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Will the government ban Conveyancing Solicitors referral fees?

After PI, will the Government now ban Conveyancing Solicitors from paying referral fees to estate agents? 

In the wake of the recent announcement by Justice Minister Jonathan Djanogly banning Solicitors from paying insurance companies for details of car crash victims, the Law Society has reiterated its call for a similar ban on such payments by Conveyancing Solicitors.

But does the Society really represent the views of consumers, or just a few of its members?

In 2010 the independent Legal Services Board (LSB) carried out a major review of this practice, and asked the Legal Services Consumer Panel to comment on the views of consumers. (The LSCP, which is quite independent of the legal profession, was established under the Legal Services Act 2007 to provide advice to the Board. )

The LSCP’s detailed report shows that they considered evidence on referral fees paid to Conveyancing Solicitors from a wide variety of people and organisations. They concluded that there was no substantial evidence that clients’ interests were adversely affected and that provided there was full transparency and effective regulation “then there is no reason why they should not remain part of the legal provision scene. ”

‘No case for a blanket ban’

Following this report and their own investigations the LSB concluded in May 2011 that there was no case for a blanket ban on such fees. Instead they recommended that there should be tighter regulatory provisions to ensure that consumers were fully informed if any fee was being paid.

The problem is that although the Solicitors Regulation Authority’s rules already require Conveyancing Solicitors to disclose any payments to agents, many are not doing so, and are failing to ensure that agents also disclose such payments.

Can the Law Society claim to speak for consumers?

So it would seem that the Law Society’s views do not agree with those of consumers.

Perhaps the Society should be doing more to encourage its member Solicitors to comply with the existing rules of their professional regulatory body, rather than just calling for a blanket ban, which will probably be ignored.

The LSCP in their report called for “Active enforcement of the rules, backed up by penalties that serve as a strong deterrent. Non-compliance with disclosure rules is rife, but policing of introducers – the crucial decision point for consumers – is light-touch. ”

The government should listen to the findings of this independent body and bring in regulations to force agents to make it clear whether they will receive any such fees from Conveyancing Solicitors, instead of banning referral fees outright.

Do you agree? Contact our Conveyancing team for more information.

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