Around 2.5 million people in the UK sustain accidental injuries every year.1 As a result they may lose income or independence, and face lifestyle changes. Fault may rest with the driver of another car, a public authority such as a local authority or hospital, an employer or another individual whose action or inaction was the cause of the accident and the injury sustained. Under UK law the liable party must compensate the injured person for any loss (i.e. the polluter pays).
Far from there having been a recent boom in consumers claiming compensation for injuries, only 31 per cent of accident victims actually claim compensation using legal processes. Indeed the actual number of claims for injuries following accidents has reduced since the new method of funding legal actions in personal injury cases, the ‘‘conditional fee agreement’’, was rolled out, as the table in Appendix 1 shows. Since the abolition of legal aid for personal injury cases in 2000, CABx have handled over 130,000 enquiries relating to personal injury claims.
Seeking compensation for injuries and harm is not a social problem or the sign of the emergence of a ‘compensation culture,’ but simply realising a civil and legal right. Where an individual has suffered injuries, a compensation award can help them to afford help and services to enable them to adjust and fully recover or make up for financial loss. People who have been injured may have lost pay, or even their jobs, as a result of being unwell. They may have experienced a dramatic change in lifestyle where social opportunities were closed off to them, they may have incurred costs to adapt their life and their homes to deal with the injury, whether during a period of recovery or permanently. They may also have experienced stress, depression and anxiety. Failure to address these problems can contribute to social exclusion.
A financial award of compensation (damages) from the person or body responsible can help to reduce public costs of services and benefits to the individual affected. Also lessons learnt from claims ought to benefit others and the public at large by putting right the problems that caused the injury in the first place. Whether as employers, service providers or citizens, we all have obligations to avoid causing harm to others, and to take all reasonable steps to prevent such harm arising.
Contents
Summary and introduction
1. Background to the ‘no win no fee’ crisis
- Conditional fee agreements
After-the-event insurance
The rise of claims management
The practices of CMCs
The regulatory gap
2. The consumer experience of ‘no win no fee’
- Consumer entitlement
Sales practices and techniques
Poor claims advice
Poor quality of service from solicitors
Outcome for the client
The impact on the clients’ health
Conclusion
3. Options for regulation and market reform
- The regulation gap
Simplifying CFAs and law society regulation
Voluntary regulation of the claims management industry
Compulsory regulation of the claims management industry
Regulation of insurance intermediaries and credit brokerage
Regulation of doorstep sales and cold-calling
Joining up regulation
4. Towards a better funding system
- Reform of costs
Reform of compensation
Empowering and protecting consumers in the market
Options for creating a sustainable funding system for the future 37
Reviewing the indemnity principle
5. Towards a better process
- Alternative dispute resolution mechanisms
A Personal Injury Tribunal
A ‘no-fault’ system
Rehabilitation and prevention
6. Conclusions and recommendations
- The case for change
Recommendations for regulation
Recommendations for reform of costs and funding
Recommendations for reform of the compensation process
Bibliography
Appendix 1 Personal Injury Statistics
Appendix 2 International comparisons
Appendix 3 List of CABx submitting evidence
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No Win, No Fee, No Chance
