Part 2 of the Compensation Act 2006 (“the Act”) regulates claims management services.

A person who provides “regulated claims management services” must be authorised under the Act to do so, or be exempted, or have the benefit of a waiver of the obligation to be authorised. Under section 4 of the Act, a regulated claims management service is one declared to be regulated by order by the Secretary of State.

The Compensation (Regulated Claims Management Services) Order 20069 declares certain kinds of services to be regulated when provided in connection with certain kinds of claim. The services include advertising for claimants, referral of claimants to legal practitioners, advice in relation to claims and investigation of claims. The kinds of claim include: personal injury claims and criminal injuries compensation claims; employment-related claims such as wages, unfair dismissal and discrimination; claims for housing disrepair, claims relating to financial products and services and claims in relation to Industrial Injuries Disablement Benefit.

This Order exempts legal practitioners (barristers, solicitors, advocates, legal executives and foreign lawyers) who are already regulated by their respective professional bodies from the obligation to be authorised.

Article 5 exempts persons who are carrying out a regulated claims management service that is an activity that is regulated by the Financial Services Authority (FSA), have been exempted under FSMA or have the benefit of an exclusion under FSMA. The exemption does not extend to persons who refer uninsured losses to a legal practitioner or authorised person.

Articles 6 to 12 exempt various other persons that do not provide regulated claims management services for profit, such as charities and not-for-profit advice agencies (article 6), the Independent Complaints Reviewer (article 7), independent trade unions (article 10), students’ unions (article 11); do not provide services to the public generally, such as the Motor Insurers’ Bureau or the medical defence bodies (articles 8 and 9 respectively); or provide the service of referrals only as an adjunct to an unrelated business and only in small numbers (article 12). In the latter case, authorised persons to whom the referrals are provided are obliged to ensure that the “introducer” obtains the referrals in a way consistent with the Regulator’s rules about advertising and marketing.

Legal practitioners are also excluded from the obligation to ensure introducers comply with the Regulator’s rules because in practice the overwhelming majority of such referrals to legal practitioners will be to solicitors, who are bound by the Solicitors’ Advertising and Referral Code 199910.