The new chairman of the Personal Injury Bar Association (PIBA) is calling for no win, no fee companies such as Claims Direct and Claims-line to be regulated.
Matthias Kelly, who has made no secret of his dislike of the contingency fee system, said: “Parliament has a duty to regulate that kind of activity.”
He expressed surprise that regulation was not already in place. “The government has, in the past, shown itself ready to regulate just about every form of human activity,” he said.
He pointed out that solicitors working in the contingency fees market had a compensation fund and had to hold professional indemnity insurance.
But those companies competing with solicitors for personal injury work are only regulated by run-of-
the-mill legislation such as trading standards rules.
Kelly's views are echoed by the Law Society. A spokewoman said customers' interests needed to be protected. “There should be some sort of redress available,” she said.
“We always recommend to people that they should use a solicitor. Solicitors are one of the few professions where it is compulsory to have professional indemnity insurance.”
Regulation of companies offering contingency fee services was considered by the Lord Chancellor's Department in the Blackwell Report in 1999.
It concluded there was not enough evidence to justify regulating those who were not legally qualified, but offering quasi-legal services.
A spokesman for the Lord Chancellor's Department, which would be responsible for any regulation of the no win, no fee companies, said the onus should not necessarily be on the companies.
He said those looking to pursue personal injury claims should also take responsibility. “There is a certain responsibility on consumers to shop around,” he said.
Kelly said some of the concerns about no win, no fee companies could be assuaged by encouraging people to take out before the event insurance instead.