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Referral Fees

Volume 532: debated on Tuesday 13 September 2011

8. What decisions he has reached on implementing the recommendation of the review by Lord Justice Jackson to abolish referral fees. (71313)

As the House was informed on Friday 9 September in a written ministerial statement, the Government have decided to ban referral fees in personal injury cases as recommended by Lord Justice Jackson. The ban complements our wider reforms to no win, no fee arrangements, which are being taken forward in the Legal Aid, Sentencing and Punishment of Offenders Bill.

May I first express an unequivocal welcome for the announcement that the right hon. and learned Gentleman and the Under-Secretary of State for Justice, the hon. Member for Huntingdon (Mr Djanogly), made on Friday not only in respect of motor insurance but more widely about implementing this central plank of Lord Justice Jackson’s recommendations? Since the Justice Secretary used the word “ban”, which I think is the correct word, may I ask him whether he accepts that, given the level of malpractice we see across the legal and paralegal industry, the ban will have to be backed by the criminal law?

First, may I say that I am glad that my old friend the right hon. Member for Blackburn (Mr Straw) and I are in complete agreement on this subject? It is not the first time. He got in first, really, because I waited for the opinion of the Legal Services Board, which I have not followed but which I had to consider, and he rightly prompted a decision. People who agree with us include not only Lord Justice Jackson but my noble Friend Lord Young in his report, “Common Sense, Common Safety”, the Law Society, the Bar Council and the Association of British Insurers. The main beneficiaries will be claimants who are genuinely referred to the best expert to act for them and the justice system in general. We are now considering the way in which to put this into practice, but it is likely to be in the form recommended.

Developing on that point, does my right hon. and learned Friend agree that we should consider not only criminal law but close liaison with professional bodies to ensure that strict disciplinary action is brought against individuals or bodies who seek to circumvent any ban by rebranding fees as other costs or, worse still, start an emerging black market in referrals?

My hon. Friend makes extremely sensible and welcome suggestions. We have not decided exactly what form the ban will take yet, so I will not predetermine its eventual form. As the professional bodies strongly support us, we look forward to their co-operation because they are in the best position of all to ensure that different types of abuse with the same bad consequences are not used to evade the ban.