Personal injury details are currently being purchased from insurance companies, allowing law firms to target potential new customers. This practice now faces a government ban in an attempt to address the current compensation culture in Britain.

The practice of selling personal injury details has become common in recent years and has had an impact on the rising cost of insurance. Experts have labelled the practice a racket.

Jonathan Djanogly, the Justice Minister, has suggested that the current referral system encourages too many spurious insurance claims and that too many people are able to make a profit on minor incidents and accidents.

Mr Djanogly indicated that the proposed ban will make people think harder about whether to sue or not. The ban will also help to reduce the insurers costs and help reduce the costs to the customer.

Existing proposals have already suggested that the claimant should pay a success fee for a referred claim, rather than the defendant. This would lower the overall legal costs involved, making it cheaper for customers.

The Association of British Insurers (ABI) have welcomed the proposal for a ban, but suggested that it needs to be watertight.

Otto Thoresen, the director general of the ABI, suggested that the current compensation system is dysfunctional and that a ban on referral fees is an important step to take to address the problem. However, he also indicated that action needs to be taken to reduce legal costs and address the problem of whiplash claims before customers will see a benefit.

Karl Tonks from the association of Personal Injury Lawyers indicated that they would welcome a ban on cold calling of potential customers. However, he also suggested that a blanket ban on referral fees could push the practice underground and that the transparency of these fees was more important.

The Claims Standards Council and the Access for Justice Action Group have also commented.

Rather than a blanket ban, they suggest that insurers justify the fees to a regulatory body. They also suggested that any approaches to can potential claimant should be banned if they do not have the individuals permission. Advertising should also be restricted to prevent and financial incentives for making a claim to be offered.

Andy Slaughter, the Labour shadow justice minister, indicated that Labour supported the proposed ban. However he indicated some reservations over the proposals, adding: "It is strange that the Ministry of Justice is seeking to ban all referral fees when the government themselves admit that there is no universal definition of what constitutes a referral fee."

The Office of Fair Trading has indicated that motor insurance premiums had risen by approximately 40% over the last year. The number of personal injury claims was actually 31% lower than in the period from 1994 to 1998, but the cost of claims has been rising. In the last 10 years, the total cost has doubled from 7 billion to 14 billion.