The Claims Standards Council (CSC) has been ruled out of becoming the regulator of claims management companies (CMCs).
The publication of the Boleat Report, which was commissioned to discuss the CSC's suitability for the role of claims regulator, makes clear that the regulator's task is too challenging for the trade association.
The report, written by former ABI director general Mark Boleat, states the cost of running a private sector regulator would be between £1.5m and £2.1m per year. It continues: "If designated, the council would probably need substantial underwriting from the government or other stakeholders."
Baroness Ashton of Upholland, who is guiding the Compensation Bill, told the House of Lords on Tuesday she accepted the recommendations of the report, and the CSC would not be given statutory powers.
Speculation continues over who will become the regulator. Insurance Times understands that the Lord Chancellor, Lord Falconer, would prefer a government department to maintain control.
A spokesman for the Department for Constitutional Affairs (DCA) said there was no timetable for appointing a governing body and it may even be delayed until the Compensation Bill has passed through Parliament.