Britain is becoming known as the ‘whiplash capital of Europe’, through an ever growing culture to claim via fake car accident injury claims, over the top compensation.

Justine Greening, Transport Secretary is getting tough on bogus claim offenders, with a proposal to ban litigations caused by very low speed accidents, suspect medical assessments and the main objective to stop ambulance chasing lawyers making extortionate amounts of money from unlawful claims.

A newspaper investigation has bought to light over 5000 claims management companies (CMCs), whom pass on accident claimants to No Win, No Fee law firms for a finder’s fee. So far 707 have been closed by the Government for malpractice.

Ms Greening has been trying to bring this reform for some time, but the law fraternity would prefer it to continue, to the detriment of ever soaring vehicle insurance premiums. A proposal will be put forward to central cabinet members by Ms Greening, at Downing Street with the Prime Minister as chairperson.

Germany has adopted a policy that if the car is travelling under 6.25mph, you cannot claim for whiplash injuries. They also have to have two doctors’ reports of the medical examination of the claimant, for it to be considered.

It will be asked if it can be classed as a criminal offence for intentionally causing an accident, as a way of placing a false claim. In Britain around 1,500 claims a day are being logged, for this type of accident and pushing insurance costs up. There has been a decrease in deaths and injuries from road accidents, but insurance prices are still increasing.

The regulator for the insurance industry, says companies have been closed down for fabricating car accidents, bullying victims through phone calls into make claims and deceiving clients by not giving then all the recovered compensation.

A conference has been requested by Ms Greening with Justice Secretary Kenneth Clarke, Business Secretary Vince Cable, Health Secretary Andrew Lansley and Home Secretary Theresa May to convey her findings with a view to altering the law.

Mr Cameron is to assemble a summit to look into all perspectives of the insurance industry, to reassess the way they conduct their business. Since the Legal Services Board withdrew the ban on law practices paying a fee to anyone bringing them a customer for referral, CMCs started to appear. So for the last 8 years the increase in these firms is spiralling out of control, so a need for regulation is paramount.

A spokesperson for the Ministry said: ‘Claims-management companies are subject to strict rules of conduct.  We have made it very clear to businesses that we will not accept any malpractice or attempts to take advantage of consumers.’

It is known that some CMCs in order to obtain details of car accidents, pay repair garages and insurance firms for information. Then proceed to bombard the accident victim with communications, till they get the result that they want.

MP Louise Ellman, Labour representative for Liverpool, Riverside, said: ‘Claims-management companies are a major problem. They are the worst part of this merry-go-round of lawyers, insurance companies and brokers, after someone has had an accident. There needs to be a clampdown.’

As most CMCs companies don’t manage the accident claims themselves, they simply refer the claimant to a law practice on their database, in return they receive a referral fee. With a possibility of a ban on referrals imminent, the companies are moving to people that might have been miss sold payment protection insurance.

Legal Aid and Sentencing and Punishment of Offenders Bill are at present being debated by Parliament, for reforms to make referral fees illegal.