Solicitors Regulation Authority (SRA) Chief Executive Antony Townsend has reiterated that the Authority has taken an understanding approach to enforcing the ban on the payment of referral fees in personal injury cases.
Mr Townsend was speaking at the Legal Futures conference, The LEX Factor, at Bishopsgate in London on 6 June. And he told delegates that the SRA was continuing to take a measured approach as firms get to grips with the ban.
The ban, which came into force on 1 April as part of the Legal Aid Sentencing and Punishment of Offenders Act 2012) (LASPO), prohibits the payment of referral fees 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.
Antony Townsend said: “It is clearly very early days in terms of enforcement; we’re only nine weeks into the ban. And while there are those that may like to have seen hundreds of firms thrown instantly before the SDT on 1 April, we are taking a more proportionate and constructive approach to enforcing the ban wherever possible.
“Our enforcement strategy is focused on active supervision. Where we have concerns, we are engaging with firms to ensure compliance is achieved.
“Where we have significant concerns, we are talking to firms to help them put things right. We are also working very closely with our partners such as the Ministry of Justice and the Financial Conduct Authority, providing information to each other and raising issues as they emerge.
“Of course we will take formal enforcement action against any firm flagrantly breaching the rules. Those unwilling to change their practices and who fail to co-operate will face action.”
The SRA has made a raft of resources on referral fees available to firms. These pages will continue to be updated as new material becomes available. The SRA has also published an enforcement strategy for the referral fee ban.
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.