News releases

SRA debates way forward for referral fee ban

The Solicitors Regulation Authority has launched its official consultation on its approach to enforcing the ban on referral fees in personal injury cases.

The ban comes into force in April 2013 as part of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO). The SRA is therefore consulting on proposed changes to the regulatory framework to ensure it complies with the Act.

The consultation outlines the proposed revisions to the Outcomes and Indicative Behaviours concerning referral fees in the SRA Code of Conduct. The SRA has suggested two new Mandatory Outcomes be added, stating in Chapter 6 that "you are not paid a prohibited referral fee" and Chapter 9 that "you do not pay a prohibited referral fee".

The Code of Conduct would also define referral fees. Indicative Behaviours illustrate how the outcomes can be achieved, avoiding the need to include detailed prescriptive rules.

Also included is draft guidance outlining the SRA's interpretation of the relevant provisions of LASPO. For example, the consultation document lays out how the SRA may view joint marketing schemes.

There's also a flow chart to help practitioners identify the risk of possible breaches, analysis of the issues, and a draft supervision and enforcement strategy. The SRA published a discussion paper on the matter in the summer to start the debate and received an encouraging amount of responses and viewpoints.

David Hackett, Regulatory Policy Manager, said: "We've already been listening clearly to all those with an interest in this matter as we develop a workable regulatory framework that ensures the integrity of legal services is protected and the rule of law upheld. We'd therefore urge as many possible as possible to take part in the consultation and continue to help shape our work.

"The document should bring a lot more clarity to the issue so that the profession can adapt their practices accordingly. It gives them a clear steer on our thinking and nearly six months to work this into their business models if needed."

The consultation does not debate the rights and wrongs of referral fees in personal injury cases or Parliament's decision to ban them. The ban came about amid concerns of the high cost of civil litigation, rising insurance premiums, increasing numbers of claims and the perception of a "compensation culture", where people are encouraged to claim for minor or even fictitious injuries.

The consultation can be found on the consultation pages of this website. It lasts for eight weeks, so responses are required by 18 December 2012.

Find out more about the consultation

The SRA will be working closely with other regulators and stakeholders during the coming months, which includes a Referral Fees Forum taking place on Monday 19 November.

All views will be collated and analysed and presented to the SRA Board meeting on 23 January. This will allow time for any changes to be made to the regulatory framework ahead of the ban coming into effect on 1 April.