While reform of the NSW CTP scheme is still under discussion, caps on legal fees for minor CTP claims have already become law.
Motor Accidents Compensation Regulations 2015 (2015 regulations) have been amended to cap legal fees for any CTP green slip claims made on or after 1 November 2016. The new amendment overrides any existing cost agreements.
Changes to the 2015 regulations:
- Prohibit contracting out costs for a settlement of not more than $50,000. (Contracting out is when a lawyer charges more than the fixed maximum)
- Protect the first $50,000 of a settlement from legal costs
- Limit legal costs to $5,000 for children under 18, where the settlement is not more than $25,000 or if the same legal practice is bringing a claim by another occupant of the same vehicle
- Limit legal costs to $10,000 for children under 18 where the settlement is $25,000 to $50,000.
The regulations aim to address low-severity CTP claims of $50,000 or less.
The Law Society of NSW is pleased with the amendment because it removes incentives to pursue fraudulent claims and should reduce premiums. Many fraudulent claims are made for children or other occupants of the same vehicle.