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Referral fee ban debate moves on

The Solicitors Regulation Authority is collating all the comments received in response to its discussion paper on the forthcoming ban on referral fees in personal injury cases.

The ban comes into force in April 2013, introduced as part of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO). The SRA published a discussion paper on the matter in June to encourage interested parties to put forward their views, the closing date for which was 31 July.

The paper aimed to encourage discussion of implementation of the provisions on referral fees by setting out the SRA's analysis of the issue and the potential effect on the sector. The paper also outlined the authority's current thinking on how the ban should be enforced in the context of risk-based, outcomes-focused regulation.

As well as inviting comments, SRA officers met with key players to gauge their views, including attending a conference in Manchester, in the heart of personal injury work. The responses, numbering nearly 30, are now being collated and analysed ahead of a formal consultation exercise in the autumn. Early indications are that the direction of travel outlined in the paper is broadly welcome.

David Hackett, Regulatory Policy Manager, said: "We had a very good response to the discussion paper, as you'd expect. There are a number of interesting aspects to the ban which we encapsulated in our paper, and these drew the responses we've received.

"We're now analysing those responses as we draw up our formal policy position ahead of going out for a full, 12-week consultation in the autumn."

The discussion paper outlines that the SRA doesn't feel that rules would be consistent with outcomes-focused regulation, and the best way forward would be to amend the mandatory outcomes within its code. This could be backed up by illustrative indicative behaviours, but all options remain on the table.

The Government's ban has come 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 Government believes that banning referral fees, along with a variety of other policy measures, will reduce costs in individual cases and prevent inflated or spurious claims.

Any changes made to the regulatory framework will come into effect in April 2013.

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