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Referral fees the priority for LSB consumer panel

17 November 2009

The Legal Services Board’s new consumer panel will look into referral fees as a priority, panel chair Dianne Hayter has said.

The announcement follows the Law Society’s surprise decision, first reported on on 5 November, to call for a total ban on referral fees.

Talking to Solicitors Journal, Hayter confirmed that the issue would be at the top of the agenda for the new panel, appointed last week, because it had been a matter of controversy for some time and was “central to consumer interests”.

“It raises questions of transparency and choice, and choice is important to make the market work,” Hayter said. “It is an example of something where debate has gone on between professionals without asking consumers what they think.”

Hayter, who is also a member of the Insolvency Practices Council, pointed out that referral fees were not allowed for insolvency practitioners.

The risks posed by ABSs, scheduled for spring 2012, are also likely to feature high on the agenda.

“There are good things about the profession that we don’t want to lose with ABSs,” Hayter said.

“As always with change, there is a risk,” she commented. “People always feel more comfortable with the way things are but we know consumers would like a one-stop shop.”

The challenge, according to Hayter, would be to make consumers feel as comfortable and confident about obtaining legal advice from one of the new providers as they may be obtaining it from a solicitor in a traditional law firm.

The former chair of Labour’s National Executive Committee also defended the credentials of the panel, which is entirely made up of lay members. It was, she said, the first organisation in the legal services sector to consider the delivery of services from the point of view of users’ interests.

“These lay members have been appointed because they are independent and worldly-wise,” she said. “Our remit is to find out how things are working for users of legal services, and their combined experience shows very broad consumer awareness.”

She suggested the panel would be working with consumer groups in the wider sense, including organisations such as Which? but also other major users of legal services – for instance, road user organisations such as the RAC or the AA, charities, small trade associations and other groups who could not make their voices heard effectively.

The panel is expected to meet about six times a year. In between meetings, panel members will be researching specific projects individually or as ad hoc project groups.

Its recommendations will not be binding, but the LSB would have to provide reasons if it decided not to follow them.

But, according to Hayter, the panel’s strength will lie in identifying what the LSB believes is “possible in the real world” and putting forward convincing cases.

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