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Looking ahead

November 2018

With Brexit dominating the news and the political agenda there have been few headline grabbing developments in the insurance claims handling arena this month.

No-one was expecting any drama from the final 'Ping Pong' stage of the Civil Liability Bill, and the Commons amendments were approved uneventfully.

Technology is likely to be a feature of the coming year, and this month the Law Commission launched the first of a series of consultations to prepare for the advent of automated vehicles. The end of the month saw the announcement by the Department for Business, Energy & Industrial Strategy of three new research projects investigating how businesses can make best use of AI in insurance and law. 

Whilst uncertainty prevails over all aspects of Brexit, we continue to monitor progress of the European Commission's proposals to amend the scope of the Motor Insurance Directive and there was better news this month as the IMCO Committee of the European Parliament published draft recommendations attempting to rein in the Commission's proposals. Also in the motor arena, this week has seen the highly anticipated hearing in the Supreme Court of the appeal in Cameron v Hussain concerning the ability of a claimant to bring a claim against an unnamed defendant.

We look at developments below, along with our usual round up of forthcoming cases, and other issues on the horizon.

Forthcoming cases

Supreme Court

Local authority: protection from harassment. The Court of Appeal in CN v Poole Borough Council held that a local authority owed no duty of care in the exercise of its social services child protection functions, to protect two children from harassment by a neighbouring family. The Supreme Court heard the appeal on 16/17 July 2018. Read more on the Court of Appeal decision in our update from December 2017.

Professional negligence: solicitors. The appeal in Perry v Raleys Solicitors was heard on 27 November. In this professional negligence claim concerning the alleged under-settlement of a vibration white finger claim the issues are: (1) where a solicitor negligently fails to advise a client of a potential claim against a third party, and where that client then brings a claim against the solicitor, seeking damages for the lost opportunity to pursue the former claim: must the client prove, on the balance of probabilities, that the former claim would have been an honest claim? and, (2) in which circumstances should an appellate court interfere with a trial judge’s findings of fact? Read more in this Crown Office Chambers update.

Motor insurance: unnamed defendant. In Cameron v Hussain & LV= the issue is whether a claimant is entitled to bring a claim for damages against an unnamed defendant, if the claimant has been the victim of an unidentified hit-and-run driver, and the car the unidentified driver was driving is covered by an insurance policy, albeit one in the name of someone untraceable. The appeal was heard on 28 November.

Motor insurance: "use" of vehicle. The issue in R&S Pilling T/A Phoenix Engineering v UK Insurance Limited is whether on its true construction, a policy of motor insurance extends to liability for damage to the property of third parties because of fire caused by repair work to the car when it is immobilised. We now have confirmation the appeal will be heard on 13 December.

New - Permission to appeal. Asbestos related disease: disclosure. Permission to appeal has been granted in Cape Intermediate Ltd v Dring (for and on behalf of Asbestos Victims Support Groups Forum UK). At the previous hearings the issue has concerned the extent to which the court should grant access to documents by non-parties. We await further details of the issues upon which permission to appeal has been granted.

Court of Appeal

Update - Construction: pay less notices - “smash and grab” adjudications. An appeal in Grove Developments Ltd v S&T (UK) Ltd was heard in October and in a judgment handed down on 7 November, the Court of Appeal upheld the first instance decision of Coulson J, in a nutshell finding that "the employer, having failed to serve a Payment Notice or Pay Less Notice, is nevertheless entitled to adjudicate to determine the 'true value' of an interim application". Read more in our update this month

Update - Professional indemnity insurance: exclusion clauses. At first instance in Crowden v QBE Insurance, the defendant professional indemnity insurer successfully obtained summary judgment against claimants who had brought claims against the insurer direct, under the Third Parties (Rights against Insurers) Act 1930, after receiving negligent investment advice from a now insolvent financial adviser. The insurer successfully argued that the claim was excluded under the policy. The appeal was due to take place on 21 November but now appears to be listed for 18 December.  

Limitation: mesothelioma contribution claim. The case of RSA Insurance plc v Assicurazoni Generali Spa concerns the recovery of payments between insurers in a mesothelioma claim. HHJ Rawlings held that the limitation period was two years from the date of settlement, as in a damages contribution claim, as opposed to six years for a debt claim. The appeal is due to take place on 6 or 7 February 2019.

Costs: success fees in low-value PI claims. Litigation Futures reported in July that the Court of Appeal is to consider the legality of what has become the industry model for handling low-value personal injury claims, with firms charging clients a 100% success fee as standard. The court has given permission for a second appeal in Herbert v HH Law which is now due to be heard on 19 or 20 March 2019.

Acoustic shock: breach of duty & causation. The defendant has been granted permission to appeal in the case of Goldscheider v Royal Opera House in which the claimant viola player successfully alleged that during a rehearsal of Wagner's Ring Cycle he was exposed to noise levels which created a risk to and resulted in injury to his hearing, namely acoustic shock. The appeal is due to take place on 19 or 20 March 2019.

Jersey Royal Court

Update - Abuse claim: discount rate. We had been awaiting news following a trial which started in June and in which two victims of child abuse were claiming £238 million from the Minister for Health & Social Services in Jersey. The claims involved consideration of the law on discount rates, with the defendants seeking to argue that the principles in Wells v Wells and Helmot v Simon should no longer be followed. We understand that the parties have now reached settlement.


The following consultations are currently open:

New - Automated vehicles: law commission consultation. On 8 November the Law Commissions of England & Wales and Scotland launched the first of a series of public consultations about crucial reforms which will ensure the country is prepared for the introduction of automated vehicles. Three themes are covered in the preliminary consultation: first, how safety can be assured before automated vehicles are placed on the market, as well as ongoing monitoring and maintenance requirements once they are on the road. Second, criminal and civil liability. Finally, the need to adapt road rules for artificial intelligence. The preliminary consultation closes on 8 February 2019.

Update – Jersey Discount rate: Draft Damages (Jersey) Law. On 26 October the States Assembly of Jersey launched a consultation on a new legislative approach to setting the discount rate in Jersey, with the lodging of the Draft Damages (Jersey) Law. The draft Law addresses two issues relating to awards of damages for those who suffer long-term injuries and require ongoing care. It introduces a statutory discount rate for lump sum damages awards and it provides a statutory power to award damages by way of PPOs. The deadline for comments was 9 November and public hearings are currently in progress. The law is due to be debated on 4 December. Read more in Graham Dickinson's update The Discount Rate: The Channel Islands lead again and further details including stakeholder submissions and hearing transcripts are available on the States Assembly website.

Claims management companies: Senior Managers and Certification Regime. In September, the FCA launched a further consultation in preparation for them taking over the regulation of CMCs. All firms regulated by the FCA and authorised under the Financial Services and Markets Act 2000, along with individuals performing regulated activities, need to comply with the FCA's rules on professionalism, conduct and governance, known as the Senior Managers and Certification Regime (SM&CR). This consultation sets out the draft rules and guidance for CMCs relating to the SM&CR, and is open until 6 December. Read more in this helpful summary from Legal Futures.

Financial Ombudsman Service: SMEs & financial award. Following a consultation earlier this year, in October the FCA published its policy statement on extending access to the FOS to SMEs. At the same time it has issued a consultation, open until 21 December. Read more on the detail of both of these in our update last month Widening access to FOS for small businesses: FCA publishes policy statement, 'near final' rules and further consultation on FOS financial award limit

The following consultations await official responses:

If any client wishes to request any DWF consultation responses referred to below they can do so by emailing alex.fusco@dwf.law

Update - Motor insurance: implications of ECJ Vnuk ruling for UK legislation. Although the government has never formally responded to its December 2016 consultation Motor Insurance: consideration of the 'Vnuk judgment'  we know that its preferred option was for the Motor Insurance Directive to be amended in a way to avoid having to broaden the scope of insurance requirements to reflect the decision in Vnuk. As attention has now turned to the European Commission's proposal to amend the Directive we consider developments below under "Legislation". 

Reforming the soft tissue injury (whiplash) claims process - Part 2. In February 2017 the government published the first part of its response to the Reforming the soft tissue injury (whiplash) claims process consultation, to which DWF responded. Having initially incorporated its proposed whiplash reforms within the Prisons and Courts Bill, after the dissolution of parliament the whiplash provisions were reintroduced within this year's Civil Liability Bill which is currently progressing through parliament. In the meantime a second part to the consultation response is still awaited and is due to look at the outstanding proposals including, the Insurance Fraud Taskforce recommendations, credit hire and rehabilitation. In July, Part 2 of the consultation response received a mention in the government's response to the Justice Committee's small claims track inquiry with the government confirming that it "is currently working closely with stakeholders including from the insurance industry to take forward the IFT’s recommendations. Detail will be included in Part Two of the response to the whiplash consultation, which will be published shortly." As Simon Denyer points out in this month's Civil Liability Bill update we expect the MoJ to turn their attention to their response during 2019

Update - Review of Fixed Recoverable Costs. Jackson LJ published his Review of Fixed Recoverable Costs, to which DWF contributed, on 31 July. His proposals are to extend fixed costs in claims worth up to £100,000 along with the remaining fast track cases not yet subject to FRCs. The report is being considered by the senior judiciary and the MoJ, and a consultation will hopefully be launched before too long. Throughout the year there have been a number of comments from ministers to the effect that the government is considering the report and will announce the next steps in due course. The latest comment in almost identical terms to previous ones came from Justice Minister Lucy Frazer at the Civil Justice Council LASPO seminar on 29 June. In the absence of any meaningful developments recently, last month Litigation Futures published a handy recap of the Jackson reforms and the present position. This month, albeit on the specific issue of clinical negligence costs rather than the whole of the fixed costs proposals, Lord O'Shaughnessy responding to a question to the Department of Health and Social Care, said "Following a recommendation by Right Honourable Lord Justice Jackson in Review of Civil Litigation Costs: Supplemental Report – Fixed Recoverable Costs, the Department and the Civil Justice Council (CJC) set up a working party to develop a new process for clinical negligence initially up to £25,000 alongside new fixed costs. This working party is underway and the CJC is due to make recommendations to the Government in December."

Update - Review of low value personal injury claims including package holiday claims. In last October's call for evidence on measures to address holiday sickness claims, the MoJ also invited views on low value claims more generally and asked the Civil Justice Council to consider steps that might be taken to prevent unmeritorious claims and to resolve meritorious ones more quickly and with reduced costs. The outcome of the work done on package holiday claims was the introduction of the new Pre-action protocol for resolution of package travel claims along with fixed costs which came into force in May. In July, the government published a summary of the consultation responses and details of the way forward confirming for the first time that fixed costs would not be extended beyond gastric illness claims. And as we reported in June, attention has now turned to the review of low value claims more generally. A cross industry working party met for the first time in May to identify areas of focus which will include CMCs, fraudulent behaviour, processes, MedCo and expert evidence generally, ADR, the portal, sanctions and technology. The group was then due to report on those areas to the CJC in the summer. The synopsis of the CJC meeting (opens in pdf) in October reports that "The final report on Low Value PI Claims was nearing completion and would be ready for the January 2019 meeting."

Credit hire: model directions. In June 2017, the Civil Procedure Rules Committee issued a consultation on the "model order for directions to be used in credit hire cases". Acknowledging that the whole area of credit hire "remains a highly contentious area of litigation" the CPRC identified what they see as relatively simple steps that can be taken to narrow the issues and present the judge with the necessary evidence to make a determination. The proposed directions concern witness evidence and disclosure on impecuniosity and the agreement of hire rates. Stakeholders were urged to confer to try to achieve a consensus or risk a solution being imposed. The consultation closed on 1 August 2017 and DWF responded. Although there is no sign of a formal response we understand that some courts have already adopted them.

Default County Court Judgments. At the end of December 2017 the MoJ launched a consultation looking at the processes for money claims issued in the County Court. They have particular interest in views on limiting the circumstances in which an individual can have judgment entered in default against them without their knowledge. DWF submitted a response to highlight the issue of judgment being entered against policyholders in insurance claims when it is an insurer who will ultimately pay the claim – the MoJ had not identified this scenario in its consultation. The consultation closed on 21 February 2018.

McKenzie Friends. In February 2016 a Judiciary Consultation Reforming the courts’ approach to McKenzie Friends was launched following a Working Group review looking into the increasing numbers of fee charging McKenzie Friends. The consultation invited views on possible reform including the revision of Practice Guidance, or codification of the practice and procedure relating to McKenzie Friends. As part of that, the consultation asked whether there should be a ban on fee charging McKenzie Friends. DWF responded. In September 2017 the Judicial Executive Board announced that a large number of responses were received and that a further working group would review the proposals in light of the responses. In July, the issue received a mention in the government's response to the Justice Committee's small claims track report. The Committee had expressed concern regarding paid McKenzie friends and recommended that "the senior judiciary seek to conclude its examination of this issue as soon as possible." In response the government has confirmed that it "will work with the judiciary to make sure that their concerns are addressed." During the Civil Liability Bill debate last month, Bob Neill of the Justice Committee took the opportunity to press for a ban on paid McKenzie friends and received support from a number of MPs. In response Justice Minister Rory Stewart said "through consultation with the judiciary, we are looking at the issue of paid McKenzie friends. We are waiting for the judiciary to report back so that we can take action on that issue."

Legal services: insurance and compensation. In March the SRA launched a consultation on changes to the legal insurance and compensation rules with proposals including limits to the compensation fund and reducing minimum PII cover. The SRA says these changes will give firms more flexibility to choose the right level of insurance to suit their business and clients, while making sure there are still appropriate protections for users of legal services. The proposals include reducing the maximum single claim limit to £500,000 (£1 million for conveyancing); keeping the need for a six year run off period of insurance after a firm closes but capping the overall level of cover at £3m for firms that have done conveyancing work and £1.5m for other firms; and removing the need for compulsory insurance to include cover for large commercial clients. The consultation closed on 15 June following which some responses started to emerge, including criticism from both the Law Society and the ABI. July saw two reports on the issue from the Gazette: one on the potential for volatility to result and one from the SRA's Crispin Passmore explaining the reasons behind the proposed changes.

Solicitors Disciplinary Proceedings: standard of proof. In July the Solicitors Disciplinary Tribunal launched a consultation on the making of procedural rules in relation to first instance applications to the Tribunal. The current standard of proof used in disciplinary proceedings before the Tribunal is the criminal standard. The Tribunal is inviting views on whether instead it should apply the civil standard in line with other professional regulators. Whilst the move is clearly being considered for a number of reasons, it could be seen as complimenting the Insurance Fraud Taskforce's recommendation that the SRA toughen its stance on dishonest solicitors. The consultation closed on 8 October and over the past couple of months we have highlighted the responses from the SRA,  the Law Society and the Legal Services Consumer Panel. This month the Gazette reports on comments from SRA executive director Richard Collins that lowering standard of proof in disciplinary proceedings is ‘inevitable’, even if the change does not happen immediately.

FCA: regulation of claims management companies. In anticipation of the transfer of regulation of CMCs to the FCA on 1 April 2019, the FCA published a consultation setting out the draft rules and guidance they propose to make in relation to claims management activities, and the standards they think CMCs regulated by the FCA should have to meet. They have identified a number of harms in the sector which the proposals are aimed at addressing. Read more in the FCA press release and Legal Futures. Comments were requested by 3 August and DWF responded. A policy statement is due in Q4 2018.

Claims management companies: recovering the costs of regulation. On 20 August, the FCA opened a consultation on proposals for recovering the costs of regulating claims management companies when it takes over their regulation next year. The FCA estimates that the cost of setting up and delivering the claims management regulatory regime will cost £16.8m which will have to be recovered from CMCs. The consultation closed on 22 October and an FCA policy statement is due in December 2018. Read more on the consultation in the Gazette and on the consultation response from marketing collective First4Lawyers in Legal Futures.

Nuisance calls and messages: action against directors. On 30 May the government published a consultation proposing measures to hold company directors personally responsible for breaking the law in relation to unsolicited calls. The measures would provide the Information Commissioner’s Office (ICO) with the powers it needs to hold company directors directly responsible with further fines of up to £500,000. The consultation closed on 21 August. Read more in the press release from the Department for Digital, Culture, Media & Sport.

Update - LASPO Part 2: post-implementation review. In June, the MoJ published an initial assessment of the Part 2 LASPO reforms for its post-implementation review. The Civil Justice Council then held a seminar, where a number of speakers including Sir Rupert Jackson, Prof Paul Fenn, Prof Rachael Mulheron and claimant and defendant solicitors spoke about the key impacts of Part 2 of LASPO. The discussions covered a range of familiar issues, including: CFAs, costs budgeting, QOCS, the referral fee ban, and Part 36 consequences. High on the agenda (and now out of Looking Ahead's long grass) was the issue of DBAs which are not being effectively utilised; in part due to technical deficiencies in the regulations and in part due to the government's reluctance to permit hybrid DBAs. The mesothelioma exemption on recoverability of additional liabilities also received a mention (albeit the PIR is not directly considering mesothelioma claims or the exemption), as did the potential extension of the QOCS regime to police and/or professional negligence claims (bringing this issue out of the long grass as well). The CJC published a summary of the day's discussions and different aspects of the day were also covered by the Gazette, Litigation Futures and Legal Futures. The MoJ invited views and evidence by 24 August and DWF responded. Since then, the CJC has published its response and the Gazette reports on the response from FOIL. In September, APIL (pdf) and the Law Society published their responses, both helpfully summarised by Litigation Futures. In a separate LASPO Part 2 development this week the Lord Chancellor has announced that success fees will no longer be recoverable in defamation and privacy cases but that ATE will remain recoverable for the time being. 


Update - Whiplash reform: Civil Liability Bill. The Civil Liability Bill which was introduced in the House of Lords on 20 March contains the government's whiplash proposals to ban pre-med offers and introduce a new fixed tariff of compensation for whiplash injuries with a duration of up to 2 years. It also contains the provisions for changing the method of setting the discount rate. Although there was always broad consensus on the discount rate, the whiplash provisions were expected to receive a bumpier ride. Whilst there was vocal opposition at each of the debates, particularly in relation to the introduction of a tariff but also in relation to the proposed small claims track increase, the Bill ultimately progressed with relative ease. This month the Bill completed its final stage (Ping Pong) and now awaits Royal Assent. Read more in Simon Denyer's update Civil Liability Bill completes its parliamentary progress as attention turns towards the new claims landscapeYou can continue to follow the Bill's progress on the Bill's webpage.

Update – Motor insurance: amendment of the Motor Insurance Directive. The now infamous decision of the CJEU concerning a Slovenian tractor in Vnuk in September 2014, produced an interpretation of "use of a vehicle", for the purposes of the compulsory motor insurance regime, which was wider than the definition contained within the Road Traffic Act 1988 and thereby set in motion a review of the legislation both in the UK and Europe. Until May this year, all of the indications were that the Commission would propose amendments to the scope of the Directive so that it only related to accidents caused by motor vehicles "in the context of traffic". It came as a surprise therefore when at the end of May the Commission presented its proposals to amend the Directive but to reflect the position in Vnuk so that "[t]he 'use of a vehicle' means any use of the vehicle, intended normally to serve as a means of transport, that is consistent with the normal function of that vehicle, irrespective of the vehicle's characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion." The Commission's press release provides a short summary of the proposal, and additional documents can be found here. The proposal is currently proceeding through the European Parliament where discussions on the scope of the Directive are ongoing. This month the Rapporteur of the Internal Market and Consumer Protection Committee (IMCO) published her draft report which was debated on 21 November. The deadline for amendments is 27 November and a vote in IMCO is due by 29 January 2019. Read more in our update Motoring on - the bumpy road to MID reform

Update - Online court: Courts Bill. The Queen's Speech stated that this Bill will "reform the courts system in England and Wales to ensure it is more efficient and accessible, and in doing so utilise more modern technology".  We had presumed that this Bill would pick up from Part 2 of the Prisons and Courts Bill which included provision for the legal foundations for the introduction of new online procedures and online dispute resolution (ODR), and for the creation of a new online court that could deal with low value money claims below £25,000, as recommended by Lord Justice Briggs’ Civil Courts Structure Review. In March, the Lord Chancellor David Gauke said, "I hope to be able to bring forward further news on the courts Bill in the near future". In May, we reported that the newly introduced Courts and Tribunals (Judiciary and Functions of Staff) Bill which will allow judges to delegate tasks to court staff was not the Bill we expected. This month the Bill completed its journey through the Lords and moved to the Commons. A Commons briefing note was published in advance of the second reading which took place on 27 November and on which the Gazette reported here. During that debate, Chair of the Justice Select Committee Bob Neill urged the government "to find time for the legislative vehicle that will enable the modernisation of the court procedure rules on all civil matters to be brought forward." Also this month, the UKSC blog has published an interview with Lord Briggs in which he said, "The new Courts Bill has still not been launched, but we hope it will make provisions for an Online Court Rule Committee. Fundamental re-thinking of procedure rules will take some time, as the rules will need to be understandable by the people who produce the software for the online processes. At the moment we have adopted a temporary procedure as it will probably take one year from the passing of the Bill even to recruit the Online Court Rule Committee.”

Update - Third Parties (Rights against Insurers) Act 2010 (Consequential Amendment of Companies Act 2006) Regulations 2018. At the end of June draft regulations were published aimed at addressing one of insurers' main concerns about the 2010 Act, surrounding the ability of an insurer to seek a contribution from other tortfeasors. The Regulations were made at the beginning of the month and came into force on 23 November. Read more in our update this month Changes to third parties' rights against insurers.

We have also been following progress on two Law Commission draft Bills:

Update - Deprivation of liberty: Mental Capacity (Amendment) Bill. In 2014 the Law Commission began a review of the Deprivation of Liberty Safeguards (DoLS) under the Mental Capacity Act. The DoLS aim to protect people who lack mental capacity, but who need to be deprived of liberty so they can be given care and treatment in a hospital or care home. In March 2017 the Law Commission published its final report along with a draft Bill. It recommended that the DoLS be repealed and set out a replacement scheme called the Liberty Protection Safeguards. In February the Joint Select Committee on Human Rights launched an inquiry into the proposed reform of the DoLS and whether it is striking the right balance between adequate protection for human rights with the need for a scheme which is less bureaucratic and onerous. In March, the government published its final response in which it set out its provisional views on the individual proposals. In June, the Human Rights Committee published its report recommending that legislation implementing the Law Commission's Liberty Protection Safeguards is brought forward as soon as possible. It also recommended that parliament should provide a statutory definition of what constitutes a deprivation of liberty. Then in July, the government published the Mental Capacity (Amendment) Bill which this month has completed the HoL report stage. In advance of that stage, the Law Society produced a parliamentary briefing recommending a number of amendments. You can follow the Bill's progress here, and there is a helpful round-up of recent developments on the parliament website, including a link to a Lords Library Briefing Note which covers the background to the Bill, the differences between the Bill and the Commission's recommendations, and the Committee report. There is also a further useful update on the report stage from counsel, Alex Ruck Keene, on his Mental Capacity Law and Policy blog.

Insurance contract law reform: draft Insurable Interest Bill. In April 2016 the Law Commission and the Scottish Law Commission published a draft Bill following their review of the issue of Insurable Interest, having previously made proposals for reform in 2008 and 2011. They were asked to return to the issue due to the increased numbers of requests to write policies which include cover for children, cohabitants and to insure ‘key employees’ for substantial amounts. The draft Bill was intended to reflect the proposals set out in the issues paper and the Law Commissions invited comments on the draft Bill by 20 May 2016 with a view to publishing a final draft Bill and report in autumn 2016. The project was then put on hold due to other priorities within the team but on 20 June the Law Commission published their updated draft legislation. The extended deadline for comments was 31 October. Read more in the Law Commission press release.

Also on the horizon...

Update - Small claims track limit increase. Last December the Justice Committee launched a new inquiry into the government's proposals to raise the small claims track limit for personal injury claims. In May the Committee published its report highlighting significant access to justice concerns. Simon Denyer analysed the findings in this update.  In July the government responded to the Justice Committee report and in doing so announced a delay in the implementation of the whiplash and small claims proposals until April 2020. Importantly though, the government does not accept the Committee's recommendation to limit any increase in the small claims track limit to £1,500. Read more in Nigel Teasdale's update. In response, the Chair of the Committee wrote to the Lord Chancellor seeking further information on several points, including an explanation on how "the proposed increase to £5,000 for RTA PI claims is proportionate". Last month the Committee published the Lord Chancellor's response (pdf) (and summarised in Legal Futures) explaining the government's belief that setting the limit at a lower level than £5,000 "will fuel claims displacement".  There is also a helpful House of Commons Library briefing note on small claims for personal injuries including whiplash. The issue is or course intertwined with the Civil Liability Bill – which we discuss further above - albeit not forming part of it. Last month, at the MASS annual conference, Dominic Clayden, chief executive of the Motor Insurers’ Bureau, confirmed that the new system designed for litigants in person to run low-value claims is on course for April 2020. This month, with the Civil Liability Bill having finished its journey through parliament, attention will turn to the secondary legislation and Simon Denyer notes in his update that the small claims track statutory instrument is to be expected introduced in the second half of 2019. 

Insurance Fraud. We have for some time been waiting for the government's response to Part 2 of its whiplash consultation which sought views on certain recommendations made by the Insurance Fraud Taskforce in its final report in January 2016. The latest news on that came in the government's response in July to the Justice Committee's small claims track inquiry, confirming that it "is currently working closely with stakeholders including from the insurance industry to take forward the IFT’s recommendations. Detail will be included in Part Two of the response to the whiplash consultation, which will be published shortly." Also in July, the Solicitors' Disciplinary Tribunal launched a consultation on whether to lower the standard of proof in disciplinary proceedings to the civil standard, a move which could be seen as a response to the IFT's recommendation to toughen action against dishonest solicitors. In August the ABI published details of its most comprehensive analysis yet into insurance fraud with the headline One scam every minute – ABI reveals the true extent of insurance fraud in the UK, and in September held its annual fraud conference focusing on tackling fraud through collaboration and innovation.

Update - MedCo. In October 2016 the MoJ published revised Qualifying Criteria for MROs, effective from 8 November 2016. MedCo immediately suspended 134 shell companies for failing to comply with the new Qualifying Criteria and over the course of the next 6 months or so, MedCo reported on a range of enforcement action. In August 2017 MedCo warned against "inappropriate behaviour" during the audit process and in October MedCo published an FAQ document (pdf) to address common issues arising out of the Guidance supporting the revised Qualifying Criteria.In September MedCo provided an update on its audit programme, details of which can be found on the MedCo homepage, and Litigation Futures reported on news from its PI Futures conference that "the number of MROs on the MedCo system has shrunk by a third in only eight months." At the beginning of this month the Insurance Post reported (subscription may be required) that Medco has already started consulting over the creation of a 'litigants in person' portal on the back of the government's whiplash Bill. 

Update - Claims Management Regulation. Carol Brady published a final report following her independent review of claims management regulation in March 2016. The Treasury and the MoJ had commissioned the review to examine the perception of widespread misconduct among CMCs and to make recommendations to improve the regulatory regime. It was then announced that responsibility for regulating CMCs would be transferred from the MoJ to the FCA. This is being taken forward in the Financial Guidance and Claims Act 2018 which received Royal Assent earlier this year and HM Treasury has recently consulted on the accompanying draft regulations. A consultation which closed in August sought views on proposals to give the ICO powers to impose fines of up to £500,000 on individual directors of companies which breach the rules on nuisance calling. In July, the Claims Management Regulator published its 2017/18 annual report from which Legal Futures highlighted a move from holiday sickness claims into housing disrepair cases. August saw the deadline for the FCA's consultation on proposals for regulating CMCs and the start of new consultation on proposals for recovering the costs of regulation. September brought another FCA consultation, on proposals for applying their Senior Managers and Certification Regime (SM&CR) to claims management companies (CMCs); and the ban on cold calling in the absence of consent came into force. Last month The Financial Guidance and Claims Act 2018 (Commencement No. 4) Regulations 2018 were published, bringing into force the parts of the Financial Guidance and Claims Act 2018 which concern the transfer of the regulation of claims management services to the FCA. This month, The Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018 has been made after going through the affirmative procedure in parliament. This is the SI that was consulted on earlier this year and which transfers the regulation of claims management activities from the Claims Management Regulation Unit in the Ministry of Justice to the FCA.

New – FCA activity: market study and claims inflation. In addition to the work being done in relation to claims management regulation, at the end of last month the FCA launched a general insurance market study setting out the issues it will focus on as part of a review into how general insurance (GI) firms charge their customers for home and motor insurance. The FCA seeks input on the issues discussed in the terms of reference by 3 December. We also await details of the assessment of claims inflation in general insurance that was included in the FCA's 2018/19 business plan and was scheduled for Q4 2018/19.  The FCA is due carry out diagnostic work to assess how far brokers and motor insurers are inflating claims through referrals to CMCs and keeping volume discounts from their own repairers. This, they say, will give the FCA an understanding of the issues CMCs will need to address when they take over their regulation.

New – Artificial intelligence in insurance and law. On 28 November the Department for Business, Energy & Industrial Strategy announced three new 3-year research projects, to be led by Loughborough, Sheffield and Oxford Universities, investigating how businesses can make best use of AI in insurance and law. The projects backed by £3m through the Industrial Strategy Challenge Fund will focus on (1) how AI can be applied to processes such as underwriting and claims processing, speeding up the process for customers (2) how AI can be put to use in legal services bringing academics, lawyers, businesses and programmers together to develop the skills, training and codes of practice to deliver benefits (3) future uncertainties about the roll-out of new AI technologies in accounting and legal services and analysis of potential barriers to AI-based business model innovation. Read more in Legal Futures.

Update - Civil procedure: disclosure. Last November the Judiciary set out detailed proposals for a mandatory disclosure pilot scheme to run for two years in the Business and Property Courts. A Disclosure Working Group had been set up in May 2016 to look into widespread concerns about the excessive cost, scale and complexity of disclosure with a view to achieving a wholesale cultural change in the disclosure process. "The unanimous view of the Working Group is that a wholesale cultural change is required and that this can only be achieved by the widespread promulgation of a completely new rule and guidelines on disclosure which will apply for the majority of cases proceeding in the Business and Property Courts." After a slight delay in the rules being approved, on 31 July, it was announced that the scheme had been approved and the pilot will commence on 1 January 2019. Read more on the Judiciary website and in our update this month The Disclosure Pilot cleared for take-off.

Update - Civil Courts Structure Review: LJ Briggs' Final ReportIn July 2016, Lord Justice Briggs published his final report following his review of the structure of the civil courts. The headline recommendation was the introduction of an online court capable of handling claims with a value up to £25,000. A detailed summary can be found in the press release accompanying the report and you can read more in Simon Denyer’s analysis. In January 2017 the Lord Chief Justice and the Master of the Rolls issued a Joint Statement endorsing the report and supporting the recommendations. In the meantime a pilot began in September to trial a procedure that will allow legal representatives to file claims online at the CCMC. In April the pilot moved on to the 'Public Beta' phase and this month the Gazette reports on a paper prepared on the project by Birss J for the CPRC. The Courts Bill proposed in the Queen's Speech was expected to reintroduce the provisions enabling the creation of the new online court but the Bill is still awaited, although we report on further mentions of the proposed Bill in the Legislation section above.  In the meantime, the inaugural International Forum on Online Courts will be held in London on 3 & 4 December when there will be discussions on the successes, challenges and technological advances being made in justice systems globally.

Update - SRA activityIn July, we reported that personal injury claims feature in the SRA's risk outlook for 2018/19 as part of a new priority risk: managing claims. In the accompanying press release Paul Philip, SRA Chief Executive says, "... For the first time, we are highlighting how claims are managed as a key risk. This follows concerns over issues such as firms failing to properly check on the validity of personal injury claims…" We have also been following the SRA's work on transparency, including proposals to require law firms to publish pricing information and complaints data. In August the Legal Services Board (LSB) approved the new transparency rules, although having initially been part of the proposals, personal injury claims no longer appear to be covered by the new rules. The SRA is also sticking with plans to allow solicitors to practise from unregulated firms and enable freelance solicitors to do more, although In September it came under further fire for those plans, and again this month. It also issued a new consultation in August on proposed rule changes on the reporting of potential misconduct, and updated its warning notice in relation to holiday sickness claims (read more in the Gazette).  the SRA published its rules for dealing with the European Insurance Distribution Directive, its price transparency guidance and a statement on the implications of a 'no deal' Brexit for the legal sector. The new transparency rules will come into effect on 6 December.

In the long grass?

Issues where there has been no activity for some time:

We have kicked QOCS and DBAs out of the long grass for now as it appears they may both be looked at as part of the MoJ's post-implementation review of Part 2 of LASPO discussed further above. But with no meaningful developments since September 2017 we have reluctantly moved CJC's NIHL claims handling proposals to the long grass.

NIHL claims: Government action. In June 2015 the ABI published its report Tackling the Compensation Culture: Noise Induced Hearing Loss, improving the claims system for everyone, which highlighted concerns about the increasing numbers and cost of NIHL claims. In response to those concerns the MoJ asked the Civil Justice Council to consider the issue and make recommendations. The CJC published its long awaited report in September 2017, although Jackson LJ had spoilt the surprise by announcing and endorsing the agreed fixed recoverable costs matrix as part of his own review (see Simon Denyer's review of the proposals). The new news then was the proposals for reform of the claims handling process. You can read more about the proposals in our comprehensive update. We also took the opportunity to comment on the handling of NIHL claims in the call for evidence in relation to holiday sickness claims and low value personal injury claims.

Legal services regulation: removing barriers to competition. In July 2016 the MoJ announced a consultation on proposals to reduce barriers to market entry, and regulatory burdens on Alternative Business Structures in legal services. Lord Faulks’ ministerial statement also mentioned the government’s intention to consider a further consultation on regulatory independence. The current consultation closed on 3 August 2016 but to date there has been no response. In December 2017, while responding to the CMA Legal Services Market Study, the government confirmed it would not be going ahead with a consultation on regulatory independence as it believes there is scope to make more progress within the existing framework.


For further information please contact Alex Fusco, Professional Support Lawyer on 0161 603 5211.

You can find all previous editions of Looking Ahead here


By Alex Fusco

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.