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Legal Services Board report on referral fees is a missed opportunity says the ABI

The report from the Legal Services Board (LSB) published today on referral fees is a missed opportunity says the ABI. The ABI wants to see a ban on the practice of selling on details of someone with a potential personal injury claim as:

• Referral fees encourage frivolous, exaggerated and fraudulent claims.
• Genuine claimants want their claims dealt with promptly, as insurers are committed to doing, and not have their personal data sold around the system.
• They encourage unwanted and sometimes unsolicited contact by some personal injury lawyers.
• Independent research for the ABI has shown that claimants dealing direct with an insurer can receive higher compensation more quickly than when dealing with a lawyer.

The LSB report disregards the views of almost all of the respondents, including insurers and the Law Society, who disagreed with the analysis of the referral market by the LSB.

Nick Starling, the ABI's Director of General Insurance and Health, said:

"We are disappointed but not surprised by the Legal Services Board's decision that overwhelmingly favours lawyers. Making referral fees more transparent, as the report recommends, will not stem the growth in the compensation culture or frivolous and exaggerated claims which the practice encourages. This is why they should be banned.
"The Government's much-needed proposals for civil justice to bring about a simpler, speedier and cost-effective compensation system for genuine claimants will only succeed if referral fees are banned. Insurers now look towards Parliament to take the necessary steps and ensure a full ban, which is the only way to protect consumers".

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Last updated 01/07/2016