Claims Management Company - History

History

The abolition of legal aid for personal injury claims, the introduction of conditional fee agreements and the appearance of and growth in claims management companies led to a rapid expansion of litigation from the mid-1990s. This led to public concern at the development of a "compensation culture". The collapse of claims management company the Accident Group in 2003 increased disquiet with the system. Such companies used aggressive sales techniques and exaggerated claims, profiting from exorbitant commissions on after the event insurance policies. It was estimated that there were about 1,000 such companies in the UK in 2003. However, there was still evidence that many meritorious claims were discouraged by the difficulties and costs of litigation. These concerns, especially around the operation of conditional fee agreements, led to regulation of the market by Part 2 of the Compensation Act 2006. The activities regulated are those common to the market and which had caused concern:

• Advertising for cases;
• Advising a claimant in respect of claims;
• Certain large-scale referral activities;
• Investigating the circumstances, merits or foundation of a claim, with a view to litigation;
• Representing a claimant to any body, in writing or orally;

— in respect of claims:

• For personal injuries;
• Under the Criminal Injuries Compensation Scheme;
• For certain benefits arising from industrial injuries;
• In relation to employment law;
• For housing disrepair;
• In relation to financial products or services.