I read with some interest and no little surprise that it seems that insurers are not disclosing to their policyholders referral arrangements and the level of fees they receive.

After the introduction of the Solicitors Code of Conduct in 2007, there was a personal injury conference in Liverpool at which one of the speakers was from the Solicitors Regulation Authority.

I raised with them this very point – insurers were not revealing details of referral fees to their policyholders and there was some concern that solicitors receiving these referrals were not disclosing the referral arrangements, on the basis that it was felt by insurers and their panel solicitors that the insurers and referrers were governed by the Financial Services Authority, and not by rule 9 of the Solicitors Code of Conduct 2007.

The SRA representative made it clear at the conference that the SRA was seeking to ensure that this code was rigidly enforced.

I asked how many solicitors on insurance company panels had been investigated by the SRA; she was unable to tell me but said she would look into it.

Rule 9 of the Solicitors Code of Conduct 2007 makes it abundantly clear that there are no exemptions from the rule. If solicitors are paying referral fees the code applies.

The agreement with the referrer must be in writing (rule 9.02(a)).

The introducer (that is to say, the insurer) must undertake as part of the agreement to comply with the provisions of rule 9 (rule 9.02(b)).

By rule 9.02(e) the agreement must provide that, before making a referral, the introducer (that is to say, the insurer) must give the client all relevant information concerning the referral, in particular:It is clear from James Dean’s article that the insurance companies are not abiding by the written agreement which the solicitors on their panel must have with them.

  • The fact that the introducer has a financial arrangement with the solicitor; and
  • The amount of any payment to the introducer which is calculated by reference to that referral.

It is also clear that the solicitors on the insurer’s panel are in breach of rule 9. Rule 9.02(f) reads: ‘If you have reason to believe that the introducer is breaching any of the terms of the agreement required by this rule you must take all reasonable steps to ensure that the breach is remedied.

'If the introducer continues to breach it you must terminate the agreement.’

It seems on the basis of Mr Dean’s article that the SRA has not visited any solicitor who is paying referral fees to insurance companies. It is clear that some panel solicitors must be in breach of Rule 9.

This seems to be further evidence of the apparent willingness of regulators and courts (in relation to false allegations of fraud) to allow the insurance industry to ride roughshod over the rules which the rest of us are expected to adhere to.

Alternative business structures are to be introduced in October. Such organisations will only be required to have a single lawyer on their staff who will be personally responsible for compliance with the regulations.

Does anybody seriously believe that such a person is going to be able to withstand pressure from the owners of the ABS, to ensure the rules are complied with?

Anthony C Learmonth, Coyne Learmonth, Great Crosby, Merseyside