The Council for Licensed Conveyancers (CLC) has revealed that they have submitted proposals for increasing transparency around referral fees to the Legal Services Board (LSB).
After conducting research they concluded that there is no regulatory case for an outright ban on referral fees.
The CLC revealed that they have determined the biggest threat to the consumer interest posed by referral arrangements is around the level and timing of information given to consumers.
Their view is that a proportionate regulatory response would be advisable, where there is full transparency around the fees so consumers can assess for themselves whether they are happy with the arrangements their conveyancer has in place.
Anna Bradley, Chair of the CLC, said: “This is a proportionate regulatory response based on a widely-shared assessment that the risk of detriment to the consumer is low.
"An outright ban on referral fees could not be justified on the evidence and the enhanced transparency requirements that we have put forward empower the consumer to manage the low level of risk themselves.”
The CLC’s position follows a review and consultation carried out earlier this year.
Following the research the CLC intends to make additions to its Disclosure of Profits and Advantages Code to ensure that referral fees are managed by Licensed Conveyancers in an open and transparent way that is in line with the regulatory outcomes set out by the LSB.
They think the following measures are appropriate;
– Agreements with third-party referrers should be in writing and subject to periodic review
– Clients should be informed in writing of the arrangement’s existence no later than when accepting instructions, or when introducing a client to another person
– Clients should be advised they have a choice of provider
– The client should be informed of the nature of the arrangement (including any payment made), with whom it is made, and any impact (including any legal costs they are charged).
What do you think of the CLC’s position? Do you agree with their assessment of referral fees?