The move is one of several measures designed to combat the growing UK compensation culture. The measure will ban personal injury lawyers from offering cash rewards in order to encourage people to make accident claims that could lead to large settlements.
In the foreword to Lord Young’s October compensation culture report, David Cameron vowed to put a limit on the promotional activities of claims management companies that were contributing to the problem. The Prime Minister stated that lawyers have become too willing to pursue claims for damages, even if the pretext for such claims is slight.
Stating that the government cannot sit by and allow the situation to spiral out of control, Mr Cameron added that the Coalition will work to curtail the compensation culture perpetuated by the promotional activities of claims management firms.
Ministry of Justice head of regulation Kevin Rousell also commented on Lord Young’s report. Mr Rousell stated that the Ministry is planning to take all necessary steps in order to ensure that any concerns raised concerning the marketing practices of a select number of claims management firms are dealt with promptly.
According to the Ministry of Justice, approximately one out of every 20 regulated businesses are currently offering the kinds of cash rewards that would come to be banned under the new plans. Among those banned under the proposals would be adverts that offer an immediate £200 reward or a cash advance of £150 if a litigant’s claim is approved.
However one impact assessment determined that there may be a loss of efficiency for society if the proposal is adopted. This would be due to the lack of some socially beneficial cases being pursued if the incentives come to be banned by the government.