Some firms not fully compliant, says regulator

The Solicitors Regulation Authority (SRA) has warned that some personal injury law firms are breaking its guidelines on how to operate following the referral fee ban six months ago.

The SRA has said that it has seen some law firms failing to comply fully with the new rules, despite many complying broadly.

The regulator has suggested that law firms read and comply with its code of conduct on the issue to avoid violating the ban.

SRA executive director Richard Collins 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.”

Examples of the type of problems this has raised 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.

However, Collins said the SRA would not take a heavy-handed approach to enforcing the ban.

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