Costs reform in Scotland – Regulation of Claims Management Companies

Costs reform continues with unprecedented pace in Scotland.

Introduction

There are 2 key pieces of legislation which will impact on costs recovery and even, perhaps, how claims are presented in the future.

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill

As previously reported, the Civil Litigation (Expenses and Group Proceedings)(Scotland) Bill was introduced by the Scottish Government in June and has been proceeding through the Scottish Parliament since then.  The Bill seeks to build on the Taylor Review in 2013 and the un-enacted recommendations from the earlier Gill Review. 

Stage 1 of the Bill is due to conclude before the end of the year and the Justice Committee’s Report is expected shortly.  The proposed introduction of QOCS will be a formality although it is still hoped that improvements/amendments will be made during Stage 2 of the Bill to ensure that appropriate safeguards exist to provide defendants with some degree of protection against fraudulent claims.

Another major concern for the defendant community arising from the Bill was the absence of any provision to regulate Claims Management Companies.  The Scottish Government’s position had been that the regulation of CMCs was to be considered during the course of a separate review of legal services in Scotland.  However, the outcome of that review will not be known until next summer at the earliest, with any recommended legislation unlikely to crystallise until much later.

The Financial Guidance and Claims Bill

Following comprehensive representations led by the ABI and FOIL Scotland, the Scottish Government’s position has changed.  At the end of November, the Scottish Justice Minister confirmed that she had asked the UK Government to include Scotland within the scope of the Financial Guidance and Claims Bill and, following an amendment very recently approved by the House of Lords, CMCs in Scotland will also now fall under the scrutiny of the Financial Conduct Authority once the Bill becomes law next year.

This is undoubtedly cause for some festive cheer as there had been strong indicators of increased CMC activity in Scotland (16 CMCs had registered Scottish offices with Companies House in the past 12 months alone), no doubt fueled by the attractive new costs regime.  Now that this regulatory loophole has been closed, the defendant community can take some comfort from the fact that CMCs across Scotland, England and Wales will all face the same regulatory oversight.

Can we help?

We will be keeping a watching brief as both Bills progress and will report back as soon as there are any further developments.  In the meantime, should you wish to discuss this in more detail, or would like assistance with any other matter, please do not hesitate to get in touch.

Political Affairs
David Johnson
Partner
DD: 0207 822 7146
marketaffairs@weightmans.com

Innovation & Client Affairs
Bavita Rai
Partner
DD: 0121 200 3499
marketaffairs@weightmans.com

Market Affairs
Kurt Rowe
Associate
DD: 0207 822 7132
marketaffairs@weightmans.com

Scottish Affairs
Doug Keir
Partner
DD: 0141 375 0869
marketaffairs@weightmans.com

 

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