Other Civil Justice issues: July 2017

Apart from the whiplash reforms, what else is Government addressing in terms of legal reforms affecting the insurance industry?  It would seem quite a lot at the moment.

Transfer of CMC regulation from the MoJ to the FCA

Carol Brady, Chair of the Trading Standards Institute, started looking into the CMC market in 2015, and published her recommendations alongside the Chancellor’s Budget in March 2016. She called for tighter regulation, and a transfer of the Claims Management Regulator from the Ministry of Justice to the Financial Conduct Authority.

The Government agreed with the report – the process of carrying through Brady’s recommendations has already started. There is a well-established team at the FCA who are taking this forward with Kevin Rousell, the Head of the Claims Management Regulator.

In terms of timescales, the time estimate for the completion of the transfer to the FCA keeps being pushed back – we are now looking at a longstop date sometime in 2019. Primary legislation is required to enact this; we have already seen the announcement and introduction of this legislation through the Financial Claims and Guidance Bill. This policy piece is not in itself controversial so we expect this to pass through both Houses without too much difficulty.

However, we must all be mindful of the synergies between this new regulatory framework and a new compensation system as proposed by the Government in its recent whiplash consultation response - particularly the projected increase in the small claims track limit.

Briggs: Online Court

The vision for an online court has been revealed in the final report of Lord Justice Briggs on Civil Courts Structural Review. This is the “the single most radical and important structural change” with which he is concerned. Whilst his view is that personal injury claims should be excluded, the online court may be relevant for those claims which soon will fall under the £5,000 small claims track limit. Briggs’ final report was published on 27 July 2016, and the relevant legislation is due to be taken forward by the recently announced “Courts Bill”, which we expect to be uncontentious.

Vnuk consultation

On 20th December 2016, the Department for Transport released its technical consultation on the impact of the Vnuk case on motor insurance.

The Government appear to be considering two options:

1. A ‘comprehensive option’ which would result in the UK’s law on motor insurance broadening its definition of a motor vehicle so that more vehicles were within scope and extending the compulsory insurance requirement beyond roads and other public places. This could mean users of motor vehicles would be required to have third party insurance on private land. The comprehensive option would enable victims of accidents involving uninsured or untraced drivers on private land to pursue a claim for compensation with insurers in the first instance on account of the requirement for insurance. This would mean that MIB would have to consider more claims for compensation.
   
   
2. An ‘amended Directive option’, whereby the EU would amend its own motor insurance Directive, thus broadening the definition of a motor vehicle in a similar way as for the comprehensive option. But the key distinction is that it would only require the users of motor vehicles to have third party insurance cover on land over which the public has access, whereas the comprehensive option would require insurance on private land. The amended Directive option would also provide more victims with a route to compensation, either through insurers or the MIB, than at present, though this would be fewer than would benefit from the comprehensive option.

The consultation ran until 13 April 2017 (the deadline was extended from the original date of 31 March 2017). Keoghs provided its draft response to clients well ahead of the submission deadline.

The Government’s response is due in mid-July (three months from the closing date), but this is very likely to be pushed back given competing Government priorities amid the disruption from the general election in June. The Keoghs Market Affairs Team is happy to assist clients with any queries that they may have on this issue as it progresses.