The Department for Constitutional Affairs (DCA) is expected to give the Lord Chancellor, Lord Falconer, powers to regulate claims management companies (CMCs) later this month.
Sources close to the Claims Standards Council (CSC)predicted the body would be amalgamated with the DCA.
"The DCA will end up being the regulator, using the same personnel which the CSC has in place. I don't think the Law Society will be involved with the regulation process, instead they will be told to get tough on solicitors," the source said.
It is expected the Law Society will be given greater authority to independently monitor the performance of law firms operating in personal injury claims.
The DCA will give feedback on the contents of an independent report which was commissioned to investigate the CSC's ability to become regulator in two weeks.
The report, written by former ABI director-general Mark Boleat, is expected to recommend that the CSC should distance itself from commercial operations which could give way to potential conflicts of interest.
Meanwhile, the CSC has looked to establish the Claims Standard Institute as a separate independent body which would regulate existing CSC members.
The Advertising Standards Authority is also expected to publish its report on CMCs advertising in the next two weeks.
' The Association of Personal Injury Lawyers (Apil) is mounting pressure on the government to change clause one of the Compensation Bill.
Apil president Allan Gore, will tell guests at the president's annual dinner: "It is not too late for the government to reflect on the folly that is clause one by dropping it."
