SRA ponders policing of referral fee ban
The Solicitors Regulation Authority will set out within weeks how it intends to police the forthcoming ban on referral fees.
The SRA has confirmed it will draw up a formal policy position in advance of a 12-week consultation starting this autumn.
The authority has stated that ‘all options remain on the table’, but the ban is likely to involve a reworking of mandatory outcomes of the code of conduct.
Around 30 responses were received to the SRA’s initial discussion paper on the government’s plan to ban referral fees for personal injury cases by next April.
Responses are now being collated ahead of the consultation launch, as the SRA tries to pin down the definition of a referral fee and how the ban would be consistent with outcomes-focused regulation.
David Hackett, SRA 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.’
The Ministry of Justice sees a ban as an important step in reducing costs in personal injury cases and preventing spurious claims.
But the SRA admitted in its own discussion paper that it would not be able to prevent alternative business structures being created to get round the ban, so long as they complied with regulatory obligations.
Comments
Will the SRA get this one right?
After their remarkable and expensive failure to get the online “ my SRA” working, I have to say I'm dubious about the ability of the SRA to deal properly with this highly contentious issue. Let's hope they can get this one right!
Hopeless
Whatever they decide they will screw it up. The SRA screw everything up. Not just slightly - utterly and completely.
Close them down. Now.
not hopeless, just hapless
That seems a little harsh, dude. Admittedly, they are hopeless when it comes to administration, anything to do with computers, deadlines, answering queries, answering complaints and regulation.
What they were good at was mindless intimidation, nitpicking and over - regulation. That kept the profession in order because we knew to overreact when complying with their rules and regulations, especially if they were coming to visit. Now it seems they want to strip that element away, so, yes, maybe NOW they're redundant. But they weren't before.
too late
Why are referral fees to be banned now?
I have never been a fan of them at all but now in an age when the insurance companies own solicitors and probably control 90% of the destination of RTA accidents through selling Before the Event Insurance what will this achieve?
If I have an accident I'm 99.9% sure that my insurers will have a subsidiary or a policy that will not be covered by this ban.
Like with conveyancing, I am sure this will end up hitting small law firmss and businesses more.
Farce
It is completely illogical that it would appear that our regulators will be able to stop a firm of solicitors paying referral fees but if a solicitor is part of an ABS they can ??????? Fair Trading Act ?
It smells just like the way the insurance industry got around the cold calling /third capture angle by being regulated by the FSA
If anyone from the SRA reads this can they .... oh no you're more interested in sending out pointless questionnaires or focusing on getting our applications on line, was it a 6 month cock up ? I may raise this when I'm queried why I didn't respond to a client within 24hours. Did anyone get sacked for that ? I'm just waiting for "lessons will be learned" , must be great not working in the real world
I don't get this angle at
I don't get this angle at all. It seems to be a Gazette thing, because it seems to be referred to in a lot of angles.
If a referral fee is banned, then it is - and will be - banned both for traditional practices and ABSs.
What they mean when they talk about loopholes to "get around" the ban, is if an ABS were composed of a CMC and a Solicitors firm. In that case the referral fee would still be banned, but there would be no need for a fee for the referral in the first place as the CMC and ABS would be one and the same.
But then, it wouldn't be a CMC any more - it would be a licensed ABS, i.e. to all intents and purposes a solicitors firm.
So it could do as much as, and no more than, any other firm could do.
Of course we all know that the benefit that CMCs have over solicitors is that they can ignore the rules. They are regulated, but even if they get caught, the worst that could happen is that they are closed down as a limited company. Nothing to stop the directors walking out and opening another limited company the day after and applying for - and obtaining - authorisation as a CMC. The individual salesmen have no personal liabilities or obligations. So cold-calling, misleading, etc., are common place.
But any CMC that formed an ABS with a solicitor would be bound by the Code of Conduct. If they had their license as an ABS withdrawn, it is unlikely anybody involved would ever get another one [well, knowing the SRA, this is probably not true, but that's the theory]. Plus there is personal liability for the significant costs involved (both wasted in having set up the ABS in the first place, and in the costs of closure, SRA investigation costs, fines and penalties).
So an ABS - whether composed of a partnership between salesmen and solicitors, or anybody else - has no greater or lesser privileges than anyone else. Yes an ABS with a CMC can run advertising campaigns - but so can a sole practitioner.
Or am I really missing the point?
(I meant a lot of
(I meant a lot of "articles")
Referral fees
Ban them not just in PI but all of them- esp. those in conveyancing, where Estate Agents' backhanders are notorious but commonly not disclosed to the client.
And your evidence for this
And your evidence for this claim is?
Referral fees and other unprofessional practices
As a retired solicitor:
1. I recall the Law Society held a postal vote on bribes; the profession voted 'No'; but in its arrogance LS proceeded to permit them. Now we have a ban.
2. So far so good, but what about associated malpractice e.g. insurance companies and claims agents soliciting business for PI or motor claims.As in many matters, there are too many enforcement agencies each of which says 'Not for us guvnor'. Can SRA act as a co-ordinator of complainers where a firm of solicitors is involved?
3. Over the years lawyers have been fascinated with IT and terrible at selection and implementation. After 2 years waiting for on-line registration of KR1 'keep my name on the roll', now we are told it will be done manually as before. With SRA it is "OPM" [Other peoples' money] so that does not matter.
4. I am so glad to be out of it all.
The long and winding road
Ah, a few weeks... so, it is already behind the August deadline for that was originally announced for the policy statement. Then there will be a 12 week consultation. Then more navel-gazing...
The reason that the operative date for LASPO was pushed forward to 2013 was to give the profession time to adjust their business model. Instead it is being used for this nonsense and an indefinite lack of clarity.
Get on with it man. The situation demands clarity before the Autumn, and while you are about it, some clarification on the payment of incentives to clients would also be of benefit!
Something is rotten in the state of Denmark
If the insurance industry states that it cannot make money from motor or employer insurance due to the prevalance of spurious claims, and it is the sole bulwark against the flood of such claims, surely the answer is to abolish the whole system entirely and introduce a New Zealand ACC type scheme here, or to restrict any claims to a set high level of disability such as in NSW?
This would reduce the level of claims, would cut out the attraction of spurious claims other than those of the very determined, and would lead to cheaper 'insurance' and a better deal for the consumer/ tax payer. It would also of course undermine the profits of the insurance industry
This of course ignores the fact that the insurance industry has a privileged quasi-govt position, with compulsory insurance being backed up criminal sanction by the state
It also ignores the fact that the insurance companies for years undercut each other to run motor claims at a breakeven or a loss basis, to use the premiums to generate a profit, to generate new business and gain inroads into more lucrative insurance areas. It was only with the economic crash that motor policies were set at more realistic levels and the war on 'fraud' was announced as a major concern.
It also ignores the fact that for years insurance companies have had informal arrangements with 'panel' solicitors charging astronomical fees for BTE claims triggered under the policy, and the ABS changes simply will enable them to formalise what they have always done.
Not once have i ever seen anyone tell the consumer just how much money the insurance industry was making by such practices, and ultimately costing them-instead we only ever see the headline figures for the amount of suspected fraud out there
And not once in all of this introduction of a brave new world to change the legal profession, and fundamentally undermine its independence, have i seen any indepth questioning of the role of the insurance industry, or any appetite to question whether it should have been the one subject to indepth review and reform.
Accepting there will be no proper regulation of what the insurance industry chooses to do, much as the string of banking scandals demonstrate, it makes little difference what rules the SRA announce, other than you can be sure it will regulate the easy targets.
Referral fees
As Law Man says above, the Law Society ignored the majority vote against referral fees/bribes. It acts against its members’ wishes, has lost the regulatory function and does little other than dream up superfluous accreditation schemes and the like. It is time for this feeble and flaccid organisation to be disbanded.
The disasters created by
The disasters created by referral fees has completely destroyed the credibilty of PI claims but has also seriously affected the conveyancing market and should be banned in any form across the board - Getting work is no longer about doing a good job - and at a fair price. CQS makes constant reference to being a mark of excellence etc - but that is not what attracts referrers these days - what attracts them is who is prepared to give them the biggest kick back.
We have an anti-bribery policy - what are referral fees but a posh name for a "bung" - talk about hypocrisy!