Matters have got so bad that they have asked a Judge to “temporarily halt the payments being made to businesses on an ‘economic loss’ basis”.
BP presented a number of examples to illustrate the madness of the compensation feeding frenzy citing businesses that were nowhere near the coastline affected, one firm was many miles away from the Gulf of Mexico oil spill and it “enjoyed bigger profits during the year of the spill in 2010 and yet still received millions in compensation”.
This is looking like the first example of a very major international business having its future and shareholders interests affected because it agreed to pay compensation in what seemed to be a fair and generous way with the ‘outcome’ (yes that word again) being that fairness was replaced by greed, and as the song goes ‘lawyers guns and money’.
BP has already sold a substantial part of its business to pay out compensation and fines as a result of the disaster and has said it could be ‘irreparably harmed’ by the payouts because they could cost it ‘billions‘ more than it budgeted for when it agreed to a settlement in April 2012.
In its application to the court some of the examples BP offered of ‘absurd’ claims included: a $21 million payment made to a rice mill in Louisiana situated some 40 miles from the coast that earned more revenue than in spill year of 2010 than in the previous three years.
It also made reference to $9.7 million paid out to a highway, street and bridge construction company in northern Alabama, almost 200 miles from the Gulf, which does no business in the region and for which 2010 was its best year on record.
As they say when America sneezes we get flu.
Compensation culture in the UK, fuelled by the pestilence and plague of CMC’s no win no fee legal offers, legal aid and regulatory action has ensured that the compensation trough can see plenty of snouts taking their fill.
Influenza matters in the UK have got so bad that we now see a proliferation of fraudulent claim ‘reporting’ sites.
Here are some examples: the government has Report Benefit Fraud, the insurance industry has the Insurance Fraud Bureau and the Engineering Council sees they have a serious problem around qualifications citing three examples that they are trying to combat.
Have we become a nation of fraudsters created by consumer protection ‘on acid’ where consumers take no responsibility for their own bad decisions because a regulator will make sure somebody else pays where it would appear from the levels of fraud it was not their fault at all.
Regulation is a vital part of UK life today, sadly in many ways, yet it adds so many additional costs and burdens on good, honest businesses.
Surely something must be done to ensure that those who have actually lost out, through no fault of their own, get appropriately compensated and those that have not get dealt with robustly by the legal system, and without the protection of legal aid or in our industry the seemingly automatic call for funds, without limit or logic, from the FCA, FOS and FCSC.