Relief for claimant PI lawyers as government decides against raising small claims limit

Grayling: turning the tide on the compensation culture

The small claims limit for personal injury cases will not be going up to £5,000, the Ministry of Justice (MoJ) announced today.

Instead it has unveiled a raft of other measures aimed at cutting the cost of motoring, including the creation of independent medical panels to detect fraudulent whiplash claims.

The government said the changes were “part of its plan to help hardworking people”, but it will be seen in legal circles as a major relief to hardworking claimant lawyers. The decision was predicted by this website just last week.

The MoJ has decided not to take forward the small claims limit increase in light of concerns raised during the whiplash consultation, particularly around giving other reforms time to settle down. However, it will be keeping the limit under review and has not ruled out a change in future.

In a statement to Parliament today, justice secretary Chris Grayling said there are “good arguments” for increasing the limit “to raise incentives to challenge fraudulent or exaggerated insurance claims”.

However, he had listened to the views of the transport select committee and others that “now may not be the right time” to raise the limit “because of the risks that it may deter access to justice for the genuinely injured and encourage the growth of those disreputable claims firms which so damage the industry”.

He continued: “At this stage, we have decided to defer any increase to the small claims threshold until we can determine the impact of our wider reforms on motor insurance premiums and better safeguard against the risks identified above. We believe that this is the right thing to do for all interests.”

The MoJ has also revealed that the number of claims management companies registered to handle personal injury work has continued to fall – from a peak of 2,553 in December 2011 to 1,902 in March 2013, before implementation of the referral fee ban, and 1,485 last month.

The MoJ said it will now “work quickly with experts” to implement the independent medical panels next year. This will include developing a scheme for accrediting medical experts who can assess whiplash injuries, enhancing the medical reporting process, improving information for medical assessments and carrying out spot checks to ensure quality.

The government claimed that figures from the AA show its LASPO reforms and “action on rogue claims firms” have already led to a 12% fall in average motor insurance premiums over the past year, equivalent to £80.

Mr Grayling said: “We are turning the tide on the compensation culture and helping hardworking people by tackling high insurance premiums and other motoring costs.

“It’s not right that people who cheat the insurance system get away with it while forcing up the price for everyone else – so we are now going after whiplash fraudsters and will keep on driving premiums down.”

Other changes to benefit motorists are a freeze on the statutory maximum price of the MOT test for a car (£54.85) until 2015, and trialling new comparison road signs which will show prices at different service stations along a route, making it easier for drivers to get the cheapest deal and encouraging competition on prices. The fees charged for the driving test will also be reviewed to identify any opportunity to save money for the 1.5m car drivers who take their test every year.

See blog here.