The Ministry of Justice (MoJ) announced at the weekend it had requested the Civil Procedure Rule Committee, a body responsible for setting limits on legal costs, to “urgently look” at the costs of holiday claims and to “reduce cash incentives” to make it financially less attractive for claims management companies (CMCs) to encourage travellers to lodge fake applications.
There is currently a loophole allowing CMCs to levy unlimited legal costs for claims that originate abroad, leaving tour operators open to paying grossly inflated costs in proportion to the damages awarded in the case.
Under the government proposals, operators would pay a prescribed sum depending on the value of the claim, making the cost of defending a case far easier to predict and manage.
In a statement the MoJ said: “As a result of these proposed changes, fixed recoverable costs can be extended to cover claims arising abroad, closing the loophole and meaning that payouts for tour operators will be subject to stricter controls.”
Following the news, Abta said it was “crucial” MPs look to enact further reforms to “increase transparency” between CMCs and solicitors.
“We will continue to work with them [government] to find long term solutions to the [fake sickness claims] problem,” the association vowed.
Jet2holidays, which has employed private detectives to uncover bogus claims, said it was “pleased that the government is moving to tighten the net on unscrupulous holiday sickness touts. This action needs to be swift and effective.”
Martyn Dean, director of Gateshead-based OTA JLM Travel, told TTG in October he was receiving “three or four” solicitors’ letters a week on holiday sickness claims.
On hearing the latest news, he said: “I’d love to see the government go after the claims firms. They are the vermin of the industry and making money wrongfully out of other companies’ misery.”
Richard Lightfoot, owner of OTA Lowcostsunshine.co.uk , who also experienced a surge in sickness claims added that he hoped the new fees cap would “make people think twice.”
