New Regulatory changes rumble on

The Jackson report and recommednations whilst positive, have left the market in a state of flux i'm afraid.

As well as the ongoing delay regarding the date that the new low value RTA scheme will actually go live, there still remains the question as to whether Lord Justice Jackson's recommendation to ban referral fees is going to be implemented.

If the ban is imposed it is almost certainly going to bring about the mass destruction of the accident management market as we know it, as Solicitors will be banned from paying referral fees to accident management companies who will in turn be banned from paying them onto Brokers, Bodyshops and everyone else who refers claims up the ladder.

What will happen then when the initial referrer has nothing but good customer service as a motivation to to send a client to a firm of Solicitors or to an Accident Management Company?  Lots of these so called "exempt introducers" ( a bit of MOJ regulatory speak there) rely upon revenue generated from this secondary workload to survive, not to mention the legion of 1 man band accident management companies who are also solely dependant upon referral fees.

Unlike the early days when referral fees where banned but the Law Society was so complacent that everyone openly flouted the laws, these days the Solicitors Regulation Authority, The Ministry of Justice and the FSA will clamp down hard on any violators, so if referral fees are banned - they are banned.

If the ban is imposed then basically everything carries on as before except that there is less money washing around for everyone on a per case basis (relative to RTA claims only).

With the general election just around the corner, this entire matter has become a political affair and the Conservative party who were openly "anti - referral" until recently now appear to be softening thier message with shadow Justice minister Henry Bellingham today suggesting that "in a capitalist society, it might not be a good idea to ban something which market forces have constructed"

We will continue in a state of flux until the Legal Services Board Consumer Panel reports in May and an economic impact consultancy report is recieved sometime later. Add in further consultation time and throw a General Election into the mix and i think we are still probably 6-9 months away from a decision one way or the other.