Daily Insurance Industry News
Daily Insurance Industry News
Thursday 18th of October 2018
May 28, 2011

Legal Services Board and ABI lock horns over referral fees

by Gill Montia

Story link: Legal Services Board and ABI lock horns over referral fees

The Legal Services Board (LSB), which oversees the regulation of lawyers in England and Wales, has come out against a total ban on referral fees, preferring instead to prevent abuses in the system by strengthening transparency.

The decision marks the conclusion of an LSB review based on economic analysis, consumer research and advice from the Legal Services Consumer Panel.

The Board’s new guidance provides more flexibility to approved regulators in the sector, and requires regulators to make sure consumers know when referral fees are in operation, and to whom they are being paid.

LSB chairman, David Edmonds, comments: “We are persuaded that the interests of consumers are best served by continuing to permit referral fees, but managing their impact through shining the light of transparency on them.”

The Association of British Insurers (ABI), which wants an outright ban on the fees, has responded saying: “The LSB report disregards the views of almost all of the respondents, including insurers and the Law Society, who disagreed with the analysis of the referral market by the LSB.”

The ABI’s director of general insurance and health, Nick Starling, adds: “Making referral fees more transparent, as the report recommends, will not stem the growth in the compensation culture or frivolous and exaggerated claims which the practice encourages. This is why they should be banned.”


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