Referral fees are just a symptom of the large volumes of money available in the system – banning them in isolation will not work
While the Legal Aid, Sentencing and Punishment of Offenders Bill is a major step forward and indicates that parliament is taking the issue of excessive legal costs seriously, it falls short of an effective solution.
Limiting the referral fee ban to personal injury claims presents a risk that fees for other elements of the motor claims process - particularly credit hire claims - could be used as an alternative.
Also, referral fees are merely a symptom of the large amounts of money available in the system. Banning them in isolation will not tackle the underlying cause of high costs, namely the excessively high fixed fees and hourly rates recoverable by claimant lawyers.
Inefficiencies in the claims system represent a significant cost to policyholders, claimants and the UK as a whole and these will only be tackled by introducing the full, package of measures recommended by Lord Justice Jackson.
Steve Thomas is director of market affairs at solicitors Keoghs