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SRA clarifies approach to referral fee ban
23 May 2013

The Solicitors Regulation Authority (SRA) is continuing to work with firms carrying out personal injury work to ensure they remain compliant with the ban on referral fees.

The ban, which came into force on 1 April as part of the Legal Aid Sentencing and Punishment of Offenders Act 2012, prohibits the payment of referrals in personal injury cases. It has been introduced by the Government amid concerns of the high cost of civil litigation, rising insurance premiums, increasing numbers of claims and the perception of a “compensation culture”, where people are encouraged to claim for minor or even fictitious injuries.

Agnieszka Scott, SRA Director of Policy, reiterated the enforcement stance the Authority has taken after addressing the Manchester Law Society Personal Injury Conference yesterday (Tuesday 21 May). Some delegates said there was still a certain amount of confusion over what was and wasn’t permitted, especially with regard to marketing schemes.

Agnieszka Scott said: “We are actively engaging with all firms that want to remain compliant and we’d urge anyone with queries to get in touch to discuss their concerns. As we laid out in our enforcement strategy, while there’s no transitional period for the ban, we were never going to take a heavy-handed approach.

“We said we would show understanding to those firms that wanted to comply, and that’s the approach we are taking. We will be having less understanding conversations with those firms that show no willingness to comply.

“There is also a need for understanding our position too. We are fully committed to helping firms remain compliant and therefore engaging with them on adjustments to their business model.

“But by the same score, the Outcomes dealing with the referral fee ban carry no more or less weight than any other Outcomes in the Code of Conduct. Our approach to enforcement and compliance, including any sanctions in the light of proven wrong-doing, remain the same.”

The SRA has made a raft of resources available to firms on its website.

More on the?referral fee ban

These pages will continue to be updated as new material becomes available.

The SRA’s enforcement strategy for the referral fee ban can also be found here. To deal with the new legislation, the SRA has added two new Mandatory Outcomes to the Code of Conduct, which will be found in Chapter 6 and Chapter 9 respectively, and which state that “you are not paid a prohibited referral fee” and that “you do not pay a prohibited referral fee”. On top of the two new outcomes, the Code of Conduct will seek to define referral fees, while Indicative Behaviours illustrate how the outcomes can be achieved, avoiding the need to include detailed prescriptive rules.

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