing the economic benefits of greater NHS rehabilitation.
  • The Department for Work and Pensions should lead a group, including insurers and others, to make recommendations by February 2005, looking at developing mechanisms for earlier access to rehabilitation.
  • The Chief Medical Officer and NHS chief executive should immediately issue joint guidelines to NHS hospitals and surgeries on claims management companies' advertising on their premises.