Justice Committee recommends against raising the small claims limit, citing access to justice concerns

The government’s whiplash crackdown risks denying access to justice for genuine personal injury claimants, according to MPs.

The House of Commons Justice Select Committee recommended against the government’s plan to raise the small claims limit from £1,000 to £5,000 saying it “raises significant access to justice concerns.” 

Committee chair Robert Neill MP said: ”Access to justice, including the right of access to the courts, is a cornerstone of the rule of law, but these reforms risk putting that right in doubt.”

The committee’s report on the small claims limit, published this morning pointed out that claimants in the small claims track are unlikely to have legal representation, as they cannot recover legal costs even in the event of a successful claim.

”We conclude that increasing the small claims limit for PI creates significant access to justice concerns,” the report states.

The committed lauded the Ministry of Justice’s efforts to develop the Litigants in Person portal which will allow claimants to submit their claims themselves, but it questioned whether the portal would be effective. 

“We conclude that this ambitious project risks falling short of creating a claims process that guarantees ’unimpeded access to the courts’, a principle upheld by the Supreme Court in its judgment in the Unison case,” the committee said.

The committee said it is “troubled” by what it described as the absence of reliable data on insurance fraud, and recommended that the government work with the ABI “to develop a more nuanced approach that avoids conflating unexpected consumer behaviour with fraudulent activity”.

It also recommended that the government, the ABI, the PRA and the FCA should monitor the extent to which any reduction in premims can be attributed to the whiplash reforms, and report back after 12 months.

The MPs said that the small claims limit should be increased, but only in line with inflation from 1999, which would raise it to £1,500. 

The ABI defended the government‘s plans. James Dalton, Director, General Insurance Policy, Association of British Insurers, said: “The conclusions in today’s Justice Select Committee report on the Small Claims Track (SCT) limit read like a shopping list of asks from the claimant lawyers. If accepted, these recommendations would achieve absolutely nothing in terms of reducing the number and cost of whiplash-style claims, would allow lawyers to continue to line their pockets and honest motorists would continue to pay higher car insurance premiums as a result. In addition to every £1 paid in compensation to claimants, claimant lawyers get nearly 50p.

“Access to the justice system is important and the fact remains that under the Civil Liability Bill, compensation for whiplash claims will be fixed and a portal is being developed to facilitate access for people to make a claim with the support and guidance they need to do so.

 “We remain confident that our data provides a reliable and transparent indication of the levels of claims fraud detected by insurers and we are happy to work with Government and other stakeholders on this issue”.