Consulting on the Compensation Culture

One of the outcomes from Lord Young's review of Health and Safety is to question the marketing methods employed by some Claims Management companies.

The Issue

The issue that Lord Young identified is that a number of companies offer cash inducements to encourage accident victims to make claims for compensation. Such claims may be against businesses, employers or anyone who might possibly be held responsible for the accident.

Cash inducements are considered to be against the spirit, though not the letter of the rules set up by the government to regulate the Claims Management sector.

Under the 'Conduct of Authorised Persons Rules 2007', Rule 6(b) of Client Specific Rules states:

"A business must - - - not offer an immediate cash payment or a similar benefit as an inducement for making a claim."

A few companies avoid this restriction by offering cash payments "as soon as we accept your claim" or similar terminology that suggests the payment is not "immediate".

By offering such inducements, the claims companies are encouraging people to pursue claims through the legal system that may have little or no real merit.

Consequences

Over the past decade or so, this has given rise to a perceived "compensation culture" that makes everyone nervous in case a small mistake that results in a minor incident should become escalated into a costly court case.

The evidence suggests that this is more of a perception than a reality. However, as long as the perception exists, it inevitably affects the attitudes and practical reactions of people and businesses – often to the disadvantage of society in general.

The perception can be exaggerated by the media when they report on and raise the profile of compensation cases beyond what might be justified by the facts. Genuine Health and Safety suffers through being implicated in press stories – often unjustifiably – as being the justification for unwarranted claims.

Responding to Government Proposals

The government is proposing to amend Rule 6(b) to broaden the scope of inducements that are prohibited. Under their proposals the rule would be amended to read:

"A business must - - - not offer any cash payments or similar benefits as an inducement for making a claim."

These proposals, along with a few other tweaks to the 'Conduct of Authorised Persons Rules', are included in a Consultation currently being undertaken by the Ministry of Justice.

Whilst the Consultation is aimed primarily at the Claims Management industry, responses are welcomed from anyone.

If you have an interest or views on these changes then you can access the Consultation document, which includes a response form, on the Ministry of Justice website.

This is one small way in which we can influence the application of Health and Safety to genuinely save lives and keep people safe instead of being used as a convenient excuse for those who want to ban or avoid some perfectly legitimate activity.

To discuss your health and safety or environment requirements, without any obligation on your part, please gives us a call on 01744 766000 or complete the Enquiry Form on our website.

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