'Compensation Culture' Must Go, Says Govt

In an attempt to rid the county of 'compensation culture' the government intends to ban referral fees in personal injury claims.

Ministers said too many 'middle men' were pushing up the costs for ordinary claimants and insurance policyholders by taking fees for individual cases.

Claims management companies, insurance companies, lawyers and others charging for 'referring' the claim up the line are part of Britain's growing compensation culture which the coalition is determined to tackle.

Justice Minister Jonathan Djanogly said: "Referral fees are one symptom of the compensation problem and too much money sloshing through the system."

It is understood that the government’s plans will stop defendants having to pay 'success fees'. Instead the person making the claim will have to pay this fee.

Mr Djanogly said: "Many of the claims are spurious and only happen because the current system allows too many people to profit from minor accidents and incidents.

"People are being encouraged to sue, at no risk to themselves, leaving schools, business and individuals living in fear of being dragged to the courts for simply going about daily life."

The Association of British Insurers welcomed the move, condemning referral fees as adding no value and encouraging "spurious and exaggerated" claims for minor injuries.

Director-General for the association Otto Thoresen said: "It is important that the ban must be watertight and apply across the board."

"Banning referral fees is an important first step in tackling our dysfunctional compensation system, and needs to be accompanied by a reduction in legal costs and action to tackle whiplash if honest customers are to benefit from these reforms."

The Ministry of Justice said the ban would only cover the payment of fees made in personal injury cases.

(LB/CD)