Claims Direct slumps after heavy criticism

Personal injury compensation specialist Claims Direct has seen its £154 million market value slashed in half as it issued a profits warning and reshuffled its boardroom.

Personal injury compensation specialist Claims Direct has seen its £154 million market value slashed in half as it issued a profits warning and reshuffled its boardroom.

The group says the number of cases it will be accepting for the rest of the financial year will be significantly below market forecasts.

The firm blames negative publicity for a slump in consumer confidence.

And it warns its full-year figures are as a result also likely to be significantly below market expectations.

The autumn publicity has centred on accusations that people winning compensation cases in court were sometimes seeing their damages virtually wiped out by Claims Direct's fees.

Until April last year, awards for damages set by the courts did not have to take into account the fees or percentage people then had to pay to personal injury groups following the case.

This meant those who suffered injuries or accidents sometimes received much less than they anticipated after companies took their percentage or fee.

In November Claims Direct saw its shares fall by 25% after it said it would have to pay out £5 million to compensate people who had lost out in this way.

Telford-based Claims Direct says despite "encouraging" increases in call centre enquiries, the number of accepted cases has not maintained the levels seen up to the end of November.

"It is still too early to say whether the recent increases in enquiry levels will continue," it added.

As a result, it anticipated the level of accepted cases for the remainder of the financial year, to the end of March, will be significantly below market expectations.

Numbers of accepted cases had slipped from 5,002 in November to 2,523 so far in January, although this was a slight improvement on December's rate of 2,411 cases.

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