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Should Conveyancing Referral Fees be banned?

There has been a lot of debate for some time now over whether referral fees for conveyancing matters should be retained or scrapped and whether they have harmed ‘consumers’.  

The Law Society Gazette reported on 20 May 2010 that according to a report commissioned by the Legal Services Commission:

“There is no evidence that referral fees have adversely affected consumers in the conveyancing or personal injury markets. ”

The report went on to state that there is no evidence to show that referral fees have led to a decline in the quality of work or to an increase in fees. The study shows that the average conveyancing fee is around £543 while the average that is paid where no referral fee is paid is £687. The report said referral fees have risen from £50-£100 in 2004 to £259-£400 in the present day while conveyancing fees have remained fairly constant making one question the fairness of it all!

The Law Gazette published on 3 June 2010 states that:

“Supporters of a ban on referral fees suffered a second blow in the space of a fortnight last week, as a new report from the Legal Services Board recommends that referral fees should remain. ”

 The Board have called for greater disclosure of fees and have decided that although they have their problems, referral fees have a place in the current market.   I can understand this to an extent, but what worries me is how conveyancers’ fees have barely risen over the last few years while referral fess have shot up. A broker need only refer a case on to be paid a referral fee while a conveyancer must work hard throughout the conveyancing process to earn what they do. Work is referred to firms that can pay the highest fees rather than to those that provide the best quality of service and clients are therefore limited as to choice of legal representative where brokers, who require referral fees, are involved.

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