Practitioners in the travel sector have been encouraged by the Government’s recent commitment to tightening the regulation of claims management companies, who offer support to consumers in making a claim for compensation. In the Queen’s Speech of 21 June 2017, the Government announced that claims management companies’ fees would be capped and responsibility for regulation of such companies would be transferred to the Financial Conduct Authority. Complaints-handling responsibilities would also be transferred to the Financial Ombudsman Service.

The Government will introduce these reforms via a new Financial Guidance and Claims Bill. The transfer of the regulation of the claims management companies to the Financial Conduct Authority will mean that the authority has the power to implement a claims management regulatory regime, which will cap the fees that claims management companies can charge to consumers. The level of cap is currently unknown. The transfer will also help ensure that senior managers at the claims management companies are personally held accountable for the actions of their business and ensure a more robust authorisation process for new companies wishing to enter the market.

These reforms are another step forwards in the battle to control the ever-growing compensation culture in the UK and to reduce the amount of fraudulent personal injury claims, in particular gastric illness claims, we are seeing being fuelled by rogue claims management companies. It is hoped that more stringent regulation and capped fees will discourage claims management companies from malpractice. This reforms are widely welcomed by the personal injury and travel sector and we now await further detail from the Government as to how this Bill will operate in practice.