The Road Accident Fund (RAF) CEO, Collins Letsoalo says they have clamped down on legal costs by reducing them from R10 billion to R4bn because of a number of measures they have implemented.
Letsoalo said they have also recovered R800 million in duplicate payments from the lawyers. The Special Investigating Unit (SIU) was also roped in to probe these case and it managed to recover R400m in duplicate payments.
Letsoalo said they have been taking a number of initiatives to keep the RAF financially sustainable.
However, the RAF model was making it difficult to settle all claims and this has led to a huge backlog.
But they believe the Road Accident Fund Amendment Bill that is out for public comment will address the challenges faced by the fund and will make it financially sustainable.
Letsoalo and senior officials of the RAF were briefing the portfolio committee on transport on Tuesday.
The RAF has reduced legal costs from R10bn to R4bn.
“If you look at the trajectory of the legal costs they went up, as you can see that we have brought them down to less than R4bn as it is now. (Legal costs) increased from about R284m in 1998 to close to R10bn. For us, that is creating a big problem as the RAF,” said Letsoalo.
He said something had to be done to reduce legal costs.
The RAF CEO also told members of the committee they have reported lawyers who are involved in wrongdoing to the Legal Practice Council (LPC) and the Legal Services Ombud.
“We have found that a lot of money we have paid out has never made their way to the claimants and that is what has been an issue. We also ran a campaign called ‘know your rights’ campaign, meaning what are you entitled to once you lodge a complaint with the RAF. That has resulted in a lot of lawyers being reported to either the LPC or the Legal Service Ombud because of what people have done, taking money for the claimants and using it for themselves,” said Letsoalo.
Letsoalo said one of the measures they took to reduce the legal costs was to in-source lawyers through the Office of the State Attorney.
If they had not done anything to reduce legal costs this would have gone up and affected the finances of the RAF.
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