LSB seeks to manage rather than ban referral fees.

The Legal Services Board final report into the review of referral fees has been concluded.  The “Decision Document” which runs to 43 pages sets out the outcomes that it wishes to secure for consumers.
These outcomes are to generally allow referral fees subject to specific measures to reduce the potential likelihood of harm.  Measures include provision of disclosure to the client of the arrangement or fee.
A regulator may still impose a ban on referral fees where it can evidence harm to consumer.
Some parts of the sector were hoping that the LSB would ban referral payments in conveyancing for both solicitors and licensed conveyancers to enable a level playing field of regulation across conveyancing however the LSB did not reach the conclusion that an outright ban would be appropriate.
The report explains that the LSB commissioned Charles River Associates and the Consumer Panel with the task of collating evidence as to whether referral fees were harming consumers or were diminishing access to justice.  It concluded that there was no evidence of harm where consumers were properly informed of financial payments.
Individual regulators have been given a set of criteria that they would have to meet should they wish to impose a ban on referral fees but it would be hard to imagine a situation where one regulator imposed a ban and another regulator of conveyancing did not.
David Edmonds, Chairman of the Legal Services Board said “Before this exercise, the debate on referral fees was characterised by high passions but a lack of hard evidence.  Following this detailed investigation, we are persuaded that the interests of consumers are best served by continuing to permit referral fees, but managing their impact through shining the light of transparency on them.
We have set out a range of measures that can help achieve this — with the approved regulators free to choose what is best suited to their part of the market.  Whilst they will have the flexibility to tailor action, securing these outcomes is essential and we will track progress carefully over the coming months.” 
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