Want to settle a dispute without lawyers in a friendly environment? Good news – the value of disputes that can be settled by the small claims court is set to triple next year, so many consumer transactions will qualify.
So, ministers are proposing to increase the small claims limit from £5,000 to £15,000 from next April.
On balance, this has to be a good thing. After all, prices are going up so why shouldn’t the small claims limit go up as well?
Purchases often top £5,000
Consumer transactions today are increasingly exceeding the £5,000 limit. It’s becoming more common for people to spend over £5,000 on home improvements, holidays and cars. Substantial purchases, like installing double glazing, wouldn’t be covered by the £5,000 limit, but would certainly fall within this new limit.
In today’s difficult financial climate, we’re more likely to complain if there is a problem. But some people are left in a quandary when they realise it could cost them just as much money to instruct a solicitor to pursue their claim because it’s outside the current limit of £5,000.
One of the reasons consumers are willing to take cases through the small claims process is because they aren’t exposed to the other side’s costs.
Faced with making a decision based on costs and risk, many people cave in and decide against any action. Raising the limit will provide greater access to justice for more people. They will be able to pursue their claim without having to instruct solicitors, which will be a welcome change for some!
Is less more?
On the other side of the scales though, there is a risk that by raising the limit too much, some could end up losing out. At the current limit, it isn’t usually proportionate for businesses to instruct solicitors for claims below £5,000. So many businesses will either send a representative from their office to defend the claim or settle before the hearing.
If that limit were to change to £15,000 then the costs of instructing solicitors may become more proportionate for businesses to pursue, putting consumers in a different dilemma. With a higher amount at risk for businesses, it will be more cost effective for them to pursue or defend these higher value claims.
Despite the fact that the businesses still can’t ask for their costs even if they win, they will be more likely to instruct solicitors to act for them. Being up against professionals may be too much pressure for consumers to face.
I guess the real question is, ‘Is less more?’. Have you ever used the small claims court – or would you be more likely to if the limit is raised to £15,000?
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