The UK's largest personal injury claims firm, Accident Group, has sacked 2,400 people - many by text message - after its parent company Amulet Group announced on Friday that it would go into administration.
Shocked workers take in the news outside the firm's HQ
Staff with company mobile phones received a series of text messages, warning them that salaries would not be paid.
Manchester-based Amulet Group said its subsidiary had to cease trading because it could not sustain its "continual battles with the insurance industry" and after "the sudden failure of a banking partner to support the company".
The administrators, though, blame Accident Group's "lower than expected claims success rate" for the financial difficulties, which they say "resulted in increased insurance premiums on new business and retrospective claims from the underwriters".
Personal injury accident claims services are not regulated, and it can can be very difficult to get any money back that has been paid to Accident Group
About 200 Amulet staff are being kept on to process existing claims.
The news will be a blow to the government, which abolished legal aid for personal injury claims and replaced it with laws that allow solicitors to operate on a "no win, no fee" basis.
Accident Group is the second large personal injury claims firm to fail, following the collapse of Claims Direct - although the latter is now trading again under new owners.
Sacked by text message
Amulet's three other subsidiaries, Accident Investigations, Claims Support Services, and financial adviser First Advice - which sponsors Manchester City football club - are now in administration as well.
Rumours about the collapse of the Accident Group had been circulating since Thursday evening, when employees with company mobile phones received a series of text messages, warning them they would not receive this month's salary.
Workers were first asked to "check your e-mail for salary news" and then told that "unfortunately salary is not paid".
Staff were given the news at Manchester head office at noon on Friday. During the morning, a BBC reporter saw security preventing staff from leaving the building with their personal belongings.
One worker, who had just been told she had lost her job, told the BBC: "They came in and said the administrators have taken over, some of us may have jobs and there are letters going out in the post. It was a bit angry in there. There was a lot of shouting."
After having had an accident, the company's customers could take out an insurance with Accident Group that covered them for making their personal injury claims. Legal expenses were paid for if they lost their case.
Company or creditors ask court to put firm into administration
Administrators take on day-to-day control
Firm is protected from creditors
Company can be rescued - or is sold at best value
Suits mainly larger companies because of administration costs
The company collects the claims and then passes them on to solicitors.
Customers have to pay the hefty insurance fee only if they win their claim.
Terry Lindon, chairman of rival firm Invaro, said the Accident Group's business model was "wholly flawed", and called on the government to regulate the sector more tightly.
Amulet Group now has a network of 35 shops and kiosks around the UK.
Last year it reported profits of £17.8m on a turnover of £243m.
It arranged insurance for 178,000 people for the year to 31 August.
Parent company Amulet Group is now in administration.
What remains of the firm is now protected from its creditors, while the administrators from accounting firm PricewaterhouseCoopers (PwC) hope to sell the remaining parts of the Group.
Day-to-day managerial control is now be in the hands of Michael Horrocks and Craig Livesey of PwC.
A spokeswoman for PwC said the administrators had already received "expressions of interest in parts of the Group's assets and business".
I am absolutely disgusted by the whole thing. I received a phone call after 11 at night on Thursday telling me not to come to work on Friday as I didn't have a job, and I wouldn't be getting paid. I have bills and a mortgage to pay and am outraged that they can be allowed to do this. I have worked so hard for this company and all they could manage to do was send me an impersonal text message to say I no longer had a job and "unfortunately my wage had not been paid"!
I have great sympathy for the staff, however I will not miss being harrassed by Accident Group employees every time I walk down the High Street, wanting to know if I have had any accidents. You should see them descend on anybody with a limp or a walking stick. Perhaps if there are fewer spurious insurance claims as a result of this company's demise, our premiums might go down.
I think the method of notification to the workers sums up the general ethos of this company. Whilst sympathy will not be hard to find for the now redundant workers, few in this industry will shed any tears for the demise of this organisation.
I was a employee at the accident group in the Manchester head office, and the fact the company was aware of the possibility of this happening and didnt let us know, is very upsetting. I personally am owed approx £1,800 in wages today, and approx £1,500 in commision the next month, this has put us all in very bad positions!!!
I have currently got a claim going through the accident group. When putting a claim in a loan is secured with the Royal Bank of Scotland in your name, payable by you if you fail to complete the claim. The accident group have secured the loan in my sister's name but have not been availble to comment on what is going on with the claim or the loan.
The demise of Accident Group has severely damaged my health. I nearly died laughing. I would sue them but for the fact they are out of business.
They promote the cult of the victim, they cause insurance premiums to rise.
As an employee of TAG I am still owed several thousand pounds worth of expenses which I have been trying to recover for a year, in addition to this month's salary payment. It is now likely that I will be forced in to personal bankruptcy. TAG's administration procedures are a cacophonous shambles. The management are simply cowardly. The impact on personal injury departments of solicitors firms throughout the country will be extremely acute if not entirely crippling.
We are in complete distress about being sacked, its not the fact that we have lost our jobs its the manner in which we have. There are people who have families and bills to pay "what are they meant to do"? Many have worked there for a long time who have been offered many jobs before and have turned them down because of the loyalty for the Accident group. Look how we are all repayed notice via a text message. I think its a disgrace.
Keith Hooper & Craig Mannion,
I left the company on 02.04.03 and I am still waiting for my commission payment of £22,000
I feel sorry for the people that will be left without work as a result of this, but one less "ambulance chaser" has to be a good thing.
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