RTA Portal fee cuts confirm sectors worst fears
Industry News : 28 February 2013
It was confirmed today by justice secretary Chris Grayling that RTA Portal claims worth up to £10,000 will have their fixed recoverable costs slashed to £500.
Grayling stated in a consultation response published today that fixed costs will be cut from the current figure of £1,200 from the end of April, confirming the sectors worst fears.
Furthermore, from the end of July the sector will see the implementation of new protocols extending the scheme to £25,000 and to employer and public liability claims.
As a result, fixed costs for RTA claims with a value of up to £25,000 will be £800, whilst employer and public liability costs will be £900 for lower-value cases and £1,600 for cases worth up to £25,000.
The cost figures are identical to the proposals set out by Grayling last November which preceded a six-week consultation.
“I want to see claims handled quickly and efficiently so accident victims with genuine cases can be compensated as soon as possible”, stated Grayling, “That is why following consultation and careful consideration I have confirmed that changes to the digital system used for settling uncontested road accident claims will take place this year.”
“From April the costs lawyers can charge for using the scheme will be reduced to reflect the work and costs involved and from July the system will be expanded to include higher-value claims and accidents at work or in public places. These changes, along with our wider reforms, are intended to bring more balance to the system, make lawyers’ costs proportionate and in turn create an environment where insurers can pass on savings to their customers through lower premiums.”
The head of motor and liability at the Association of British Insurers, James Dalton, stated, “This is very good news for customers who will benefit through lower car insurance premiums as unnecessary legal costs are removed from the system. The government is to be congratulated for grasping the nettle on this issue and resisting the scare-mongering claims of ambulance-chasing lawyers.”
The Government said it had used the Jackson report and research by the Legal Services Board to find an average cost for RTA claims worth less than £10,000. The average cost will be £700 for each referral fee paid by a solicitor firm.
The MoJ response said it was 'appropriate' that a review of fixed costs should take the forthcoming ban on referral fees and the savings firms will make as a result into consideration.
A total of 763 responses were prompted by the consultation, with 729 from 280 claimant firms and bodies (around 96%) and just 22 from insurers and defendant firms (around 3%). A further 12 responses came from representative and expert organisations.
The announcement has come just days before a judicial review hearing led by claimant groups APIL and MASS is due to take place. The case, which is based around the reasons for the government's costs figures and the influence of the insurance lobby, will still go ahead in spite of today's announcement.
In its response, the Ministry of Justice said, 'The government decided in principle, in the autumn of 2011, that the abolition of referral fees should lead to a reduction in fixed recoverable costs.
'On 14 February 2012, following an insurance summit held at No.10 Downing Street, a commitment in principle to reduce FRCs was announced. Further work was then undertaken to gather evidence on the appropriate level of FRCs.'
Click the link below to download the Ministry of Justice consultation response (27th February 2013).