Wednesday, 2 November 2011

Back to the drawing board, please, with the MoJ’s Referral Fee Impact Assessment


So, the Ministry of Justice (MoJ) has published an Impact Assessment on the Referral Fees ban. Good news, for surely things must be proceeding apace?

Well, yes and no. Yes, ever since September’s announcement by the MoJ that referral fees in personal injury cases are to be banned many people, including me, have been pleased and optimistic that a clearly dysfunctional system is at last going to be reformed. But no, because – and not for the first time – there are grounds for fearing that to embark upon reform in haste is to repent at leisure.

Why do I say this? Not, I assure you, because I just happen to like banging the drum of measured and sensible reform, as opposed to what is increasingly coming to resemble an ill-conceived cacophony of scattergun percussion. I urge caution because of the nature of this particular Impact Assessment.

First, though, a refresher. Impact Assessments are relatively new to the government’s lexicon, arising from a rationale which states that estimates of the costs and benefits of policy options under consideration should normally form an integral part of consultation exercises. As the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) is pushed through, with its provision banning the receipt and payment of referral fees, it is therefore government policy that an Impact Assessment be undertaken. Bear in mind that an Impact Assessments is:
  • a continuous process to help the policy-maker fully think through and understand the consequences of possible and actual Government interventions in the public, private and third sectors; and
  • a tool to enable the Government to weigh and present the relevant evidence on the positive and negative effects of such interventions, including by reviewing the impact of policies after they have been implemented.
That sounds sensible, you will agree. It is shame, then, that this particular Impact Assessment is so scant on detail. Remarkably, it contains nothing on the mechanics of the implementation of the ban, other than that it is planned for autumn 2012. Here is all that there is on the crucial question of just how the ban will be achieved:
  •  The reforms will be implemented through primary legislation. A provision in the Legal Aid, Sentencing and Punishment of Offenders Bill will be introduced to prohibit the payment and receipt of referral fees in personal injury cases. It is intended that the relevant regulators (the SRA, FSA, claims management regulator and others) will take the necessary steps to enforce the ban.
Indeed, the Impact Assessment expressly says that there is no data available for a ‘quantitative’ impact assessment. The data required for this is listed, but then described as unobtainable either because it cannot be tracked down, is unknown, commercially sensitive or not readily available. What’s more, a vast amount of the Impact Assessment is couched in conditional terms: look out for the frequency of the words ‘might’ and ‘may’ when it comes to the ramifications of the referral fee ban in practice.

One thing is said with clarity: that claimants could lose out as a result of the proposals.

To me, that alone should be enough to urge a rethink. We need to put the emphasis on helping people pursue genuine claims. Referral fees turn the industry into one in which money trumps merit, but how can it be right if, as a consequence of rushing through legislation, some people who have been seriously injured are unable to bring claims? The Government needs to remember the purpose of an Impact Assessment: to help the policy-maker fully think through and understand the consequences of legislation. Please, then, can we have some thought about how, exactly, to implement the ban?