SRA calls for views to shape further robust action on claims

The Solicitors Regulation Authority (SRA) is calling for further evidence on the challenges facing consumers that join high-volume claims as it steps up the robust action it is taking to investigate poor practice, and to protect consumers from harm.

High-volume consumer claims arise when large numbers of consumers file claims against the same organisation, or in relation to the same issue. Such claims activity is currently concentrated in areas including housing disrepair, data breaches, flight delays, diesel car emissions, motor finance commission, and other financial services.

The regulator’s recent Thematic Review, concluded that many firms were failing in their duty to protect and promote clients’ best interests when pursuing these claims.

 The SRA is already investigating 76 law firms involved in such claims, and has recently written to more than 500 other firms asking them to complete a mandatory declaration of compliance, the results of which will be studied by its investigation teams.

Today’s Discussion Paper identifies five main challenges with the way the sector is operating, and invites views from a wide range of people on these. These insights will inform future action the SRA will take in using its regulatory powers to support the creation of a safer claims market for consumers.

Anna Bradley, Chair of the SRA Board, said: ‘The risks and issues we are seeing in the high-volume consumer claims market are unprecedented. We are already investigating 76 law firms and are continuing to gather evidence from others, so we can identify where else we need to intervene.

‘Too many firms don’t have their house in order, so we need to use all the levers at our disposal to protect consumers and identify poor practice’.

The SRA’s discussion paper has identified five main challenges. These are: 

• Improving transparency and clarity for consumers about their claim. For example, does the term ‘no win, no fee’ give consumers a false sense of security and should it be restricted, caveated or banned?
• Managing risks around third-party litigation funding.
• Making sure ATE insurance meets consumers’ needs.
• Making sure regulation keeps pace with a changing market. For example, should the SRA consider changes to the way it authorises and monitors firms working in high-volume consumer claims?
• Delivering wider improvements across the system for consumers in high-volume claims processes.

The SRA is working with the Ministry of Justice, the Financial Conduct Authority (FCA), the Royal Institution of Chartered Surveyors, the Ministry of Housing, Communities and Local Government and the Legal Services Board, among others, to tackle these issues. It will also be engaging directly with stakeholders through a series of events and webinars over the autumn, and through carrying out research.

Feedback on the challenges and questions raised in the paper is requested before 14 November with respondents asked to complete a survey or to email any comments to jointhediscussion@sra.org.uk.

Insights from this exercise will inform future policy development with the SRA expecting to consult next year on a series of more specific proposals, to enhance its regulatory approach.

Image provided by Canva

Francesca Kaye