SRA investigates ten firms over referral fee ban

The SRA has commissioned 'forensic investigations' into ten law firms over possible breaches of the ban on personal injury referral fees.

The regulator said it had visited 25 firms to assess their approach to the ban and whether they were compliant.

In his chief executive's report for tomorrow's board meeting, Antony Townsend said the sample included a "variety of size and type of firms, covering various personal injury referral schemes" and the focus was on how firms obtained new work and the advice given to clients.

Richard Collins, executive director of policy at the SRA, told the Westminster legal policy forum earlier this month that enforcing the ban was number two on the regulator's priority list behind financial stability.

Meanwhile Townsend said a total of 23 law firms had been investigated for failure to nominate COLPs and COFAs, though there had been only four interventions so far where one of the grounds was failure to nominate.

The SRA's enforcement team is still working on a further 55 investigations, over delays and failure to disclose information as part of the nomination process.

"The majority of these matters are awaiting adjudication, and are likely to result in an internal sanction," Townsend said.

In a separate development, the SRA said it had written to 141 firms which have still not secured indemnity insurance, and are operating under their insurer's extended policy period (EPP).

"We've written to all those firms that we believe have not secured insurance so that they know exactly what they will have to do between now and 29 December," Mike Haley, the regulator's director of supervision, said.

"We're aware of the different plans some of them have, such as merging with another firm or selling their business, but all need to know that when the EPP ends, they will no longer have insurance and therefore will not be able to undertake any reserved legal activities.

"Of course, it could be that these firms do secure a new policy between now and 29 December, and nearly half of those who entered the EPP have done just that. But there is a danger that firms do not plan for the worst, and that could put their clients' interest at risk, meaning we would have to step in."

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