REVIEW: principles underlying fees to come under scrutiny

The Law Society Regulation Board is to review the underlying principles governing referral fees, and has vowed to crack down on firms breaching the rules.


At a meeting in London last week, the board said some of the breaches 'have adverse effects on clients, and undermine confidence in the profession'.


It plans to hold the review at its November meeting, after which it expects to undertake further work - in consultation with consumer and professional groups and other regulators - to see whether the rules and guidance should be changed.


The compliance committee will also oversee a programme of enforcement.

The moves were prompted by a report from the practice standards unit that unearthed widespread and systematic breaches (see (2006) Gazette, 21 September, 1).


These often included a complete lack of disclosure of the referral fee arrangement, inadequate disclosure, a failure to obtain an undertaking from the introducer to comply with the introduction and referral code, or a failure of solicitors to ensure that introducers are complying.


Board chairman Peter Williamson said: 'We are combining a programme to improve compliance, and a review of the principles of referral arrangements, to ensure that the public are properly protected and high standards are upheld.'


Desmond Hudson, Law Society chief executive for representation, welcomed the board's decision. He said: 'Our members rightly want more clarity about referral fees.'


Philip Hoult