Insurers pressure Government to close referral fee ban loophole

The insurance industry has renewed calls for the Government to amend the the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act in order to close a supposed loophole that exists in the referral fee ban.

According to Post Magazine Allianz has highlighted problems with the referral fee ban in its submission to the Competition Commission’s private motor insurance market investigation.

Sarah Mallaby, casualty and motor claims manager at Allianz, told Post that the way that claims management companies (CMCs) could pass on clients to recommended lawyers without selling their details was not illegal but was "not within the spirit of LASPO".

"If we are serious about the referral fee ban having teeth, either the government or the Competition Commission should step in and close the loophole," she said.

“It would probably [need to be removed] through a formal amendment to the legislation. I am sure the authorities could look into it and take action.”


LV claims strategic development manager David Butcher also said that the Government should close the loophole as soon as possible, while suggesting that the Solicitors Regulation Authority (SRA), Financial Conduct Authority and the Claims Management Regulator look closely at non-transfer of data models.

Butcher and Mallaby's views have been supported by Zurich's motor claims director Jon Cawley, who asked whether the legislation's prohibition of transferring or selling data for referral fees was broad enough.

"We are open-minded but, in terms of the legislation, there should be efforts to remove all referral fees relating to income from personal injury.”


Mark Dugdale