SRA issues warning note on risky behaviour by PI lawyers
Personal injury lawyers have been cautioned against risky behaviour that could fall foul of the referral fees ban.
The Solicitors Regulation Authority (SRA) fired out a warning note last week amid concerns that firms may be indulging in behaviour that flouts the 1 April ban.
It also warned that it knows of “numerous” examples of firms complying with referral fees but potentially breaching other parts of the code of conduct.
According to the SRA, claims management companies have been asking firms to pay them a proportion of clients’ damages in return for a referral, or even to forward them the client’s damages, which may not be in the client’s best interests.
Other potential breaches include arranging for clients to buy insurance reports or other products at inflated prices so the introducer receives a higher rate of commission, and not being sufficiently transparent about the arrangement.
Richard Collins, SRA executive director, says: “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. We will take formal enforcement action.”
Deborah Evans, chief executive of the Association of Personal Injury Lawyers, says: “We’ve always believed a ban on referral fees would be difficult to enforce but, now that a ban is in place, it is the responsibility of solicitors to ensure they are not in breach of it, the responsibility of insurers and brokers to ensure they don’t profit from any breach, and the responsibility of the SRA to ensure it is enforced.”
The warning note can be read here.
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