SRA will not provide detailed rules on referral fee ban
Solicitors’ demands for detailed rules to help them comply with the forthcoming ban on referral fees in personal injury cases will not be met, the Solicitors Regulation Authority (SRA) has confirmed.
The referral fees ban is due to come into force next April, as part of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. The government is introducing it in response to suggestions that referral fees are encouraging higher numbers of claims and therefore higher insurance premiums.
The SRA intends to use an “outcomes-focused approach” to regulate the ban, which will allow it “to look at the substance of an arrangement, rather than just its form, and focus on those arrangements that pose a real risk to the public interest”.
However, responses to the SRA’s June discussion paper included concerns that the Law Society previously found it difficult to regulate the payment of referral fees and called for “clear guidance” on the ban.
Having published its analysis of the responses last week, the SRA says: “It is not the function of the SRA to provide regulated persons with ‘safe harbour’ guidance.
“However, given the interest in this issue, it is likely that the SRA will publish further guidance setting out our legal interpretation of what is caught by the Act. Our preliminary view is that the definition within the Act is fairly wide-ranging.”
It warns that joint marketing and advertising arrangements are “vulnerable to being in breach”, and says solicitors had raised “particular concerns” about these. It says it will look at the issue “so as to ensure that a clear and consistent message is delivered in the forthcoming months”.
