Moves to regulate claims management companies – often accused of being ‘ambulance chasers’ – come into force today.
The Department for Constitutional Affairs brought in new laws imposing strict rules of conduct on the companies which, for example, offer legal help to sue after an accident.
They have previously been accused of using hard-sell tactics to encourage frivolous claims with no chance of success.
From today the firms must give potential customers clear information about the options available for pursuing a claim, and high-pressure sales tactics will also be stamped down.
Breaking the rules carries up to two years’ imprisonment.
The Lord Chancellor, Lord Falconer of Thoroton, had expressed amazement that some of the firms had been allowed to advertise in hospitals, encouraging patients to sue their doctors.
The Compensation Act will ban unauthorised marketing in hospitals and aim to reduce misleading advertising.
Constitutional affairs minister Bridget Prentice said: ‘Appropriate action will be taken against those who willfully flout the law.
‘The regulation has put in place vital safeguards for consumers when using the services of claims management companies and I am confident that it will also help raise standards across the industry.’
Lord Falconer has admitted there is a ‘damaging’ compensation culture in Britain.
In November 2005 he expressed his disappointment with the industry’s attempts at self-regulation.
The Claims Standards Council was set up in 2004 but only a small proportion of companies joined the body.
So far about 800 organisations have been registered under the new measures.
Consumers will be able to check if a company is authorised by visiting the claims regulation website or by dialling 0845 450 6858.
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