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Consumer panel backs referral fees

27 May 2010

The Legal Services Consumer Panel has backed referral fees but called for greater transparency and improved regulation.

Charles River Associates, consultants for the Legal Services Board, concluded earlier this month that consumers were not being damaged by referral fees in conveyancing and personal injury (see 17 May 2010).

“Consumers are surprised, even shocked that lawyers pay referral fees, but they are willing to tolerate this so long as such transactions are conducted in the open,” Dr Dianne Hayter, chair of the consumer panel, said.

“Greater transparency, combined with tough action against rule-breakers, is needed to ensure that referral fees work in the interests of consumers,” she said.

“Referral fees have their problems, but they can increase access to justice while not raising prices or reducing the quality of service.”

The panel’s report, published this week and focussing on conveyancing and personal injury, said the LSB should consider requiring introducers to obtain a client’s written consent for referrals.

The report also suggested that the OFT and trading standards departments should carry out “mystery shopping” of high-pressure selling by estate agents.

The consumer panel recommended that the LSB review the market for referrals in three years’ time.

In a separate development, the LSB announced yesterday that solicitors should make it clear that clients have the right to complain to the Legal Ombudsman service, once the new system takes over from the Legal Complaints Service later this year.

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Regulators Discrimination Tribunals & Courts Costs Health & Safety