Referral fees ban in personal injury cases

The Government has implemented the primary recommendations contained in Lord Justice Jackson’s Review of Civil Litigation Costs, including in particular a fundamental reform of ‘no win no fee’ conditional fee agreements and a ban on the payment and receipt of referral fees in personal injury cases.

Ban on referral fees

In April 2013 the ban of referral fees was implemented by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Provisions in part two of LASPO make it a regulatory offence to pay or receive referral fees in personal injury cases.

The ban captures all of the main businesses involved – solicitors, claim management companies and insurers. Any breaches of the ban will be subject to appropriate regulatory action by the relevant regulators, the Solicitors Regulation Authority (SRA), Financial Conduct Authority (FCA) and the Claims Management Regulator.

Claims management companies currently receiving referral fees for providing access to claimants in personal injury cases are acting in breach of the referral fee ban and their conditions of authorisation.   

Civil Justice Reforms

The implementation of the referral fee ban is part of the Civil Justice Reforms which is intended to reform civil litigation funding and costs to restore balance to the system. See further details in respect to the civil justice reforms.

The reforms were implemented in April 2013 through Part 2 of LASPO, associated regulations and changes to the Civil Procedure Rules.

Full details regarding the reforms can also be found in the document Civil Justice Reforms - full package of reforms

Information for businesses

The Claims Management Regulator recognises that businesses will want to ensure their compliance with the referral fee ban. We will continue to develop guidance to assist affected businesses in assessing their own compliance. However, we will not provide practical examples of what will be compliant with the ban. 

The Claims Management Regulator has detailed emerging issues and considered its ongoing approach to enforcing the ban.

Claims Management Regulation – Approach and enforcement of the referral fee ban (PDF 0.22mb)

The Claims Management Regulator has produced a quick guide for those claims management businesses operating in or considering operating in the personal injury sector. (PDF 0.20mb)

Frequently Asked Questions have also been developed to help answer the most common questions raised. (PDF 0.19mb)

Working with our Partners

The Claims Management Regulator continues to work with the Solicitors Regulatory Authority and the Financial Conduct Authority to ensure a consistent approach to enforcement of the ban and have released a joint statement. Referral Fee Ban Joint Statement (PDF 0.16mb) 

The Solicitors Regulation Authority publically consulted on its proposals for implementing the ban and has developed a regulatory framework.  For more information visit: www.sra.org.uk/sra/policy/referral-fees-ban.page

The Financial Conduct Authority has also provided a guide to how it will supervise enforcement of the ban.
For more information visit: www.fca.org.uk/firms/being-regulated/meeting-your-obligations/firm-guides/insurance-intermediaries/banning-referral-fees-for-personal-injury-cases


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