October 12, 2011
Giving evidence to the Transport committee, alongside Spencers Solicitors director John Spencer, Jack Straw former home and justice secretary, said that claims management firms and credit hire companies are "parasites in the system".
John Spencer argued in the session that unless the government tackles systemic failings within the personal injury industry, a ban on referral fees alone may do more harm than good:
"A key component of any ban will be adequately defining what a referral fee is and consequently what it covers," he said. "For example, will the government include ancillary services which are also involved in personal injury claims, such as car-hire companies, in the ban?"
He added: "There are also a myriad of question marks over advertising standards and data protection, with unsolicited texts, cold calls and adverts which encourage litigations, being used to the detriment of the public and the injured party alike.
"We also need answers as to what the advent of Alternative Business Structures, will do to the personal injury system. Could a claims management company or insurer take over a law firm? Market rumour is indicating that a vast majority of CMCs have expressed interest in doing just that when the time comes.
"The practice by which insurers intercept claimants before they have access to independent legal advice, also needs to be properly regulated.
"A culture of profiteering within the system has created these corruptions. While they remain unaddressed accident victims will continue to be treated as commodities and the public will continue to pay the price."
Read the full article CMCs verging on "criminal" on the Post Online website.