THE RIGHT TO REDRESS

June 2006

CAMPAIGN BRIEFING

REFORMING THE PERSONAL INJURY COMPENSATION SYSTEM

The right to redress is a key consumer principle. When something goes wrong consumers expect something to be done about it, whether that means rectifying the problem, securing compensation, having an investigation, or, sometimes, just getting an apology. This is no less true when you have an accident than when you buy a faulty product. Despite claims that the UK has a compensation culture the total costs of compensation cases in Britain has stayed the same since 19891. Consumers should have quick and easy access to redress, but the current personal injury system can be lengthy and complicated. Which? wants to see the system reformed so instead of feeling confused and vulnerable, people are empowered to make choices about whats best for them, whether their injury was caused at work, in a motor accident or in a public area. Which? welcomes the Compensation Bill to regulate claims management companies, which will ensure proper protection for consumers. Which? has identified seven principles for any redress system: accessibility, independence, fairness, transparency, effectiveness, efficiency and confidentiality. Our proposals for reforming the personal injury compensation system are built around these principles.

ACCESSIBILITY
Recent research by the Department for Constitutional Affairs (DCA) shows that 85 per cent of adults have recently seen, heard or read something about compensation payments for personal injury2. The growth of claims management companies and the plethora of adverts are largely responsible for this awareness (89 per cent said they had recently seen TV adverts about personal injury compensation payments). But this awareness is not translating into claims in fact only about 31 per cent of accident victims actually claim compensation using legal processes3.

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for all consumers

Which? believes there needs to be a consumer gateway to provide consumers with this information. This could be through extra funding to Consumer Direct or another consumer-facing organisation, such as Citizens Advice or Community Legal Service Direct. The Independent Complaints Advocacy Services (ICAS) could provide a similar gateway for people wanting to make a claim relating to their medical care. Specialist advisers could discuss an individuals circumstances and then give quick and easy guidance on whether they might be eligible to claim and their routes for doing so, including approaching the insurer directly, pursuing a small claim in the county court or going through the new NHS redress scheme. Such a referral service would ensure consumers have sufficient information before they make a claim so they do not inadvertently exclude themselves. They would also get information on what sort of compensation might be eligible for example, for the injury itself, stress, loss-of-earnings and rehabilitation.

INDEPENDENCE
Providing information through an organisation like Consumer Direct will ensure consumers get independent advice. The Association of British Insurers (ABI) has already said it will fund an advice line; Which? would like to see this funding put into the consumer gateway. Furthermore, when insurers provide free legal advice to consumers pursuing their claims this has to be really independent and not tied to the insurers choice of solicitor. Curbing access to legal advice for consumers is not a suitable way of speeding up the system, but by providing alternative sources of advice consumers wont always need to instruct lawyers for relatively straightforward cases.

FAIRNESS & TRANSPARENCY

Crucially, consumers should also get guidance on how to fund claims. The DCAs recent research shows that TV, radio and press adverts are strongly suggesting to consumers that claiming for personal injury wont cost them anything at all4. However, even under a no win no fee arrangement you may end up having to pay for after-the-event (ATE) insurance, medical reports and disbursements. Furthermore, many consumers are likely to be taking out ATE insurance unnecessarily because they are already covered by an existing insurance policy, such as car or home insurance, or could get help from their trade union. For consumers to make an informed choice, they also need to know all the facts. So the system must become more transparent. Consumers should be made aware of any referral fees, whether these are paid by solicitors to claims management companies or to trade unions.

The ABI has proposed setting a new public tariff of damages. We agree this would help claimants understand how the level of damages is calculated but are concerned that a simplistic tariff for injuries would not take into account an individuals situation, such as the impact of the injury or of the circumstance of the accident. The Government should commission research to find out how public compensation tariffs operate in other countries to ensure such a scheme would not cause any detriment to claimants. Furthermore, we do not support the ABIs proposals for penalising consumers for putting forward ill-founded or exaggerated claims, which would undermine their fundamental right to go to court. It is worth noting these are not the same as fraudulent claims, for which people can be prosecuted (although there is no evidence that such claims are a major problem).

EFFECTIVENESS & EFFICIENCY

The key benefit of giving consumers early access to independent advice is enabling them to make a choice. Much of the debate around reforming the personal injury compensation system has been couched in terms of whats best for the consumer with lawyers, insurers and trade unions all claiming to know what this means. But in fact, what is best for one consumer may not be for the next. In some cases, all people want is an apology. In another, an early quick settlement may be sufficient even if it is not for the full amount they may get, months later, through litigation. Which? believes giving consumers better information will also help to ensure the early notification of claims. This is necessary for a fair and efficient system that restores claimants to the position they were in before the event. However, while setting a time limit of around six months may be suitable for low value claims we would not want to see this enforced for those with more complex injury claims. We also believe there should be uniform guidelines for when the insurance industry should pay out, particularly for relatively straightforward, low value claims. The DCA supports this idea. Early admission of liability would speed up the process, ensuring claimants get compensation and rehabilitation as soon as possible. We also agree with the DCA that where there is an early admission of liability there should be no success fees paid to solicitors. In addition, forms should be filled in in triplicate at the beginning of the process rather than having different professionals filling them in at different stages throughout. These measures would keep the costs down, which are, of course, ultimately picked up by consumers.

We would support initiatives to ensure rehabilitation is more widely available and offered more quickly after accidents occur. However, consumers should still be given a choice both in location and in type. Crucially in medical negligence claims people should not only be offered rehabilitation services where their initial injury occurred.

Small Claims Track

Which? believes the small claims court is a quick, easy and fairly cheap way for consumers to get redress. Our past research has shown the system strengthens a consumers weak bargaining position and the leverage of issuing a claim can dramatically improve the chances of being offered an early settlement, which a lot of claimants accept. Many people were also able to navigate the system independently and represent themselves. We think the 1,000 limit for personal injury claims is probably set too low and have some sympathy with the recommendation of the Select Committee for Constitutional Affairs to raise it to 2,500, although we cannot endorse this figure without our own research. While you are clearly going to feel differently making a claim for personal injury than for a general consumer issue, we believe the small claims track is sufficiently consumer-friendly for this limit to rise without any detrimental impact on consumers. Nonetheless, we will be interested to see the results of the Governments pilot of a small claims support service in Reading, which aims to advise consumers on court procedures and help them prepare for their hearing.

CONFIDENTIALITY
Clearly at a time when consumers are feeling stressed and vulnerable they need to be treated with dignity and respect. Which? is particularly concerned about recent publicity for schemes where claims management companies and claimant lawyers can buy and sell personal injury cases. Consumers have a right to know from the outset who will be handling their claim and should not have their circumstances traded like commodities from which people can profit.
FOOTNOTES 1 Better Regulation Task Force: Better routes to redress, May 2004 2 DCA: Effects of advertising in respect of compensation claims for personal injuries, March 2006 3 Citizens Advice: No win no fee no chance, December 2004 4 DCA research as above

FURTHER INFORMATION
Please contact: Louise Restell Tel: 020 7770 7823 or louise.restell@which.co.uk Printed and published by Which?, 2 Marylebone Rd, London NW1 4DF

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