Tuesday, 12 March 2019

Ceisteanna (89)

Pearse Doherty

Ceist:

89. Deputy Pearse Doherty asked the Minister for Finance his plans to regulate claims harvesting companies in the area of personal injuries; and if he will make a statement on the matter. [11527/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Allegations of companies engaging in what has been termed as ‘claims harvesting’ practices were brought up during the Cost of Insurance Working Group’s consultation process, as well as through representations and Parliamentary Questions submitted by, for instance, the Alliance for Insurance Reform and the Deputy himself previously.

The Department’s Insurance Policy section has undertaken research in respect of Claims Management Companies (CMCs), including engagements with relevant parties, most particularly the Law Society of Ireland and the Claims Management Regulation Unit, the UK body set up within the Ministry of Justice to regulate CMCs there. Following this examination, I do not believe there is a compelling argument at present for putting in place a regulatory regime for CMCs in Ireland for a number of reasons, which are set out below.

Firstly, and most importantly, there does not appear to be a sufficient number of CMCs operating in the Irish market to justify the establishment of a specific regulator. The Department has been advised by those with a level of expertise in this area that the number of active ‘claims harvesting’ websites operating in Ireland has significantly reduced from approximately 60 in 2016 to around half-a-dozen more recently. The Department has also been advised that between about 23 and 40 websites have been taken down directly as a result of the Law Society’s work in this area, at least two as a result of Orders from the President of the High Court following arduous and complex investigations.

Secondly, it would appear that many of the websites which are operating in Ireland may not actually be located within the jurisdiction nor within other EU countries. I understand that this factor increases the levels of complexity of investigations, as it can be particularly difficult to establish who the owners of the relevant websites are. My view, and that of the Department, is that in such circumstances it would be just as problematic for a specially appointed supervisor to determine basic facts such as ownership. Therefore, from a cost benefit perspective, it is difficult to justify incurring significant costs to establish such a role.

Thirdly, we have stringent rules in relation to how solicitors can operate in relation to advertising and generating business. In particular,

- the Solicitors (Advertising) Regulations 2002 prohibits solicitors’ advertisements offering inducements to make personal injuries claims, and

- Section 62 of the Solicitors Act 1954 prohibits solicitors from rewarding or agreeing to reward unqualified persons for the introduction of legal business, i.e., payment of a referral fee.

This is in contrast to the situation in the UK for example. The Irish rules are significant deterrents and are actively enforced by the Law Society.

Fourthly, it is our view that the setting up of a supervisor would afford CMCs a level of legitimacy and recognition which is certainly currently absent in Ireland. It would appear based on my officials’ conversations with the UK authorities that the referral fee ban has been widely circumvented there to at least some degree without the relevant entities losing their authorisation. This would appear to show that the tolerance level for referral fees is far higher in the UK than it is here. This is reflected in the fact that CMCs are seen as legitimate businesses in the UK and much of the regulatory work which the supervisor undertakes is related to matters of consumer protection, consumer awareness and ensuring adherence to applicable rules, rather than seeking to eliminate what we would consider as ‘claims harvesting’-type activity.

The UK supervisor also seeks to ensure adherence to relevant advertising regulations, but again the regulations in this country appear to be far more stringent, with, for example, a ‘no win, no fee’ policy being openly advertised on the main authorised Personal Injury CMC websites in the UK. As you are aware, such advertising is prohibited in this country.

My view is that the existing solicitor regulations have helped prevent the type of situation currently pertaining in the UK from evolving to anywhere near the same extent here.

In conclusion therefore, at this point in time, I do not believe a compelling case for regulation can be made from a cost benefit analysis perspective. It should be noted that under section 218 of the Legal Services Regulation Act 2015, when commenced, such advertising will no longer be regulated by the legal professional bodies as happens at present but by the Legal Services Regulatory Authority. Specifically, section 218(d)(vi) of the 2015 Act allows for the restriction of any advertisement which, in the opinion of the Authority, “expressly or impliedly solicits, encourages or offers any inducement to any person or group or class of persons to make claims for personal injuries or seek legal services in connection with such claims.” The Authority will be undertaking consultations for the making of regulations for the advertising of legal services by legal practitioners, whether solicitors or barristers, under section 218 of the Legal Services Regulation Act 2015. The Legal Services Regulatory Authority is expected to take over this responsibility in July 2019.

I will, of course, keep the situation under review, and my officials will continue to monitor the prevalence or otherwise of this issue. In addition, I would suggest that if anyone is of the view that particular solicitor firms are using such claim harvesting websites, they should report the matter to the Law Society/ Legal Services Regulatory Authority for investigation.