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Government to Ban Referral Fees

Rising insurance costs will be tackled by a ban on referral fees, announced on Friday (9 September 2011) as part of the Government’s commitment to curb compensation culture.

The Government will ban the payment of referral fees in personal injury cases. The current arrangements have led to high costs, encouraged a compensation culture and led to the growth of an industry which pursues claimants for profit. Insurance companies inevitably pass the costs they incur through increased compensation claims directly onto motorists and those with other insurance policies, unnecessarily forcing up the cost of living.

Although this ban only relates to referral fees in personal injury cases other types of referral fees are paid. Many people may not be aware that some estate agents often receive a payment from solicitors or licensed conveyancers they recommend. This could run into hundreds of pounds in some cases. Many of the national estate agents make such recommendations to large conveyancing firms some distance away.

Andrew Pluck, Head of our Property Department comments: “Hart Reade never pay referral fees and never will. If we are recommended by an estate agent it is purely on the quality of service that we offer. If you are thinking of putting your property on the market or buying always ask the estate agent before instructing them whether they receive a referral fee for recommending a conveyancer and how much. You can then make an informed decision in whom you wish to trust with your house sale or purchase.”

To see full details of the Government’s announcement please click here.