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SRA publish referral fee guidance and enforcement strategy

SRA publish referral fee guidance and enforcement strategy

The Law Society Gazette has reported that the SRA have moved to calm fears over interpretation of LASPO in relation to the forthcoming ban on referral fees in PI cases. New guidance and  the enforcement strategy have now been published to help settle the confusion that has arisen as to how the ban will be policed in the coming months.

Richard Collins, Executive Director of the SRA has been reported to have announced that, although the SRA will not give 'Safe Harbour' advice to firms seeking to compy with the new ban on referral fees in PI cases, it is intended to produce case studies in the SRA handbook that will give examples from real examples schemes that have been investigated by the regulator.

Mr Collins said to the SRA board,

‘It’s very clear that the government struggled to define what a referral fee is. The range of possible arrangements is pretty much infinite and it’s simply not possible for us to come up with a set of words which would give absolute clarity.’

On 20.3.13, the SRA published the consultation on the Referral ban, which concluded that there was a lack of clarity in respect of LASPO.

'It is clear from the responses that there is scope for interpreting the provisions in LASPO in different ways and that there is some lack of clarity about which practices and business models which might be affected by the ban, particularly in relation to issues such as “pooled marketing resources” and payments for services. Many respondents felt that the SRA should provide clarity, either through prescriptive rules or detailed guidance describing exactly the kinds of arrangements that will or will not be acceptable.'

Examples are given of both permitted and non permitted arrangements.

In order to deal with the confusion, some guidance has been given and an enforcement strategy has been produced at Part 4 of the consultation. This makes it clear that the overriding principles in the Code of Conduct 2011,  chapters 6 (your client and introductions to third parties and chapter 9  (Fee sharing and referrals) will apply. It is clear that transparency is the key consideration, together with independence and professional judgment.  

Click here to read the full document that contains the guidance and the enforcement strategy.

As to payments for advertising and marketing, although guidance has been promised by the MOJ as to what will be considered to be a realistic payment under LASPO, non has yet been sighted, apart from a simple FAQ document that is of little assistance. As there is now only a week or so to the introduction of the scheme, this is yet another example of regulatory obfiscation that needs to be resolved as a matter of urgency.


For any advice and assistance for issues like these please do call Jeremy on 0844 2722322 or submit a comment below. Jeremy will come back to you at the earliest convenience.

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