Solicitors could be struck off for breaching referral fee ban
SRA warns of fines of up to £2,000 for law firms or £250m for ABSs
Solicitors found to be “deliberately flouting” the ban on referral fees could be struck off, the SRA warned today.
Publishing plans to implement the ban, the regulator said not all breaches would require enforcement action and promised to focus on arrangements which “pose a real risk to the public interest”.
A spokesman for the SRA said that among the “wide range of tools” at its disposal were rebukes, fines of up £2,000 for law firms or £250m for ABSs, and referring a firm or individual to the SDT, which has the power to strike off solicitors or impose unlimited fines on their practices.
The spokesman said imposing “artificially inflated charges” on clients or third parties, repeated breaches of the ban or “taking steps to disguise or hide payments” were all factors indicative of serious misconduct.
He said the aim in taking enforcement action was to deter those who “breached the principles and failed to achieve the outcomes” and deter others in the same position.
“For the most serious of cases where firms or individuals are deliberately flouting our requirements and therefore the law, we may consider removal from practice.”
The regulator made it clear it regarded ABS status as no “easy option” in getting round the ban.
The spokesman said the SRA would “look closely” at proposed referral arrangements in any ABS application.
“Where, for example, a firm and a CMC apply to become an ABS, we will carefully scrutinise the application and the proposed business model.
“Models which suggest an intention to continue as more than one business, with referrals being made between them, may not be licensed, if we believe the referral arrangements will be unlawful.
“Applicants will need to demonstrate that they are truly operating as one entity and if referrals are made to another part of the business within a group structure, that these comply with LASPO and our regulatory requirements.”
The consultation closes on 18 December 2012, with the SRA board due to approve rule changes by the end of January next year.