Justice Committee Critical Of Plans To Increase Small Claims Track

The Justice Committee has published its conclusions following an examination of the impact of raising the small claims limit for personal injury claims.

Following a lengthy consultation with relevant parties, the Justice Committee has set out its response to proposals to raise the small claims limit for personal injury (PI) from £1,000 to £2,000, and to £5,000 for RTA-related PI claims.

The consultation included the hearing of oral evidence from Lord Keen of the Ministry of Justice and other interested parties in January 2018.

The conclusions can be summarised below:

The Committee was concerned by the absence of 'reliable data on insurance fraud' to support the contention by Lord Keen during his oral evidence that there was macro evidence of a claims culture in the UK; The the regulation of claims management companies (CMCs) made via the Financial Guidance and Claims Act, are welcomed, but further measures are need to prevent exploitation of any loopholes. The Committee stated its view that an outright ban would have been more effective; The Committee welcomed the engagement of the Government in working with the insurance industry in development of the new online portal, but were concerned about the technical challenges and ensuring equality of arms to those using the portal; Proposals

The Committee set out their proposals in response:

The current small claims limit for PI should be increased to reflect inflation, calculated from 1999. This would result in an increase to around £1,500.April 2019 was noted to be an appropriate time to make such a change; However, linked to this and the Committee's support of the proposed online portal, they suggested that any roll out be delayed until at least April 2020, thus delaying the proposed change to the small claims tracks limit (excluding EL/PL claims) further. Before introducing the proposed changes to the PI claims process, the Ministry of Justice should review the outcome of the post-legislative review of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012; The Financial Conduct Authority should impose a cap of no less than 20% on the proportion of compensation that CMCs can recover from PI claimants for their services; The Government monitor the effectiveness of the restrictions on cold calling within the Financial Guidance and Claims Act, reporting to the Committee within a year...