SRA update on referral fee ban
Following the first six months of the ban on referral fees, the Solicitors Regulation Authority (SRA) has issued a warning note based on their experiences so far.
Whilst focussed on personal injury the key points could just as easily apply to conveyancers, for instance failure to advise clients properly about the costs and how their claim should be funded and lack of transparency about the arrangement.
It might be worthwhile reviewing your arrangements, at some point as the focus is likely to change to conveyancing.
Firms are encouraged to read the warning note that they have published on their guidance pages.
Richard Collins, SRA Executive Director, said: "Firms have done a lot to ensure they comply with the ban, but this does not in any way reduce the need for firms to continue to ensure compliance with the other Principles and Outcomes in the Code of Conduct.
“Worryingly, we are beginning to see some examples of firms that – in their desire to maintain a volume of new clients in a manner compliant with the referral fee ban – have not paid sufficient attention to compliance with the broader, and longstanding, regulatory requirements regarding referrals."
A number of different types of issues have occurred so far, these include;
- Agreeing with an introducer to deduct money from clients’ damages
- Inappropriate outsourcing of work to introducers
- Referrals to other serviceproviders which are not in the best interests of clients
- Failure to advise clients properly about the costs and how their claim should be funded
- Lack of transparency about the arrangement
The SRA stressed that they are happy to work with firms to help them put things right and that their approach to tackling the ban is both proportionate and constructive.
The SRA stressed that it is important for firms to make sure they are adhering to all handbook rules and have not inadvertently breached other parts of the Code of Conduct whilst making changes to their business models.