The Solicitors Regulation Authority (SRA) is to reconsider the controversial question of referral arrangements as new figures show that the number of firms not complying with rules governing referrals remains stubbornly high. The SRA also expressed fears that the current economic climate might encourage practitioners to cut further corners.

New figures seen by the Gazette show that levels of compliance with rules on referral arrangements show little sign of falling – and in some areas have got worse. While 22% of firms visited before November 2007 failed to disclose to clients their financial arrangements with the work introducer, the figure has risen to 32% since.

Other significant jumps included firms not giving clients a statement that their advice is independent (48% to 60%) and firms failing to confirm to clients that information disclosed will not be passed on without the client’s consent (46% to 60%).

Only 61% have reviewed their referral arrangements to ensure compliance by the firm and introducer. Almost a quarter of referral arrangements were not in writing – this is required when there is payment or other consideration, which is the case in the vast majority of arrangements seen by the SRA.

Even in areas where solicitors have improved, non-compliance is still high. More firms are complying with the requirement to obtain an undertaking that an introducer will comply with the referral rule, and to having satisfactory arrangements to ensure that an introducer provides the client with all relevant information, but breaches were still seen at 43% and 48% of firms respectively.

SRA chief executive Antony Townsend said: ‘This trend is disappointing, especially given our efforts to increase awareness of the rules. It is hard to believe that such high levels of non-compliance are entirely caused by ignorance. I am also concerned that the current economic climate might increase the temptation not to comply. The SRA board will consider the issue again shortly.

‘Solicitors in any doubt about referral arrangements should check the Code of Conduct and, if further guidance is needed, call the SRA ethics helpline.’