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Welcome to a special Claims Standards Council bulletin on 29 September 2010
The Legal Services Board has published a discussion document, setting out the Board’s initial views on the regulatory treatment of referral fees, for consultation.
Click here to see it.
This has long been a contentious issue. Our intention with our work has been to illuminate the debate by commissioning economic evidence, the views of consumers and advice from our Consumer Panel.
During our investigation we have found no compelling evidence for a ban of referral fees but we were concerned by the lack of awareness consumers had of them. This has led us to make 3 main recommendations for consultation
Improving transparency and disclosure for consumers
Improving transparency and disclosure in the market
Delivering active regulation
These recommendations are very much in line with the Legal Services Consumer Panel’s advice to us that might be summarised in their conclusion of “reveal, regulate and retain”. The Panel argue that the last element depends on the delivery of the first two, which are of equal importance. The Board broadly believes that this provides a clear basis for further discussion.
This is an important area of work and we invite you to study our preliminary conclusions closely. The consultation closes on Wednesday 22 December. Responses should be sent to
Michael Mackay
Legal Services Board
7th Floor, Victoria House
Southampton Row
London WC1B 4AD
Fax: 020 7271 0051
Email: consultations@legalservicesboard.org.uk
The Legal Services Board has published a discussion document, setting out the Board’s initial views on the regulatory treatment of referral fees, for consultation.
Click here to see it.
This has long been a contentious issue. Our intention with our work has been to illuminate the debate by commissioning economic evidence, the views of consumers and advice from our Consumer Panel.
During our investigation we have found no compelling evidence for a ban of referral fees but we were concerned by the lack of awareness consumers had of them. This has led us to make 3 main recommendations for consultation
Improving transparency and disclosure for consumers
Improving transparency and disclosure in the market
Delivering active regulation
These recommendations are very much in line with the Legal Services Consumer Panel’s advice to us that might be summarised in their conclusion of “reveal, regulate and retain”. The Panel argue that the last element depends on the delivery of the first two, which are of equal importance. The Board broadly believes that this provides a clear basis for further discussion.
This is an important area of work and we invite you to study our preliminary conclusions closely. The consultation closes on Wednesday 22 December. Responses should be sent to
Michael Mackay
Legal Services Board
7th Floor, Victoria House
Southampton Row
London WC1B 4AD
Fax: 020 7271 0051
Email: consultations@legalservicesboard.org.uk
Referral fees are a contentious feature of today‟s legal services marketplace. On the one hand it is argued that they are economically inefficient and morally indefensible - that it is simply wrong to trade individuals‟ legal requirements, that doing so drives up costs and charges and hence reduces access to justice. On the other hand, it is argued that referral fees are simply a legitimate client acquisition cost. Lawyers have not always been effective in marketing their services and some clients have been left unserved. Claims management companies and insurance companies have therefore helped to correct this deficiency in the market and so furthered the cause of access to justice. For this service, a fair profit is justified and the ability of lawyers to pay fees for their services should not be denied.
