Djanogly loses powers after financial controversy

As reported in the Telegraph and the Guardian, Justice Minister Jonathan Djanogly has handed responsibility for regulating claims management firms to Justice Secretary Kenneth Clarke after a conflict of interests was exposed. An inquiry was launched by Cabinet Secretary Sir Gus O'Donnell into revelations that Djanogly's children held shares (which they have now sold) in his brother-in-law's claims management companies and stood to gain from legal aid changes that Djanogly was piloting in parliament.

While O'Donnell found that the minister was not in breach of ministerial code and that no further investigation into the matter was necessary, he concluded that regulation of these businesses should be the responsibility of another minister. A Ministry of Justice spokesperson said of O'Donnell's findings: "The cabinet secretary has concluded that Jonathan Djanogly took the appropriate steps to prevent any conflict between his financial interests and his ministerial duties. There is no evidence that he acted in any way other than in the public interest. Djanogly retains ministerial responsibility for civil justice policy. He has requested that the Claims Management Regulation Unit be overseen by a different justice minister, to avoid any possible distraction from this important issue. The Ministry of Justice has agreed to this change."

Djanogly had failed to declare that his children were minority shareholders in Going Legal and Legal Link Introductory Services, his brother-in-law's businesses which put people in touch with no-win, no-fee lawyers and make a profit by claiming a referral fee. The independent body responsible for advising ministers on legal regulation, the Legal Services Board, said in May that the case for banning referral fees had not been made out; however, four months later (without consultation or impact assessment), Djanogly announced a ban on referral fees in personal injury cases. This effectively protected his brother-in-law's businesses, as they deal with employment law so were not affected by the ban.