Motor Brief January 2019: market insights

A summary of key developments including an update on the Civil Liability Act 2018 (whiplash claims and discount rate review), small claims track, LASPO review, regulation of claims management companies, Scottish civil justice reform, online court modernisation, autonomous vehicles, ongoing review of the Motor Insurance Directive and ABI guidance on Green Cards.

The Civil Liability Act 2018

On 20 December 2018 the Civil Liability Bill received Royal Assent, starting the first review of the personal injury discount rate. The review must be completed by the Lord Chancellor by August 2019 (when applying the timeline set out in the legislation) – but the government is being pressed to set a new rate as quickly as possible. The MOJ opened its consultation into setting the rate, ahead of the Bill receiving Royal Assent. The call for evidence closes on 30 January 2019.

Measures relating to whiplash are expected to be implemented ahead of April 2020, to allow large-scale testing of the online systems. Regulations are to be made on a number of areas including: the levels of tariff applied to injuries, court powers to award an uplift on the tariff, medical reporting and FCA regulation and reporting.

Contact: Ian Davies

Small claims track and portal

Alongside the whiplash measures within the Civil Liability Act, the process to increase the track limit to £5,000 for motor-related claims is expected to progress in 2019 to allow the framework to be in place for April 2020. The Civil Procedure Rules Committee will oversee these changes. Secondary legislation will be necessary to progress the IT portal – expected to move into its next developmental phase shortly.

The proposed increase of the track limit to £2,000 for employer and public liability claims is expected to follow the increase of the motor track.

Contacts: Martin Stockdale and Mark Walsh

Civil justice reform in Scotland

Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018

On 8 November 2018, the Scottish Government opened its consultation into Part 1 of the Act, which deals with the regulation of success fee agreements (no win no fee). The main purpose of the consultation is to determine the correct level of cap for personal injury claims. Proposed caps include up to 20% for the first £100,000 of damages.

The consultation closes on 31 January 2019. The Scottish Government proposes to implement the new provisions at the same time as the FCA regulation of claims management companies commences on 1 April 2019.

Damages (Investment Returns and Periodical Payments) (Scotland) Bill

On 18 December 2018, the Bill passed Stage 1, following a debate that was mainly favourable of the Bill and its aims, but with a suggestion that there are still some areas to play for come Stage 2. The main area of debate revolved around PPOs and there were also concerns around the notional investment period used to calculate the discount rate.

Stage 2 commenced on 22 January 2019, offering a further opportunity for debate.

Contacts: Peter Demick and Rory Jackson

Post-implementation review of LASPO

The Ministry of Justice are undertaking a post-implementation review of Part 2 (litigation funding and costs) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Evidence was sought by way of online survey in August 2018, with reference to the initial assessment of the reforms. A report drawing on the views of stakeholders and available data was initially to be prepared for later in 2018 but is currently awaited.

A review of LASPO Part 1 (Legal Aid) is being undertaken separately.

Contact: Jennifer Harris

New era of regulation for claims management companies

On 1 April 2019, the Financial Conduct Authority (FCA) will become the regulator of CMCs in England, Wales and Scotland. Following a consultation on the proposed rules and requirements, the FCA published its Policy Statement on 17 December 2018, which sets out the conduct, rules and fees it will apply to CMCs. The Policy Statement confirms the majority of responses supported the FCA’s proposals, with a recognition that there is a need to strengthen the regulation of the industry.

The FCA’s stated focus is on driving up standards of conduct and boosting consumer protection. Any firm that does not meet the new minimum standards will not be authorised to handle claims. Requirements include greater transparency about estimated fees. The next major milestone for firms starts this month, when CMCs can apply for a ‘temporary permission’ to operate. This will allow them to continue to operate until they are fully FCA-authorised during one of two waves running from April until the end of July.

Contact: Niall Edwards

International forum on online courts – the cutting edge of digital reform

International delegates gathered at the inaugural forum in London on 3 and 4 December 2018 to discuss the successes, challenges and technological advances being made in justice systems globally. The event was jointly chaired by Susan Acland-Hood, Chief Executive of HMCTS and Professor Richard Susskind, President of Society for Computers and Law.

The focus of the forum included ODR within court systems and online decision-making by judges, as well as the central issues that will face policymakers, judges, technologists, and lawyers as we look forward to 2020. Background to the event is HMCTS’s ongoing £1 billion programme of court reform – which most recently has seen the streamlining of probate applications.

Kennedys was the sponsor of the SCL Sir Brian Neill Lecture delivered by Shannon Salter, Chair of the Civil Resolution Tribunal, Canada – entitled “Can online dispute resolution humanize the justice system?”

Contact: Richard West

Law Commission review of regulatory framework for automated vehicles

As part of a review of the regulatory framework for the safe deployment of automated vehicles in the UK, the Law Commissions of England and Wales and Scotland published its preliminary consultation paper on 8 November 2018. Closing on 8 February 2018, the consultation represents a positive step towards developing an appropriate framework following the enactment of the Automated and Electric Vehicles Act 2018.

With a focus on the need to fill any gaps in existing civil and criminal liability, as well as changes to ensure appropriate vehicle safety assurance and transparency from manufacturers, the consultation is part of a three-year project running from March 2018.

Contacts: Niall Edwards and Naomi North

Ongoing review of the EU Motor Insurance Directive (MID)

On 26 October and 10 December 2018 the Internal Market Consumer Protection Committee (IMCO) published its draft report and subsequent amendments in relation to the European Commission’s proposed changes to the MID.

IMCO’s proposals move away from those of the Commission, back towards compulsory insurance for vehicles “used in traffic”, meaning those used on a public or private road (including driveways, parking lots, garages, docking and unloading stations). The proposals exclude vehicles “used exclusively in a closed area, with no access from the general public”, with electric vehicles and those used exclusively in motor sports, excluded. IMCOs proposals to limit the scope of compulsory insurance to particular vehicles is closer to the requirements of the Road Traffic Act 1988. To that extent and whilst some uncertainty as to how the changes will work in practice will remain, if approved, they will be welcomed.

Contacts: Joy Middleton and Jennifer Harris

ABI issues Green Card guidance to motorists in the event of a no-deal Brexit

The Association of British Insurers has issued guidance to UK motorists looking to drive in Europe in the case of a no-deal Brexit after 29 March. The guidance states that motorists will be required by law to have a Green Card supplied by the insurer if they wish to drive in Europe, which constitutes proof of insurance and takes about a month to process. The European Commission is yet to confirm that European insurance authorities will waive the need for Green Cards in the event of no-deal Brexit.