The government recognises that many consumers have not had a fair deal when using the services of intermediaries to claim compensation.
The method of operation of some claims management companies in the personal injury market has been a cause concern for sometime. In 2002 and 2003 the two largest companies - Claims Direct and the Accident Group - collapsed. In 2004 a Report by Citizens Advice, No win, no fee, no chance described some of the problems (CAB evidence on the challenges facing access to injury compensation)
To address this the Compensation Act 2006 provides for the regulation of companies and individuals that provide claims management services.
The Act creates the outline regulatory framework to authorise providers who would be required to comply with rules and codes of practice. The Act also includes power for the Regulator to investigate unauthorised activities and to prosecute those who try to evade regulation.
Once authorised, businesses will have to comply with strict regulations and rules covering -
Initially the regulations and rules will cover claims in respect of -