Whilst on the face of it, the MOJ’s response to Part 2 of its consultation seems to be the dampest of damp squibs, rather than immediately consigning it to history, it is worth considering how some of the potential areas of reform have been or may be taken forward outside the MOJ’s formal intervention.
Notification of referral source of claim
The Insurance Fraud Taskforce had recommended consulting on a mandatory requirement for referral sources to be included on CNFs, to increase transparency and reduce fraud.
The consultation response highlights the 2018 amendment to RTA CNFs, introducing a mandatory field relating to the referral source of the claim. However, the field includes the options “prefer not to say” and “other source”, which rather makes a mockery of this provision. Further, the referral source is not actually disclosed to the compensator, just to Claims Portal and solely for the purpose of sharing with the IFB.
In the OIC, the options were extended to the SCNF provisions, but this time the compensator is notified of the referral source, although the additional options above remain.
QOCS and late discontinuance
The consultation had asked whether a claimant should be required to seek the court’s permission to discontinue less than 28 days before trial.
It is perhaps unsurprising that no changes are recommended here. When the CJC low value personal injury working group considered the issue in late 2020, there was unanimity that this proposal would add an extra layer of complexity, cost and court resource. The defendant does already have the power to apply for a finding of fundamental dishonesty where there is late discontinuance or to force a trial by applying to set aside a notice of discontinuance.
QOCS of course, has significantly more issues than those covered in this consultation, and we understand that as a result of work being carried out on the fixed costs regime extension, there will be a further consultation relating to QOCS.
For example, in light of the decisions in Cartwright v Venduct Engineering Ltd (2018) CA and Ho v Adelekun (2021) UKSC, there are issues with a defendant's ability to recover costs following the late acceptance of a defendant’s Part 36 offer and to set off costs against costs. The Supreme Court itself was of the view that the judgment in Ho looked “counterintuitive and unfair” and “anomalous” (paras 44 and 45).
As a result of Ho, the key policy objectives identified in Sir Rupert Jackson’s final report are not being met, namely deterrence against bringing frivolous claims or applications, and incentives for claimants to accept reasonable offers. Successful defendants should be entitled to enforce costs orders against the sums received by claimants, whether that be damages and/or costs. It remains to be seen whether there will be further intervention in this area in the context of costs reform.
Credit Hire
Concerns had previously been raised about credit hire costs due to their potential impact on the price of motor insurance premiums.
A Competition and Markets Authority (CMA) investigation in 2014 declined to address the adverse effect on competition created by the way the replacement vehicle market works in at-fault accident claims since the “rate cap” they had initially considered would have required legislation, and the harm to the consumer wasn’t sufficient to justify it.
The ‘Call for Evidence’ forming part of this consultation gave a second bite at the cherry when views were sought on various potential operating models and the reforms that could address bad behaviours and improve consumer education. But the passage of time meant it was unlikely the MOJ were going to step in where the CMA felt they couldn’t, and they have cited developments since 2017. In particular the following factors arise:
- Work has been ongoing within the industry on reinforcing and revising the voluntary GTA, and there are now many industry protocols designed to remove friction.
- The post-Brexit economic squeeze.
- Case law following the 2014 CMA investigation has largely been favourable to defendants – Stevens v Equity (2015) CA (lowest BHR rather than highest), McBride v UK Insurance (2017) CA (excess reduction) and Putta v RSA (2020) HC (assessment of pecuniosity), and also GTA rates reduced.
- Many insurers now have outsource arrangements with CHOs in respect of their non-fault cases, making it more difficult to argue against the model.
- The Financial Conduct Authority began regulating Claims Management Companies from 1 April 2019.
- The 113th CPR Update in 2020 brought in additional requirements for a Statement of Case in credit hire claims and led to the implementation of model directions in OIC litigation.
- Ironically, the response comes too soon after the implementation of the Whiplash Reforms, and therefore the bad behaviours we are now beginning to see in the bent metal and hire space won’t have been apparent when the response was written, e.g. “bent metal spoofing”, the race to get a claim over £10,000, either with an injury claim to take it out of the OIC, or with no injury to secure standard basis costs (that costs lacuna still existing for now).
Within the stakeholder responses, the “Industry Code of Conduct Model” received the most support (even when duplicate submissions were removed) but made no recommendations for the education of consumers or to address bad behaviours.
The response concludes that the best approach would be to continue to work with key stakeholders in this sector to monitor and improve the use of industry agreements, including the GTA, with further consideration being given to whether it would be beneficial to make their use mandatory in the future.
Further action on this point is subject to alignment with future government priorities, as primary legislation, which takes time to progress, would likely be required. This is of course what stalled the CMA in 2014, and therefore it appears to be a case of history repeating itself!
On that basis, the “Non GTA / protocol” space, where arguably the customer information may be poorest and CHO behaviours are the worst, remains unchallenged. In the GTA / protocol space, life continues as before with the continued threat that if poor behaviours continue something might happen, though the Government isn’t sure what…
Rehabilitation
The issue of rehabilitation is where the MOJ has most to say about progress, albeit that is a fairly low bar. The response noted that “the MOJ will continue to engage with the sector, through FOIL, ACSO and other key stakeholders, to support the development of an industry Rehabilitation Code with a view to agreeing a cross sector approach to rehabilitation. Additionally, we will continue to monitor the provision of rehabilitation and how this may be impacted by the implementation of the new Official Injury Claims Service for unrepresented claimants. Further consideration of the feasibility of expanding the MedCo system to support the provision of rehabilitation option will be considered as a longer-term option.”
For some considerable time, the FOIL cross industry working group on rehab in low value claims has been trying to formulate a process whereby the friction from such claims is greatly reduced. Whilst a process is potentially not too difficult to envisage, and there seems to be a lot of common areas of agreement, the thorny issue of cost is yet to be considered. Reduced friction for the industry needs to be reflected in reduced costs for commercially driven rehabilitation otherwise, there is unlikely to be any real agreement.
It is also worth drawing attention to the wording of the MOJ’s response which does suggest they may have overlooked that there already is an industry Rehabilitation Code – it just is widely ignored in low value claims!
Helpfully the MOJ has, however, highlighted the support there was from the Call for Evidence for rehab to come under the remit of MedCo to ensure any industry agreements are effective, reflecting MedCo’s aims of independence, accreditation, audit and sanctions where needed. The MOJ also indicated this would in any event only be a “longer-term” option.
Restricting recoverability of disbursements such as medical reports
It is hard to remember exactly what the MOJ was driving at here as there was unlikely to be any support for parties not being able to recover the cost of a medical report. We had recommended in our response to the consultation that this could only really be an effective solution where a claim is presented outside the parameters of the new reforms, when the cost of obtaining the report should fall upon the claimant.
In any event, no changes are recommended.
Barème
The Call for Evidence sought stakeholder views as to whether a Barème type system should be developed for UK claims. Barème systems use a combination of fixed tables of damages alongside ‘points-based’ scoring systems to identify where a claim fits in terms of vehicle damage, injury severity and compensation.
This is an issue that could potentially be revisited in the event that the whiplash reforms don’t achieve their policy aim of reducing insurance premiums for consumers. We have seen and commented upon the difficulties caused by additional soft tissue injuries outside the definition of whiplash, and cases are (slowly) being gathered for a potential Court of Appeal test case to determine how such injuries ought to be valued after the implementation of the whiplash tariff in the Civil Liability Act.
The original question was whether a new scheme based on the ‘Barème’ approach, could be integrated with the new reforms to remove compensation from minor road traffic accidents related soft tissue injury claims and introduce a fixed tariff of compensation for all other road traffic accident related soft tissue injury claims (our emphasis). Whilst any Barème type system would need to be accompanied by a reduction in compensation awards in line with the whiplash tariff, it is encouraging that the Government recognised “there are good arguments for pursuing the implementation of a Barème system” and whilst the current reforms need to bed in, they will “continue to keep this option under review”.
Other suggestions
Finally, the MOJ noted a number of additional suggestions received in the Call for Evidence to control the costs of civil litigation. However, given the passage of time and the implementation of reforms since, e.g., the ban on cold calling and the extension of fixed costs (which may come in October 2022), no further specific actions are proposed at this time, “but they will be considered if the Government decides further reform is necessary to control the number and cost of claims.”
Conclusion
So, all in all, not a great deal to see, but it’s perhaps useful to remind ourselves that a number of options are still potentially on the table for the future if the industry doesn’t play nicely…
