Press release

New whiplash and PPI claim rules

The latest stages of the government’s work on compensation claims take effect today (Wednesday 1 October 2014) with new measures around whiplash and PPI claims.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Lord Faulks

The fees medical professionals can charge for preparing whiplash injury reports have now been fixed at £180, to reflect the time taken to carry out assessments and write them up. Previously prices of up to £700 were being charged, leading to concerns that they could be used to generate profit. The new fee is part of measures to drive down the amount being paid unnecessarily by insurance companies on fraudulent claims, which will enable them to pass on savings to honest customers. Government reforms have been credited for leading to quoted motor insurance premiums falling. Latest figures from the AA show a record fall £120 in the past year.

Tough new rules set by the Claims Management Regulation unit at the Ministry of Justice (MOJ) have also come into effect today which prevent regulated claims companies from submitting poor quality claims for compensation for mis-sold Payment Protection Insurance (PPI) and other products. High volumes of badly compiled claims have caused delays to genuine applications being resolved.

Under the changes, claims firms have a duty to make sure the claims they are submitting have a realistic chance of success, as well as ensuring full evidence is provided to back up any allegations. Firms will also have to carry out thorough audits of how data they use has been gathered, so they can no longer turn a blind eye to whether leads have been found by illegal marketing texts and calls.

Justice Minister Lord Faulks said:

We have made major reforms to turn the tide on compensation culture, to drive down insurance premiums and help honest people.

This has already had a significant impact on the amounts people are having to pay, and we are determined to keep on pushing to help them.

The changes are the latest of a series of government moves to tackle compensation culture, including:

  • Transforming no win, no fee deals so lawyers can no longer double their fees if they win, at the expense of defendants and their insurers
  • Banning ‘referral fees’ paid between lawyers, insurers, claims firms and others for profitable claims
  • Reducing by more than half the fees lawyers can charge insurers for processing basic, uncontested claims for compensation for minor injuries suffered in road accidents – from £1,200 to £500
  • Banning claims management companies from offering cash incentives or gifts to people who bring them claims. Recommend a friend deals also banned, along with contracts agreed only over the phone
  • Naming claims firms under investigation or subject to recent enforcement action
  • Changing the law so that regulated claims companies which breach Claims Management Regulation Unit rules around cold-calling and client service will be liable for fines of hundreds of thousands of pounds (as well as the existing sanctions of being suspended of closed down)
  • Introducing proposed law changes currently being considered in the Criminal Justice and Courts Bill which will also ban law firms from offering incentives to potential clients and allow the courts to throw out any compensation case were part has been proved to be fundamentally dishonest
  • Outlining new reforms to medical assessment for whiplash claim which will drive out fraud
Published 1 October 2014