It has been well documented in the media about the ban on referral fees for personal injury claims.
What Are Referral Fees?
Referral fees broadly mean a fee which is paid by a law firm to run a claim. This payment can be made to claims management companies who act as middlemen on claims. Their savvy marketing strategies and often 24/7 call centres get claims in and they then sell these claims onto law firms. However, it is not only the claims companies that sell claims, it is also the insurers.
Many people, often without being aware of it, may have Legal Expenses Insurance attached to their motor or home insurance policies. Legal Expenses Insurance has many different guises and can go by different names but ultimately it often provides insurance cover for your legal costs of bringing a claim. If this is the case, insurers will often try to refer your claim to one of their panel solicitors, who in turn may pay a fee for the claim.
Proposal To Place A Ban On Referral Fees For Personal Injury Claims
The proposal to ban these referral fees has been made in the Legal Aid, Sentencing and Punishing of Offenders Bill. The Bill is due to go into the Report Stage in the House of Commons where MP’s will debate on its contents.
There is no universal definition of ‘referral fees’ as yet contained in the Bill. It seems it is yet to be decided, which, therefore, makes it difficult to tell what impact the ban will have. There is also no indication as to when the ban will be implemented, but a lot will depend on the speed the Bill goes through the various stages of Parliamentary process before being passed.
How Nelsons Can Help
If you have any questions in relation to the topics discussed in this article, please contact our expert Personal Injury team in Derby, Leicester and Nottingham on 0800 024 1976 or via our online form.