If the legal sector had hoped that the Government might back-track the proposals to reform the personal injury sector announced by Chancellor, George Osborne, in last year’s Autumn Statement, then those hopes were dashed last week. Speaking at the annual conference of the Association of Personal Injury Lawyers (APIL), Justice Minister, Lord Faulks, told the audience there will be no retreat or backtracking on the proposed and controversial plans to fundamentally reform the personal injury sector.
Speaking to delegates, Lord Faulks confirmed that the Ministry of Justice intends to press ahead with proposals to scrap general damages for whiplash claims and raise the small claims limit to £5,000 for all personal injury claims.
Last November the Chancellor pledged to bring down motor insurance premiums by at least £40 a year and announced the plans for immediate consultation on the matter. However, the promised consultation has still yet to materialise. Lord Faulks assured APIL members that the government intended to start the consultation process after the conclusion of the EU Referendum. After that process was completed he confirmed that the government would implement any ‘agreed’ changes through a mixture of primary and secondary legislation in 2017.
Although he remained adamant that the changes would be forced through, Lord Faulks did concede that the proposals – particularly the plan to remove general damages – would come as a ‘shock’ to practitioners. However, he maintained that the changes were necessary to help consumers:
“It is not right that people who try to cheat the system should get away with it and, in doing so, force up the price of motor insurance for other motorists,” he said.
“There is also no doubt that many such claims are driven by a substantial industry that encourages unnecessary, inappropriate or even fraudulent claims through cold calling and other social nuisances.”
When questioned about the proposed changes to the small claims threshold limit. Lord Faulks said that the threshold had been set at £1,000 for 25 years and, therefore, ‘the time was right to raise it as part of a wider package of reforms’.
Conference delegates also challenged the minister, asking where insurers’ savings from the Jackson reforms had gone and what help litigants would have if the small claims limit was increased. In response Lord Faulks admitted he did not know what had happened to any increased revenue for insurers following the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act in 2013, but he stated that he was confident insurance firms will pass on savings from the forthcoming changes, adding:
“We will be monitoring the effect of the reforms on the price of insurance and will consider further action if the premiums do not reflect reduced costs,” he said.
“I can hear the scepticism but it is a market. It is in the interests of insurance companies to attract customers; therefore they will have a significant incentive to reduce premiums.”
His comments were immediately condemned as an attack on access to justice by campaign group, A2J. It stated that Lord Faulks ‘has made it clear he is not interested in justice for millions of ordinary people who, thanks to the government’s plans, will be denied the right to redress for injuries received through no fault of their own’.
The Law Society also promised a ‘robust’ response to the consultation. Chief executive Catherine Dixon told the conference that reform of the personal injury sector implemented in 2013 needs more time to be analysed before further changes are made, stating:
“The government seemingly believes that plans to raise the small claims limit for personal injury claims to £5,000 and abandon general damages for “minor” whiplash injuries will help stop fraudulent claims. We disagree,” she said.