LASPO latest: What is a referral fee?

Published: 11/06/2012

With the Legal Aid Sentencing and Punishment of Offenders (LASPO) Act receiving Royal Assent last month and the green light on a referral fee ban poised for April 2013, all parties within the personal injury industry remain somewhat in limbo over the future.

The proposed ban will affect all regulated persons including those authorised by the Claims Management Regulator, the Bar Council and Law Society and prohibits the paying or receiving payment for referring a personal injury claim.

However the definition of ‘referral’ remains hazy.

For the cynics of the personal injury industry, a referral comes from a rogue company poaching customer data to sell on to the highest bidder. However in reality things are very different.

The level of service typically received is extensive; PI brokers and claims management companies often collect all the relevant client information, assist in completion of the 14-page CNF, act as a translator, assist with arranging a hire vehicle/recovery/storage/disposal of the vehicle and continue to act as a point of contact for the customer throughout the claim. In short they conduct a provision of service and it is this level of service which could offer a solution, and salvation, to the referral fee ban.

This possibility however remains circumspect and until the Act finally arrives, and the Claims Management Regulator and Solicitors Regulation Authority confirm how they intend to implement the referral fee ‘ban’, we can only speculate how this will affect the personal injury industry.

Content correct at time of publication