Will the insurance sector ever see an outright ban on referral fees?
Graham Gibson, director, Allianz Claims
“The removal of referral fees was recommended in Lord Justice Jackson’s report and, although the recent announcement from the Lord Chancellor was welcome, it was silent on this point.
“It must not be forgotten that when Jackson carried out his road shows, there was unanimous agreement from both the claimant and defendant lobbies that referral fees should be abolished, and discussions with stockholder groups came to the same conclusion.
“With such universal and unanimous support for their removal, it will be a complete travesty if they are not eradicated.”
Tony Baker, managing director, Credit Hire Organisation
“The simple answer is no. Referral fees are marketing costs, and all businesses have marketing costs. The level of referral fees may well change because it is a reflection of what it costs to market and what people are willing and able to pay. If the money in the system goes down, in theory the money spent on referral fees will go down. The ABI says we would like them to go, but I think there is acceptance that you have to pay something for business, in the same way insurers pay commission to get business and any professional has to pay to make their service known.”
Sophie Spink, head of government and industry affairs, Zurich
“We certainly hope that referral fees will be banned. justice secretary Kenneth Clarke referred to it in his statement when unveiling the government proposals; we are awaiting the decision of the Legal Services Board.
We agree with Lord Justice Jackson’s view that referral fees should be banned. Clearly, Ken Clarke has listened to this argument.
We hope to see steps by the Legal Services Board or the government to bring in more proposals around banning referral fees. The proposal set out by the government provided a good opportunity to reform the process. To add in referral fees would be an obvious next step.”
Karl Parr, head of large and complex loss, Groupama Insurances
“We certainly support a ban and do not believe it would compromise Ken Clarke’s key aim of maintaining access to justice while bringing legal costs to a more reasonable level. Hopefully, any delay in developing a proposal to ban them should help ensure that, when the door is finally closed, it does not re-open in another guise.
There’s growing pressure in the market for a ban and certainly the wider insurance community are very supportive as we’ve seen recently from ABI. Will it happen? It’s still difficult to predict but we’d like to think so. Comments from Ken Clarke and previously from Lord Young have certainly been making the right noises, so hopefully there is also the political will to make this sort of change happen.”