Legal Services Board approves CLC referral fee approach

The Legal Services Board (LSB) has decided to grant the Council for Licensed Conveyancers (CLC) application to make rule changes in relation to referral fees.

The decision follows a CLC review and consultation, carried out earlier this year, which found no justification for a ban on referral fees in conveyancing.

Anna Bradley, Chair of the CLC, said: “Our review of referral fees in conveyancing found no evidence of consumer detriment — an assessment shared by the LSB and Legal Services Consumer Panel following their own past research.

“An outright ban on all referral fees that some have called for could not possibly be justified in relation to conveyancing on the evidence.

“We proposed, and the LSB has granted, a proportionate regulatory response in the form of additions to the transparency requirements already in place. Those enhanced transparency requirements empower the consumer to manage the low level of risk themselves.”

During its review, the CLC determined that the biggest threat to the consumer interest posed by referral arrangements was the level and timing of information given to consumers. As a result, the CLC made additions to its Disclosure of Profits and Advantages Code to ensure that referral fees are managed by Licensed Conveyancers in an open and transparent way that is in line with the regulatory outcomes set out by the LSB.

These are:

– Agreements with third-party referrers should be in writing and subject to periodic review

– Clients should be informed in writing of the arrangement’s existence no later than when accepting instructions, or when introducing a client to another person;

– Clients should be advised they have a choice of provider

– The client should be informed of the nature of the arrangement (including any payment made), with whom it is made, and any impact (including any legal costs they are charged)

Licensed Conveyancers will have three months to comply with the new arrangements following their publication.

What do you think of the decision? Does this reflect your feelings on referral fees and conveyancing?

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