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Ministry of Justice drives on with changes to fixed recoverable costs in the RTA portal scheme

The ban on referral fees in low value RTA cases and changes to the Fixed Recoverable Costs (‘FRC’) regime in the RTA portal scheme will go ahead as planned in April 2013.

In November 2012 the MoJ invited proposals on the planned changes. This FRC consultation closed on 4 January 2013. In total the MoJ received 763 consultation responses, of which Claimant law firms and bodies made up 96%. Their arguments were: 

  1. Banning referral fees was not connected to a need to reduce costs; 
  2. The proposed new costs under the portal were insufficient to enable solicitors to provide the minimum level of work on a case required by the Solicitors Regulation Authority; 
  3. The proposals would affect access to justice and lead to a reduction in the quality of legal advice; 
  4. The proposals would lead to an increase in fraud. 

However the MoJ did not find enough evidence to substantiate the above concerns. It considered that claimant lawyers remaining in the market will be likely to take on the cases left by any who have chosen to exit. In the MoJ’s opinion the referral fee ban provided reasonable grounds for considering that current FRC’s should be lower in future. 

As a result the FRC for RTA Portal claims up to £10,000 are to be reduced from the current figure of £1,200 down to £500 from the end of April 2013. 

The RTA Portal Fees for cases up to £25,000 will reduced to £800 when new protocols are implemented in July. These protocols also affect Employers Liability and Public Liability claims, where the FRC will be lowered to £900 for lower-value cases and £1,600 for cases up to £25,000 

The report is a resounding victory for Defendant insurers and it is hoped it will lead to a reduction in car insurance premiums. However this may not be the final word on the matter. At the time of going to press a judicial review hearing is set to take place in the High Court, led by APIL and MASS. Those involved in Claimant RTA work under £10,000 will be hoping they are successful.

Vaughan Jacob / 1st Mar 2013


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