The Association of Personal Injury Lawyers (APIL) have advised that lax regulation and systemic conflicts of interest have deprived motor accident victims of legal advice and encouraged them to accept reduced compensation from insurers. APIL’s chief executive Denise Kitchener described as ‘institutionalised’ the practice of third-party capture, where the insurer of the ‘guilty’ party directly approaches the other. ‘Victims’ can often be persuaded to settle without consulting a solicitor, and accept many thousands of pounds less compensation than their entitlement.’

APIL submitted evidence of third-party capture to the Financial Services Authority [FSA] in November 2007. However, nine months later the authority said it was still considering what to do. ‘The FSA must stop dragging its heels and take firm control of the insurance industry, with its web of interdependency between a handful of major financial institutions.’ Kitchener said ‘Transparent, rigorous regulation is urgently needed.’

The FSA said it does not audit the relationship between insurers and lawyers. However, ‘we are taking the concerns expressed by APIL seriously’, a spokesman said.