The government has signalled that it is edging closer to a ban on referral fees, following comments by justice minister Lord McNally that he is “sympathetic” to such a move.
Responding to a question by Macmillan Sheikh chairman Lord Sheikh in the House of Lords yesterday, Ministry of Justice minister Lord McNally said: “The government are sympathetic to the idea of a ban on referral fees and are looking at how to tackle the issue as part of our wider reforms, and at how we could do so in a way that would be effective.”
Lord McNally’s comments represent a hardening of tone on referral fees compared to previous statements by his fellow minister Jonathan Djanogoly that the government is looking at the issue.
Lord McNally said the government is undertaking a study into how a referral fee ban could be implemented.
Lord Sheikh had asked whether the government would take forward such a ban via an amendment to the Legal Aid, Sentencing and Punishment of Offenders Bill, which was debated in Parliament for the first time last week.
Lord McNally added: “I hope that the more the public are aware of what the noble Lord described as this "dirty little secret", the more it is in the public domain and the more that all parts of the insurance industry, including the insurance companies, solicitors and the consumers, will demand-and we will respond to that demand-to ban it.
Liberal Democrat peer Lord Marks said: “This practice of insurers charging solicitors referral fees for names is not only unethical and offensive but ensures that the claims are handled not by the most competent or well qualified solicitors but by those who are prepared to pay the most to buy the clients-thus effectively depriving their clients of their right to choose the best lawyers to handle their cases.”
Lord McNally’s comments follow last week’s call by ex-justice secretary for referral fees to be banned.
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