SRA decide not to ban PI firms from offering inducements to clients

This article was published on: 06/26/13

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The Solicitors Regulation Authority (SRA) has announced that they will not be banning personal injury (PI) firms across the UK from offering clients inducements as incentives to instruct them.

It means that firms can continue to offer such gifts as iPads or cash advances of up to £1,500 to tempt personal injury victims to go with them when choosing legal representation over the competition, something that has become increasingly popular over the past year.

The SRA did however warn that if the incentive schemes were seen to be contributing towards fueling a compensation culture, then they will be forced to rethink their stance on inducements.

In a guidance note, released today to the personal injury sector, the SRA said: “There’s no evidence to suggest that similar activity by those regulated by the SRA has any adverse effect on clients, so the SRA will not be following suit. To ensure this remains the case, the guidance note has been issued to remind those in the legal profession of the relevant contents of the Code of Conduct dealing with inducements such as chapter 8 (publicity).”

It was also highlighted, within the note, that any legal firms who do offer inducements need to be clear in ensuring the claimant of the nature of the inducement and more importantly the terms with which it is being offered.

SRA director of policy Agnieszka Scott said: “We understand that the Ministry of Justice has reacted to the findings of Lord Young’s report, particularly when it comes to offering inducements in advertising. We have often been asked to look at similar measures for solicitors, but we have not found anything to suggest that it is significant problem or that clients’ interests are put at risk.”

After Lord Young’s report the regulator of claims management companies issued a ban from them using inducements from April onwards, which had created the expectation that similar could follow with the PI sector.

Agnieszka continued: “We have no evidence which suggests that inducements encourage spurious claims to be made. We want this situation to continue. The guidance not has been produced to remind solicitors of their obligations as they look to promote themselves and attract new business – remembering that their publicity should not be inaccurate or misleading and that clients do not suffer. We will be monitoring this position, and if we become aware of any further evidence of increased risk to consumers, we will review the situation.”

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