The Compensation Act


The Compensation Act 2006 is an Act of Parliament which introduced changes to the rules of claims and compensation.

The act was given the highly descriptive long title: ‘An Act to specify certain factors that may be taken into account by a court determining a claim in negligence or breach of statutory duty; to make provision about damages for mesothelioma; and to make provision for the regulation of claims management services’.

What does the Compensation Act do?

The reason that parliament felt that this legislation was needed is most likely due to a sharp increase in personal injury claims seeking large monetary compensation. It also arose from an increase in fear of litigation.

The American litigation culture has been influencing British culture for some time now, and businesses had become fearful of litigation to such an extent that it was influencing the manner in which they operated.

The Compensation Act largely seeks to stop litigation from becoming a business in its own right. Parliament hopes the act will reflect the view that litigation is available as a last resort for people who have suffered a real loss, and that compensation should only recover their loss, rather than put them in a better position than the one they were in before the loss occurred.

To that end the law made it a crime for an unauthorised person to provide claim-management services.

The rise of no-win, no-fee litigation

The increase in ‘no-win, no-fee’ law firms had created a new business model which relied on litigation for income. The recent compensation legislation seeks to:

  • Deter the public from bringing forward frivolous claims
  • Restore compensation levels to amounts that simply compensate a claimant for the injury suffered, rather than allowing the claimant to receive compensations which improve their lifestyle

If you are seeking compensation for a loss, it is vital that you understand the legal framework within which your claim will be brought, or that you instruct an authorised person to handle your claim. A litigation solicitor can explain the different processes that are associated with bringing a claim for compensation. 

The recent compensation legislation may have an effect on the amount of compensation you will be able to receive, and on the legal procedure you will be required to follow. Seeking professional advice will allow you to understand your specific situation better.

For more advice on using legal representation, see our page on compensation solicitors.

Are you thinking about bringing a claim for compensation? Contact Law can put you in touch with a specialist litigation lawyer who can greatly increase your chances of a successful claim for compensation. Please call us on 0800 1777 162 or complete the web-form above and we will call you back.

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