The blame-and-claim industry is out of control

Compensation culture has spawned a repugnant army of ambulance-chasing parasites and freeloaders

If in doubt, sue – or at least threaten to; chances are that the business involved will roll over and pay you to go away, even when your claim is baseless. It’s simply not worth the hassle, or the legal costs, to contest it.

There is a sense, I suppose, in which business gets the culture it deserves. There would be no “compensation culture” – defined by the lawyer Ronald Walker QC as “an ethos [which holds that] all misfortunes short of acts of God are someone else’s fault, and that the suffering should be relieved, or at any rate marked, by the receipt of a sum of money” – if all our businesses, utilities, banks and public services were beyond reproach.

Even so, it’s hard to resist the conclusion that the blame and claim industry – part of a much wider culture of entitlement – is once again seriously out of control. Is it, for instance, really necessary for the Financial Conduct Authority to license the image rights of Hollywood actor Arnold Schwarzenegger for a £42 million advertising campaign to persuade more people to claim for the mis-selling of payment protection insurance (PPI)?

It’s frankly laughable that the Terminator star should benefit, indirectly, from a scandal he’d almost certainly never heard of previously, let alone been harmed by.

Banks have so far paid out £27.4 billion for PPI mis-selling, but they have provided for much more, and the FCA estimates that there are still tens of millions more policies on which claims could legitimately be made.

Be in no doubt; this was a truly shocking case of an industry – in pursuit of profit, commissions and bonuses – stuffing the consumer with products that in many instances they neither needed nor even knew they were buying.

It also followed a series of similar mis-selling scandals by the financial services industry – personal pensions and endowment mortgages among them. In each case, the miscreants had to be dragged kicking and screaming into both recognising the scale of their own deception and providing adequate recompense.

Were it not for the banking crisis, which has reduced the industry to a state of grovelling contrition, the bankers would probably still be resisting. The upshot is that having previously been in a state of denial about mis-selling, the industry has now swung to the opposite extreme and, instructed by a regulator in similar pursuit of public forgiveness after the failings of the credit crunch, will now grant compensation to virtually any Tom, Dick or Harry who comes calling, including many who no doubt knew full well what they were buying and wanted the protection.

Needless to say, a veritable army of nuisance calling, ambulancechasing parasites has sprung up to persuade former policyholders to make that claim. If this was an entirely cost-free exercise I suppose it could be considered relatively harmless; in providing a boost to consumption, the gigantic size of the compensation gravy train might even be thought a positive economic boon.

But of course it is not cost free. The cost is felt in higher charges paid by customers elsewhere, and, indirectly, by the taxpayer, who bailed out some of the biggest culprits with tens of billions of pounds of support at the height of the banking crisis. The profits of the mis-selling have long since been privatised, while the losses are nationalised.

It is sometimes argued that the idea of a “compensation culture” is a myth invented by the “Right wing media”. The evidence for this claim lies mainly in the fact that awards for personal injury have not risen for some years, in number if not in size. Why anyone would find this counter-intuitive, I don’t know; ever more demanding health and safety standards have presumably had some effect in reducing the number of accidents. In any case, even the most callous “Right-winger” would surely not dispute appropriate compensation for life-changing injury. A crackdown on bogus claims has also succeeded in reducing compensation for conditions such as whiplash.

However, try telling Spanish hoteliers, recently stung by thousands of fraudulent claims from British tourists for food poisoning, or Tui, the tour operator, subject to a 15-fold increase in such claims over the past year, that a compensation culture doesn’t exist. Try, for that matter, telling the cash-starved NHS, forced to fight an ever rising tide of negligence claims, some of them frivolous in nature.

As a nation, we have come to expect something for nothing. And if there is any way of making others culpable for our mishaps, we are only too happy to extract monetary recompense. The blame game has spawned a whole new industry, employing thousands of people. Our companies, public utilities and institutions no doubt deserve much of what is thrown at them, but that doesn’t make the growing trend in compensation-seeking redress any less repugnant.