Flout referral fee ban and face jail - Straw

Those paying and receiving referral fees should face up to two years in prison, Jack Straw has told an audience of claims professionals.

The ex-justice secretary, whose motor insurance regulation ten minute rule bill would criminalise  the controversial practice, said that a two year sentence was in line with penalties for similar offences.

Defending his proposal at an ‘I Love Claims’ debate, he said: “You don’t deal with this by creating a civic offence. If you are going to rid the industry of referral fees, this will need to be a criminal offence.”

Straw also said that he had no doubt, given the widespread support for a ban from across the political spectrum, that it would happen.

He also rejected the argument that it would be difficult to draw up sufficiently tightly worded legislation to ban referral fees.

“We have the richest language in the world  and we have brilliant legal draftspeople. It’s not beyond the witr of those men and women to draft the legisltion in the correct way.”

Market research company Consumer Intelligence managing director Ian Hughes, speaking at the same event, predicted that there were potentially rich pickings for car insurers who were able to drive down the cost of their products.

He said “The first car insurance company that fixes the problem of expensive car insurance will clean up. Fundamentally, consumer are getting pretty irritable about the cost of insurance.”