The LSB rejected an outright ban at the end of May, following consultation, concluding that there was not “sufficiently compelling evidence of consumer detriment to underpin a ban”.
However, it acknowledged the need to make referral fees more transparent and proposed that providers should inform clients about the existence of the fee, to whom it is being paid, its value, and their right to shop around. The LSB has said it would undertake a further review in 2014/2015.
Each of the eight individual legal professional regulators, including the BSB, can opt for a ban among their own members. In order to do this, however, they would have to apply to the LSB for approval and would have to back up their application with evidence and reasons.
An LSB spokesperson said: “They would need to justify that as a change to their regulatory arrangements and seek LSB approval for that change.
“Approved Regulators would need to show that they can justify any ban or restriction on referral fees, referral arrangements and fee sharing with reference to evidence, regulatory objectives and better regulation principles.”
Bar Council chairman, Peter Lodder QC said: “The choice of lawyer should be made according to quality, not according to who has made payments to the referrer.
“History reveals a lack of any effective regulation of such fees. There is no reason to think that these new proposals will make any difference. The Bar Council will continue to call for their abolition.
“Further, the requirement on the Approved Regulators to justify any ban on referral fees is particularly alarming. The justification is abundantly clear from the Bar Council’s consultation response and that remains unchanged.
“We will be urging the LSB to look again at its proposals, as we simply cannot understand how they will benefit consumers of legal services, which must be a priority.”
In its response to the LSB’s consultation, the Bar Council argued that attempts to regulate referral fees had failed and that “payments behind closed doors between lawyers” would damage the public’s perception of the profession.
It said referral fees were prevalent in criminal cases, and that it was “unrealistic” that people accused of a crime, given the short time scales involved, would challenge their solicitor’s plan “to farm out to a fee-sharing Higher Court Advocate”.
The Law Society has also criticised the LSB’s decision, and has called for an outright ban on referral fees.
The Bar Council has urged the Legal Services Board (LSB) to reconsider its “surprising and disappointing” decision on referral fees.