Personal injury lawyers and claims management agencies could see their operations limited following a review of health and safety laws focusing on the UK's compensation culture.

Lord Young's report – Common Sense, Common Safety – was published last week and calls for restrictions on the volume and type of 'no-win, no fee' advertising for personal injury claims, as well as restrictions on the operations of both the agencies referring the cases to solicitors and the lawyers themselves. Referral fees themselves would not be banned by Young.

Young states that the incentives for claiming competition have to change, arguing that the "system must be fair and proportionate without placing an excessive financial burden on the losing party".

As part of his recommendations he calls on the Solicitors Regulation Authority (SRA) to better regulate personal injury lawyers and states that he supports recommendations by Lord Justice Jackson to reduce the cost of civil litigation while allowing for contingency fees.

In an annexed letter to the SRA, Young (pictured) said: "The general impression these advertisements create is that, no matter how trivial or unsubstantiated a claim for damages may be, there is a firm of lawyers ready and waiting to pursue it. The impact on business, particularly small and medium sized business, is considerable."

"I should be grateful if the SRA could undertake a review of the Solicitors' Code of Conduct to ensure that it is sufficiently tight to curtail such damaging activity."

Young's report has been welcomed in part by the Bar Council.

Michael Todd QC, who has led the Bar's response to the Jackson review of civil litigation, said: "The Bar Council recommended that the funding aspects of the costs of civil litigation should be the subject of a separate consultation, and is pleased that Lord Young welcomes the Ministry of Justice's forthcoming consultation on conditional fee arrangements, as we do. Lord Young's criticism of referral fees is also welcome."

However, concerns have been raised that the new policies might prevent victims of personal injury seeking justice.

Todd added: "If availability of legal aid is to be reduced, then the Government has to be mindful to preserve other means of accessing the justice system, whilst weeding out the potential for abuse."