Claim farming soon to be prohibited in South Australia

Making unsolicited contact with an individual (for a benefit) in order to encourage them to pursue a personal injury claim will soon be prohibited in South Australia. It will also be prohibited to provide or receive a benefit in exchange for a 'claim referral'.

In September 2025, South Australia's parliament passed the Statutes Amendment (Claim Farming) Bill 2024.

South Australia's reforms are subsequent to the changes implemented in Queensland and New South Wales prohibiting claim farming. However, South Australia is the first jurisdiction in Australia to expressly prohibit claim farming in relation to both personal injury claims and applications under the National Redress Scheme.

The Statutes Amendment (Claim Farming) Bill 2024 (currently pending royal assent) amends both the Legal Practitioners Act 1981 (SA) (LPA) and the Summary Offences Act 1953 (SA) (SOA).

What is claim farming?

Claim farming commonly involves individuals or businesses (who are seeking a benefit) making unsolicited contact with potential claimants in order to encourage or persuade the individual to pursue a compensation claim.

A claim farmer can be a legal practitioner or an intermediary between a claimant and law firm. Claim farmers often pressure vulnerable individuals (including survivors of child sexual abuse and people in custody) to lodge compensation claims. They may seek to influence the allegations made or make misleading promises to a potential claimant.

Claim farming ban in South Australia

In South Australia it will soon be an offence (under section 42B(1) of the SOA) for a person to approach or contact a claimant to solicit or induce them to make a personal injury claim. This includes a claim for redress under the National Redress Scheme for Institutional Child Sexual Abuse. A maximum penalty of $50,000 is prescribed.

However, section 42B (1) will not apply:

• if the claimant has requested the contact, or
• if no benefit is expected (and no benefit is actually received) in exchange for the contact, or
• in relation to contact by a law practice or legal practitioner where particular circumstances exist as detailed in section 42B(4) (including specific circumstances involving class actions).

A 'benefit' includes goods, services and monetary payments. However, it does not include a gift 'of goods or services of a value not exceeding the prescribed amount'.

Under section 42A of the SOA it will also be an offence for a person to give or receive a benefit in exchange for a 'claim referral'. A 'claim referral' is the referral of a claimant to a person for the provision of a service related to the claimant's claim. A maximum penalty of $50,000 is also prescribed. However, advertising or promotion of a service to 'the public or a group of persons' remains permissible. Additionally, section 42A does not apply in respect of a law practice where specific circumstances exist as set out in section 42A(3) (e.g. a law practice with a conflict of interests or insufficient expertise is still permitted to refer a claimant to another law practice provided that the value of the benefit received in exchange is less than the amount prescribed by the regulations).

Aside from the maximum penalty, there will be 'additional consequences' for law practices involved in claim farming. Essentially, if an associate of a law practice (as defined in the LPA) is convicted of claim farming the law practice will not be entitled to recover any fees or costs relating to the provision of services for the claim. The law practice will be required to repay any amount already received relating to the services.

Further, the amendments to the LPA mean that legal practitioners engaging in claim farming may be found to have engaged in unsatisfactory professional conduct or professional misconduct. In this context, whether a legal practitioner has contravened the provisions prohibiting claim farming will be determined on the civil standard of proof (balance of probabilities) rather than the criminal standard (beyond reasonable doubt).

Circumstances giving rise to the Statutes Amendment (Claim Farming) Act 2024

Following the Royal Commission into Institutional Responses to Child Sexual Abuse various legal barriers to claiming were removed in order to assist victims to successfully bring a claim or seek redress. However, concerningly, since then numerous vulnerable individuals (including victims of child sexual abuse) have reported being cold called and exploited by third parties seeking to financially profit from a claim being made.

In 2022 Queensland passed the Personal Injuries Proceedings and Other Legislation Amendment Act 2022 banning claim farming practices. This followed the state's inquiry into claim farming practices which revealed a rising trend in third parties and law firms making unsolicited approaches to vulnerable victims.

Meanwhile in NSW historical child abuse civil claims increased exponentially (particularly from 2022) with growing concerns surrounding the risks of fraudulent claims arising from claim farming. On 9 April 2025 the Claim Farming Practices Prohibition Act 2025 came into force in NSW prohibiting the solicitation, buying or selling of personal injury claims (with a penalty of up to $55,000 or 500 penalty units). Also a corresponding amendment to section 165B of the Legal Profession Uniform Law Application Act 2014 (NSW) was made effectively providing that a legal practitioner who contravenes the claim farming prohibition may be found to have engaged in unsatisfactory professional conduct or professional misconduct.

In respect of the South Australian Statutes Amendment (Claim Farming) Bill 2024 the second reading speech by the Honourable Susan Close MP of South Australia acknowledged that whilst claim farming is relatively infrequent in South Australia the reform is intended as a proactive step to prevent South Australia becoming 'a destination of choice for claim farmers, particularly as other jurisdictions begin to take action against (claim farming)'. The Honourable Dr Close MP stated that among the most distressing instances of claim farming reported to the government 'are cases where victims of child sexual abuse who are incarcerated at the time of the unsolicited approach are approached while in prison and, some of the time, have never even spoken about the traumatic abuse suffered as a child, let alone want to share those horrific memories with a total stranger out for a quick buck'.

Implications for insurers

South Australia's ban on claim farming is a step in the broader movement occurring to stamp out unethical conduct which exploits vulnerable people and the legal system (including the services intended to support survivors of child abuse).

These reforms are anticipated to prevent frequent claim farming activities occurring in South Australia (especially as the practice is already prohibited in some other jurisdictions).

As legislative efforts to combat claim farming expand across Australia, it is anticipated that a decrease in the volume of claims made may be achieved, especially in respect of fraudulent claims. This may reduce the strain on the judicial system, insurers and government bodies by decreasing costs and resources associated with defending fraudulent claims. In respect of claims for redress this may also facilitate the timely advancement of genuine claims in line with the Royal Commission's objectives.

Summary Offences Act 1953
Statutes Amendment (Claim Farming) Bill 2024
Legal Practitioners Act 1981
Personal Injuries Proceedings and Other Legislation Amendment Act 2022
National Redress Scheme

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.