Referral fees. Are they really the problem?


For most claimants, the fact that their making a claim could lead to a company receiving a referral fee from a Solicitor or other organisation is completely irrelevant. Let’s be honest, a claimant is interested in the basics. Will their claim cost them a fee and are they likely to win a compensation settlement for their injuries after their non-fault accident.

Just last week, the government announced that they had buckled to the ever increasing lobbying power of the Insurance industry and would be bringing forward a ban on referral fees – typically the fee a Solicitor pays a Claims Management company for a claim that they pursue. The ban is due to come in to place in 2012.

No Win No Fee claims have long involved fees being paid from one party to another, but never the client paying any fees whatsoever, so why are the Government interested in the ban?

The Insurance industry like to push the view that referral fees increase the amount of claims being made and that this in turn increases fraudulent and exaggerated claims. On the basis of of what only they know! It could be argued that there is a drive to limit individuals access to justice by this move. If fees are completely outlawed the number of firms willing to work in No Win No Fee Personal Injury claims would drop considerably and the likely requirement for individuals to start paying fees for their claims would lead to many people being unable to afford to seek compensation – which is patently ridiculous and completely unfair.

So are referral fees the evil problem that the Insurance sector says that they are? We don’t think so. They often bang on about the amount of spurious and fraudulent claims. What proof have they got that there really is a fraud problem that costs so much and what proof have they got that can link it to referral fees? None! Let’s be honest, the Insurance industry have a responsibility to themselves to pay out as little as possible. However, they have a duty to pay genuine claimants genuine compensation and referral fees have nothing to do with that.

Rest assured, Personal Injury claims companies such as Direct 2 Compensation Ltd will continue to operate even if ‘referral fees’ are banned. Solicitors will still want quality claims to pursue and need companies like ours to provide such claims to them. Our claimants still want justice and will get it.

In answer to the title, are referral fees the problem? No, the Insurance industry are more of a problem to claimants and themselves in our view… The debate rages on!

If you have a claim to pursue, contact Direct 2 Compensation today for free and helpful advice. We’ve a great panel of expert Solicitors and will get you the justice you deserve.


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