SRA warns PI firms not just to focus on the referral fee ban

SRA warns PI firms not just to focus on the referral fee ban

Personal injury firms are being warned by the Solicitors Regulation Authority (SRA) not simply to focus their compliance activities on complying with the ban on the payment of referral fees and to remember other sections of the Handbook. To assist them a warning note has been published on the SRA web site.

The SRA state that it is aware of numerous examples of firms making changes that, while compliant with the outcomes that deal with the ban, potentially breach other parts of the Code of Conduct.

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.”

The SRA has given examples of the type of issues encountered, which include:

  • agreeing with an introducer to deduct money from clients’ damages;
  • inappropriate outsourcing of work to introducers;
  • referrals to other service providers which are not in the best interests of clients;
  • failure to advise clients properly about the costs and how their claim should be funded; and
  • lack of transparency about the arrangement.

The SRA says that where there are significant concerns, it is talking to firms to help them put things right. It is also working very closely with partners such as the Ministry of Justice and the Financial Conduct Authority, sharing information and raising issues as they emerge.

The Warning notice – “Referral fees, LASPO and the SRA Principles” – can be found on the SRA web site.

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