The number of claims management companies registered to handle personal injury claims has fallen by 30% in just over a year, the Ministry of Justice has reported.
According to the MoJ’s Claims Management Regulation unit, there were 1,700 such companies in June 2013, down from 2,435 in March 2012.
The decline has been attributed to the changes in the law on no-win, no-fee deals that came into force in April this year, and the ban on referral fees in particular.
The unit said it had visited more than 450 companies in England and Wales since the ban came into effect – “leading to further investigation of 141, action taken against seven and 13 surrendering their licence to trade”. Four firms that were trading without authorisation have also been stopped.
The referral fee ban coincided with tougher rules on claims management companies, including a ban on firms taking fees from customers before a written contract has been agreed or signed.