Consumer panel opens consultation on referrals

The Legal Services Board's new consumer panel has started an investigation into referral arrangements, the first issue it will tackle since its appointment last month.

The news follows on from the announcement, first reported in Solicitors Journal on 17 November, that the panel would look into referral fees as a priority.

Talking to Solicitors Journal at the time, panel chair Dianne Hayter said the issue would be at the top of the agenda for the new panel because it had been a matter of controversy for some time and was "central to consumer interests".

"It raises questions of transparency and choice, and choice is important to make the market work,' Hayter said. 'It is an example of something where debate has gone on between professionals without asking consumers what they think."

The investigation will cover "any arrangement under which business is received from, or referred to, a third party".

'Third party' will include other lawyers as well as introducers such as claims management companies, insurance companies and estate agents.

All referral arrangements will be covered, whether or not they involve payment or fees, including non-monetary arrangements that are linked to the introduction of clients, such as the provision of free or below-cost services in exchange for the referral of other business.

While the panel will look into all referral arrangements, it has said it would prioritise areas that have the greatest consumer impact.

The panel is particularly interested in hearing about issues relating to access to justice, consumer choice, quality and independence of legal advice, consumer safeguards, cap on referral fees, impact on competition, and alternative ways of generating work such as advertising, non-paid referral networks, marketing alliances, and quality assurance schemes.

The deadline for evidence is 26 February 2010. Submissions should be made by email to contact@legalservicesconsumerpanel.org.uk or in writing to Legal Services Consumer Panel, 7th floor, Victoria House, Southampton Row, London WC1B 4AD.