More Transparency Expected from Personal Injury Claims Management Companies
According to the Citizen’s Advice Bureau, it is a “civil and legal right” to make an accident claim, yet 69 percent of people do not do this . There are many reasons for this, just some of which include not having the right knowledge, or not having the funds available to submit and support a claim. Yet it is possible that these problems can be rectified by doing some research online and looking into suitable options; perhaps the industry still has some work to do in order to make information clearer.
This is something that the Ministry of Justice is also keen to do; they are currently preparing to follow up their consultation on introducing more stringent rules for claims management companies with a third inquiry into fines early next year. The idea is that they can clamp down on poor industry practices to make decisions much easier and safer for consumers.
Personal injury claims management companies (CMCs) are already down 38 percent (as of the end of September) compared to the same period in 2012, following the MoJ’s Conduct Rules which were introduced in July. The new consultation on proposed fines for CMCs accused of poor practices will go hand-in-hand with the consultation to tighten the MoJ’s Conduct Rules.
The changes wanted by the MoJ in this area include:
● Ensuring investigations are carried out to establish the merits of a claim,
● Ensuring data received from introducers has been legally obtained / is compliant with rules,
● Not making claims recklessly, falsely or in any way intended to mislead.
These proposed amendments are expected to be introduced after the new year, and should help to promote transparency when it comes to claims management companies. It is not expected to increase the burden on CMCs who are already compliant with the regulations.
The MoJ released a report which makes for interesting reading for consumers and industry professionals alike. It speaks of the 38 percent personal injury claims management company shrinkage, as well as the implementation of the Conduct Rules. They say: “Most of the CMCs that have exited the market were small businesses, which had either ceased trading altogether or were focusing on the credit hire/bent metal aspects of accident management.” 
“This is almost wholly as a result of the civil justice and related reforms to this sector introduced in April 2013. We anticipate that the personal injury claims market will continue to contract in 2013 and beyond as CMCs who are unable to adapt their business model to comply with the referral fee ban, exit the market.”
The report also explained that many personal injury focussed CMCs had been successful in adapting to the referral fee ban through the shift in business practices. This includes the amendment of models in order to make them compliant with the ban; popular solutions involve marketing schemes and service agreements. At the end of September 2013, there were 1485 authorised firms out of a total of 2350.
CMCs will need to closely monitor changes to regulations to ensure they are providing consumers with the correct information, but it will lead to much more transparency that could even lead to more people following their civil and legal right to make a claim.
 First Personal Injury, www.firstpersonalinjury.co.uk