Clarke closes referral fee loophole

Ken Clarke has closed a loophole that undermined earlier attempts to ban referral fees.

Last week, the justice secretary implemented the government’s pledge to curb the controversial practice by tabling an amendment to the Legal Aid, Sentencing and Punishment of Offenders Bill.

One of the problems, which bedevilled enforcement of the pre-2004 referral fee ban, was that regulators had to prove that payments had been made for referral fees. A clause in the bill switches the onus onto the individual who has paid or received the fee.

Solicitors DAC Beachcroft LLP head of strategic litigation Andrew Parker said: “The onus is on the person who is in breach (of the ban) to demonstrate that it was not for a referral fee but some other valid reason. This gets round the problems of enforcing a ban.”