- DBAs - the cap should apply to the cumulative total of all deductions whether made by solicitors or by a CMC. The Committee was "concerned" about deductions from future losses under a DBA and has asked the Scottish Government to reflect on that evidence and consider whether future losses should be ring-fenced.
- The Justice Committee recommends that the Scottish pre-action protocol limit be increased to £100k.
- QOCS is supported. However, the effect on QOCS of failing to beat a tender should be set out in the Bill, as should the effect of a pursuer having a case summarily dismissed.
- The Committee has "noted" our suggestions that the test on fraud should include pre-litigation conduct rather than simply "proceedings". They welcome the Scottish Government's intention to provide greater clarity.
- The Committee has asked the Scottish Government to reconsider the position of uninsured defenders.
- The Committee has also called on the Law Society of Scotland to put in place "proper checks" to ensure solicitors do not take on clients obtained by cold calling.
- The Committee considers that there is a need to reform the existing rules on additional fees, particularly in light of the provision in s 3 of the bill which would allow a solicitor to retain both judicial expenses and any success fee.
- As we know, the regulation of claims management companies is now to happen via the Financial Guidance and Claims Act when it comes into force. The Committee goes even further than that and says that the Bill should not be brought into effect until regulation of CMCs is in place in Scotland.
Committee convener Margaret Mitchell MSP commented: "In supporting the general principles of the bill, the Committee has made a number of detailed recommendations in its stage 1 report suggesting ways in which the bill should be improved. The Committee hopes the Scottish Government will be open minded to these recommendations as well."
Andrew Lothian, DWF's Head of General Insurance (Scotland) gave evidence to the Committee on the Bill on behalf of FOIL, and is working with other stakeholders to ensure that the interests of the insurance industry and its policyholders are protected.
The end of Stage 1 of the Bill will see the Justice Committee’s report debated at Holyrood in the week commencing January15. If the Bill is approved by a vote of the Parliament only then does it proceed to stage 2. Following this will Ministers publish their amendments during stage 2 or stage 3.
Stage 2 of the Bill will see the Justice Committee’s report debated at Holyrood in the week commencing January 15. In advance of that the Scottish Government is likely to publish amendments to the Bill particularly around the definition of fraud and the extent to which third party funders should be liable in costs.
DWF will continue to highlight the concerns of the insurance industry in relation to this landmark Bill. Our next update will follow the Stage 1 debate.
To explore further the regulation of claims management companies and what this means for Scotland we will be hosting a client event on 9 February in our Glasgow office. Kevin Rousell, Head of Claims Management Regulation Unit at the Ministry of Justice will be speaking at this and sharing his experiences of CMC regulation in England and Wales. We will be sending invitations out for this event in the next week.
For more information please contact Andrew Lothian Partner on +44 131 474 2305 or firstname.lastname@example.org.