No need to ban inducements by solicitors, SRA says

There is no evidence that inducements by solicitors are leading to "spurious" personal injury claims, the SRA has said.

Claims management companies were banned from offering inducements, including cash advances, by their regulator from 1 April.

Agnieszka Scott, director of policy at the SRA, said the regulator had often been asked to look at "similar measures for solicitors" following the Young report and the ban by the claims management regulator.

Scott said the SRA had not found anything to suggest that inducements were "a significant problem or that clients' interests were put at risk."

She went on: "We have no evidence which suggests that inducements encourage spurious claims to be made. We want this situation to continue."

Scott said the SRA's guidance note , published today, had been produced to remind solicitors of their obligations as they promoted themselves and attracted new business.

"We will be monitoring this position, and if we become aware of any further evidence of increased risk to consumers, we will review the situation."

The guidance note warns solicitors who offer inducements to avoid conflicts of interest.

It cites as factors which could lead to a conflict whether, if the retainer ends prematurely, the client has to return the inducement.

Other questions asked by the SRA are if the client loses the inducement by complaining about the service, or whether clients can obtain a replacement if the inducement, for example a lap-top, turns out to be faulty.

The note also asks solicitors to consider whether the offering of an inducement "fuelled a compensation culture", whether it was aimed at "vulnerable consumers" or whether it resulted in the firm "taking on improper or spurious claims".

A spokesman for the SRA said the note reiterated the mandatory outcomes and indicative behaviours set out in the SRA Handbook, and was approved by the standards committee in May.