An industry source, who wished to remain anonymous, said the Law Society was creating confusion by refusing to clarify whether referral fees should be charged or not. The source stated it was a debate that needed to be resolved for the industry to move on.
He added: “The reality of commercial life is people expect to be paid for the work they do. All this confusion means no one knows what is allowed or not. We need closure on this. The Law Society is very split over referral fees, as half the members support them and half don’t. It’s an organisation that can’t move forward.
“It’s not just mortgages; it’s across all services lawyers offer. But the Law Society has to be aware of politics, as the Office of Fair Trading (OFT) felt it was anti-competitive to ban fees. Yet, I believe if they were to be banned again, they would go underground. You can’t turn back time.”
This dispute has been stirred further by Lord Chancellor, Lord Falconer of the Department for Constitutional Affairs, demanding an end to referral fees. This was in direct opposition to the OFT standpoint, which originally placed pressure on the Society to lift the ban.
However, a spokesperson for the Law Society Regulation Board, denied it was failing to resolve matters. It said: “Our research has revealed widespread and worrying breaches of the rules that govern solicitors on referral fees. The Board is particularly concerned the public is not being informed about referral arrangements.
“We are looking at effective enforcement of the rules and to find out more about why solicitors are not complying with these rules. We will also discuss the basic principles surrounding referral arrangements at our meeting in November and we expect further work to follow to see whether changes to the rules and guidance are needed.”
