SRA not convinced by the looming referral fee ban
The Solicitors Regulation Authority has expressed its reservations surrounding the impending referral fee ban poised to hit the personal injury industry next April.
It is worried such a ban could result in a “steep increase” in the number of financial failures amongst law firms as well as being unconvinced the prohibition of referral fees will succeed in its aim to put a stop to dodgy injury claims.
A spokesman for the SRA comments:
“If it is the smaller end of the PI market that suffers as a result of changes in the market, it is possible that even for small firms who do not do significant amounts of the work, the potential loss of revenues could add to the cumulative effect of difficult economic conditions, difficulties in maintaining adequate levels of bank financing and the impact of loss of other revenue through the continued stagnation in the housing market. The result could a steep increase in the number of financial failures amongst small firms.”
The SRA published a discussion document on how it will enforce the ban last week and is seemingly as perplexed about the actualities of what constitutes a referral fees as the rest of the industry. The document describes this aspect of the new law as difficult, “particularly where the introducer is providing a service to the solicitor, such as marketing, vetting of claims or other claims management activities.
Anyone wishing to respond to the document has just seven weeks to do so, although it will not be part of the formal consultation process on its proposals scheduled later this year.