Government remain bullish on whiplash reform, but with an extended timeline
On Monday night the government published their response to the Justice Select Committee's report on the Small Claims Limit for Personal Injury and in doing so announced a delay in the implementation of the whiplash and small claims proposals until April 2020.
Whilst this is a change from the original plan to introduce the reforms in April 2019, it is something we had been expecting for some time, and would appear to a sensible decision given the extent of the work required to build and test the online platform through which whiplash claims will be handled pre-litigation. The government agrees with the Committee "that it is important to get the introduction of these important reforms right rather than strive for an early deadline which does not allow us to work carefully with litigant in person, consumer and industry stakeholders to ensure that the reforms are brought online in the most efficient and effective manner, taking account of genuine concerns of access to justice." In reality, the timeline would probably have been extended with or without the JSC recommendation.
Most importantly, the government does not however accept the Committee's headline recommendation to limit any increase in the small claims limit to just £1,500. The government is satisfied that now is the appropriate time to increase the limit for the first time since 1991 and that the proposed increases are proportionate in light of the rise in compensation levels. For RTA claims, they maintain that "claims under £5,000 are relatively minor and straightforward and are not so complex as to routinely require a lawyer" and that "leaving more claims in the fast track is unlikely to result in claimants receiving better settlements or increased compensation". It is also satisfied that the increase to £2,000 for non RTA claims is appropriate, based on the Retail Price Index which is the inflationary index used when updating the Judicial College Guidelines.
The response also provides an opportunity for the government to highlight the wider work already being done in relation to whiplash claims handling and the concessions already made during the passage of the Civil Liability Bill through the House of Lords. The government confirmed their intention to make provision for an effective means of requiring insurers to report on the savings passed on to consumers, and is giving further consideration to calls for "vulnerable road users" to be exempt from the small claims track reforms as well as the tariff within the Civil Liability Bill.
Whilst there are numerous references in the response to RTA claims below £5,000 being suitable for the small claims track, it should be recognised that the whole process for such claims is being overhauled, as the small claims track in its current format cannot be the answer to the need for a suitable litigation process for those cases. The longer time period should lead to an improved process being introduced utilising technology and being suitably adapted for litigants in person.
A couple of outstanding consultation responses also receive a mention in the government's response. The detail of the work being done to implement the IFT recommendations is due to be included in Part Two of the response to the whiplash consultation which, the government says, will be published shortly. The government will also work with the judiciary to make sure the concern regarding paid McKenzie friends is addressed. Hopefully we should see some action on both in the near future.
The government have also reiterated the efforts to ban cold calling through the Financial Guidance and Claims Act.
In the meantime the government has started the post-implementation review of part 2 of LASPO and a report will be published, expected later this year, following the provision of feedback from stakeholders which has been requested by 24 August.
The understandable recent focus in the House of Commons on Brexit-related legislation has shown again where the government's priorities lie, and the autumn is expected to see the primary focus of parliamentarians remain on the wide-ranging aspects of that key issue. The uncertainties surrounding Brexit lead to a wider concern as to whether and if so when the current make-up of the House will be in a position to consider other measures such as the Civil Liability Bill.
Subject to those points, we expect the Bill still to proceed in the Commons in the autumn albeit there will now be a longer period from Royal Assent to implementation of the whiplash reforms. We agree there is a need to have a workable process in place first and it is understandable that development of the process will take some time, although the original announcement from George Osborne that whiplash will be banned, will by then be nearly 5 years old.
It should be recalled that there is an expectation of the Online Court recommended by Lord Briggs also coming into action in 2020 and the new timescale would now appear to allow for an overlap. Again, this would be welcome to dovetail the new pre-litigation process with any enhanced digital court process.
The Bill had its first reading in the Commons on 28 June and the Speaker of the House has certified it as affecting England and Wales as expected so that the 'English votes for English laws' (EVEL) procedure applies. This highlights the importance of the votes of English and Welsh MPs, so giving the government a clear majority without DUP votes. That will be important given there were 5 Conservative MPs on the Justice Select Committee who presumably agreed with its unanimous report. We also know that Labour will be raising again the arguments put forward in the House of Lords to try to restrict the impact of the reforms.
Where the Commons will be rising for recess later this month, as we mentioned in our last update we still expect the Bill's second reading either in September or October after the party conferences and that it will then progress into Committee Stage during the remainder of this year when we will be able to further gauge the views of the house.
There is still of course a need, and thankfully a desire of government, to implement the discount rate provisions of the Bill as soon as possible so that the first review can get underway. The delay in the expected implementation of the whiplash reforms does not impact at all on the new process to review the discount rate, which can begin as soon as the Bill succeeds in passing through the Commons and obtains Royal Assent.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.