It was announced on the 16th November that the Government is to propose an increase to the small claims limit for personal injury claims from £1,000 to £5,000. For some this could initially be perceived to be a positive move, however there are many factors to consider before such a dramatic change to the law. A secondary element to the proposal involves a cap on claims for minor injuries sustained in a car accident to just over £400.
It was in last year’s statement in Autumn that the then Chancellor, George Osborne, revealed the Government’s consideration towards such changes, which have now been formally released.
The proposed changes featured on BBC Radio’s You and Yours programme on 15th November. If you’d like to listen to the interview, you can do so here, with the relevant section starting at 1 minute into the podcast:
[image source: bbc.co.uk]
The crackdown targets whiplash claims, which are often perceived to be made fraudulently. These claims are often pursued by claims management companies, who are not beholden to the strict regulations that solicitors must adhere to.
Brett Dixon, Consultant Solicitor at Smith Jones and Vice President of The Association of Personal Injury Lawyers (APIL) has stated, “The proposals as put forward take the law back to the dark ages” due to them potentially making it much more difficult for people, who have been genuinely affected by an injury which was caused by a third party’s negligence, to make a claim.
The Ministry of Justice announced that there will be a public consultation in advance of any new laws being made. Brett Dixon explained one of the issues is in relation to the sale of claims by Claims Management companies; “One of the perennial problems that we all come across is cold calling.”
“That (cold calling) could be banned very effectively” he explained, “As a solicitor, anybody that behaves in that way and regulated by SRA should be reported and I would expect them to be struck off.”
Mr Dixon added: “What you end up with in the small claims court where you have an insurer on the other side is that you are left alone in that room without representation and your opponent does have legal representation.”
It is suggested that the proposed change to the small claims limit would help drive down insurance premiums by around £40 per year, however there is scepticism around whether this would actually be forthcoming, due to past instances where radical reform in the personal injury law sector has promised savings, but premiums continued to increase. As such it is thought that personal injury claims cannot be blamed for the increase in car insurance premiums.
As it stands, Mr Dixon went on to explain, the proposed changes will leave an injured person with three options. “Represent themselves and hope that they are treated fairly by everybody; to pay for legal representation out of their damages, which if it’s reduced causes more of a problem; or simply not proceed and make a claim against someone who has negligently caused them an injury.” What the Government seems not to be addressing is the somewhat exploitative behaviour of claims management companies in cold calling people and encouraging them to pursue a personal injury claim, even if there has been no injury on their part.