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D-Day for McLaspo

On Tuesday the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill was passed by the Scottish Parliament.

The Bill will introduce damages-based agreements (DBAs) and Qualified One-way Costs Shifting (QOCS) in Scotland.

This momentous piece of legislation will change the nature of the claims landscape across Scotland. DWF have worked hard to engage with the Scottish Government throughout all stages of this Bill with particular emphasis on:

• regulation of Claims Management Companies (CMCs) by the FCA and;

• the test for loss of Qualified One-way Costs Shifting (QOCS) protection where a claimant has acted fraudulently.

The attempts by Green and Labour MSPs to make it harder for insurers to establish fraud were ultimately unsuccessful, which means the test for fraud remains largely as recommended by Sheriff Principal Taylor. QOCS will be disapplied when a pursuer or solicitor "acts fraudulently in connection with the claim or proceedings, or makes a fraudulent representation".

The Act may come into force as early as June 2018.

Andrew Lothian, Head of General Insurance (Scotland) said:

"By introducing QOCS and DBAs, this legislation represents a fundamental shift in the Scottish claims environment. While it is pleasing that the Scottish Government now accepts the need for CMC regulation, and has retained a fair and balanced test for fraud, claim volumes will undoubtedly increase in Scotland. Much of the detail of costs implications remains to be determined and further work is needed in this area. In the meantime, insurers need to be aware of these changes and the how their Scottish claims are likely to perform as a result."

How DWF were involved:

Andrew Lothian gave evidence to the Justice Committee, on behalf of FOIL, on the importance of claims management regulation in Scotland and the impact of the new Bill;

• Andrew and Jill Sinclair, Head of Counter Fraud (Scotland) at DWF, met with civil servants, MPs and MSPs to highlight areas of concern to the insurance industry;

• The transfer of CMC regulation in England and Wales to the FCA was a perfect opportunity to press for regulation of CMCs in Scotland. Andrew had articles on CMC regulation published by the Press Association, Solicitors Journal, The Journal of the Law Society of Scotland and the Scotsman. It is pleasing to note that CMC regulation in Scotland will now happen via the Financial Guidance and Claims Act when it comes into force.

The Bill will now be submitted for consideration by the Lord Advocate, Advocate General for Scotland and Attorney General for four weeks and then proceed for Royal Assent. The Bill contains a provision that it comes into effect the day after Royal Assent, so it is possible this may happen in June before the summer recess.


For more information please contact Andrew Lothian Partner andrew.lothian@dwf.law

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.