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Page last updated at 08:03 GMT, Friday, 9 September 2011 09:03 UK

Referral fee ban will counter 'sick culture'

The justice minister Jonathan Djanogly has said that a government ban on referral fees in personal injury cases will combat a "sick sueing culture" which needed to be changed.

The fees are paid by solicitors to insurance companies in return for the details of people involved in an accident. The practise is estimated to have pushed up motor insurance premiums by around 40%.

Mr Djanogly told Today presenter James Naughtie that "it's certainly a racket, it's a sick culture that we have to turn round. And I say culture because it's not just a question of insurance companies.

"It's small businesses being afraid of litigation and being put out of business by litigation; it's larger companies, who are often self-insured, having to put up their prices in shops and for their materials because of the amount they're having to pay out for claims; and then it goes even to more cultural things, like schools not wanting to send children on school trips because they're afraid of litigation."

The vice president of the Association of Personal Injury Lawyers (APIL), Karl Tonks, told the programme that his members would welcome a ban on accident victims being approached to make claims.

"Solicitors are robustly regulated in this, we simply cannot and do not do it. Others are not so well regulated and we would welcome an effective ban of those text messages and unsolicited phone calls.

"I've received them, nobody wants to have them, and we would very much welcome action by the government and others to get rid of those."

The insurance industry says it costs about £3bn a year in higher premiums.

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