SRA discussion paper on high-volume consumer claims – Law Society response

The proposals

The paper explores how high-volume consumer claims can work better for consumers. It focuses on five challenges:

• improving transparency and clarity for consumers about their claim
• managing risks around third-party litigation funding
• making sure after-the-event (ATE) insurance meets consumers' needs
• making sure our regulation keeps pace with a changing market
• delivering wider improvements across the system for consumers in high-volume claims processes

Our view

There are examples of good practice by solicitors operating in this area, as noted in the SRA’s High-volume consumer claims thematic review, but also areas of concern.

The findings in the SSB case underscore the importance of addressing the risks involved with high-volume consumer claims. We support proportionate, evidence-based reforms that improve consumer protection.

The SSB case revealed inadequate financial scrutiny in the SRA’s authorisation and supervision processes, and these regulatory shortcomings should be a priority for the SRA.

It is important for the SRA to strike the right balance between effective regulation and not unduly impact access to justice.

Before any changes are made, we urge the SRA to focus on learning from the regulatory failures identified in the Legal Services Board’s (LSB) review of SSB Group Limited (SSB) and outlined in our response to it.

The focus should be on enforcing existing rules before introducing new ones.

Summary of recommendations

Our recommendations of steps the SRA should take include:

• addressing the internal regulatory failures identified in the LSB review before introducing changes to processes surrounding high-volume consumer claims
• improving transparency and clarity for consumers by exploring standardised onboarding protocols and clearer guidance
• not banning the term ‘no win, no fee’, but ensuring solicitors use it accurately with caveats to reflect any consumer financial risks
• ensuring consumers have the right information to be able to make informed decisions about third-party funding and After The Event insurance

What this means for solicitors

Members who work in the high-volume consumer claims sector are likely to see changes to working practices in this area.

We urge that any changes be proportionate and made in consultation with stakeholders.

We have been clear that the SRA must address internal processes before considering wider changes to the high-volume consumer claims sector.

Whilst the SRA consider responses to their discussion paper, solicitors working in high-volume consumer claims may want to consider:

• reviewing new guidance provided by the SRA in light of the SSB case
• reading Law Society’s practice notes and guides, including ‘Meeting the needs of vulnerable clients’
• keeping up to date on the progress of the discussion paper, and any further changes and recommendations made by the SRA

Next steps

We will:

• work with the SRA on guidance for onboarding, funding, and insurance
• update model agreements and guidance notes to reflect any changes made by the SRA
• contribute to wider reviews on funding and costs
• engage with stakeholders to ensure reforms protect consumers without limiting access to justice