A decision on whether to overturn the rule allowing referral fees was put on ice after a narrow poll in the council last week.

Following a lengthy debate, members voted 40 to 37, with two abstentions, to back the standards board's recommendation that they defer further consideration of referral fees until the incoming regulation board has had an opportunity to look at the issue.


The board begins shadow work in September and will take on responsibility for the Law Society's regulatory decisions from next January.


Several members had spoken in favour of a private member's motion brought by Denis Cameron, chairman of the conveyancing and land law committee, that the current referral fee rule should be amended to prohibit arrangements where the referrer has a continuing interest in the transaction, such as an estate agent. However, there was no vote in the light of the decision to put the issue to the regulation board.


The debate followed a regulatory impact assessment on reinstating a ban, prepared by the standards board. Its view was that there was insufficient evidence to justify the move.


The assessment highlighted opposing views from the Master of the Rolls, who considered referral fees a mistake, and the Office of Fair Trading, which found it 'highly unlikely' that a ban could be reimposed (see [2005] Gazette, 14 July, 1).


Standards board chairman Andrew Holroyd said the fresh eye of the regulation board was needed. 'An impasse has been reached between a majority of the standards board and what is perhaps a majority of council,' he explained.


Many members also criticised the way in which the issue has been handled over the past couple of years, with few council meetings passing without it on the agenda. The ban was finally overturned in December 2003 through a private member's motion, during which the debate was guillotined.


Former President David McIntosh said: 'I think we've made fools of ourselves on this issue from time to time. Council has not managed it well.'