SRA warns firms against misleading marketing as inducements ban kicks in

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14 April 2015


SRA

SRA: breach of the ban “likely to undermine public confidence”

The Solicitors Regulation Authority (SRA) has warned personal injury firms against misleading marketing as the government’s ban on the use of inducements came into force yesterday.

The regulator said in a guidance note that firms must ensure publicity is accurate, “including not offering or suggesting or implying that you are offering any inducement in breach of the ban. Doing so is likely to undermine the trust the public places in you”.

It emerged at a Legal Futures conference last September that the SRA had decided not introduce any specific rules to implement the ban on inducements, introduced by section 58(2) of the Criminal Justice and Courts Act 2015.

The Act provides that the offer of a benefit is an inducement if it is “intended to encourage or is likely to have the effect of encouraging” a personal injury claim.

‘Benefits’ include money, other property or an opportunity to obtain a benefit, for example through a prize draw. The ban extends, under section 58(3), to benefits received by third parties.

“The primary focus of any action we take is consumer protection and support for the rule of law,” the regulator said.

“A breach of the ban on inducements would be likely to undermine public confidence in the delivery of legal services. It is also likely that offering inducements will evidence a failure to uphold the rule of law and the proper administration of justice.

“As well as complying with the law, you should ensure that you behave in a manner that in your clients best interest, does not call into question or undermine your integrity and that you comply with your regulatory obligations.”

The Ministry of Justice introduced a ban on claims management companies offering inducements in April 2013.

The SRA’s guidance note also advised firms on the use of inducements in those areas outside personal injury where they are still allowed. “You will need to consider the needs and circumstances of each individual client, for example whether they are particularly vulnerable or whether they may have difficulties understanding the information you give them.

“It is important that you are able to show that clients have made an informed decision, having considered the options available and that you have treated them fairly. A decision to instruct should not be based on your offer of an inducement in exchange for clients’ instructions.

“If you offer an inducement to clients or potential clients, you must ensure that your interests do not conflict with those of your client. You can never act where there is a conflict, or a significant risk of conflict, between you and your client.”

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