Compensation culture faces legal curbs

Britain is in the grip of the fear of a compensation culture, fuelled by unregulated claims companies that use aggressive advertising to raise and prey on false expectations, the Government said yesterday.

Britain is in the grip of the fear of a compensation culture, fuelled by unregulated claims companies that use aggressive advertising to raise and prey on false expectations, the Government said yesterday.

The Lord Chancellor, Lord Falconer of Thoroton, said unless the claims industry sorted itself out the Government would bring in laws to curb its behaviour. He said he was particularly concerned about "distasteful" advertising in hospitals that encouraged patients to bring frivolous claims against doctors.

He told the Insurance Times conference in London: "The advertising, the stories, they all create an atmosphere in which claims are encouraged and claimants given the green light to 'have a go'. I am opposed to the idea, or anything that promotes the idea, that where there is an accident there is always compensation. I am clear that there isn't always someone to blame: no blame, no claim."

Lord Falconer cited as bad practice advertising in which a young woman is seen looking at a sports car and saying: "I've always wanted one of those and now I have had an accident I can have one." He said claims companies were fuelling the perception of a "compensation culture" and increase the fear of being sued. Schools had cancelled trips and councils had cut down horse- chestnut trees because of fear of litigation.

The compensation industry has grown up after reforms that have given people greater access to the courts. "No win, no fee" agreements, championed by Labour, allow people with limited funds to take a claim to court.

Lord Falconer said the reforms had been misused by claims companies who promised clients much but often delivered little. To escape regulation, claims management companies would have to take urgent action to improve their service to consumers and ensure they did not raise false expectations, he said. They must also be "more upfront about their processes and fees, better quality control and the speedier conclusion of claims".

Months ago, the Master of the Rolls, Lord Phillips of Worth Matravers, warned that Britain was "edging closer" to an American-style compensation culture. He said statistics did not support the claim that Britain was in the grip of a compensation culture but there was a perception or fear of litigation that was changing the way we lived. Lord Falconer said, however, that accident claims had been "reasonably static" for four years.