The prospect of paying referral fees in personal injury becoming a criminal offence seemingly disappeared last night after the Labour Party failed to move an amendment to that effect during the report stage of the Legal Aid, Sentencing & Punishment of Offenders Bill.
The House of Lords also rejected a bid to exempt not-for-profit organisations from the ban on referral fees, voting 257 to 173 against a Labour amendment that would have benefited trade unions and charities.
Justice minister Lord McNally told peers that claims managers could try to use such an exemption to get around the ban: “We believe that referral fee arrangements are wrong in principle. Under the cloak of support for charities, the amendment would allow payments for the referral of personal injury cases by a wide range of organisations. This amendment would make a mockery of the ban.”
In response to another amendment, Lord McNally outlined its plans to crack down on unsolicited marketing by claims management companies, such as text messages and phone calls.
He said legislation primarily enforced by the Information Commissioner’s Office (ICO) already exists to protect people. Recent action by the ICO led to the confiscation of more than 20,000 mobile phone SIM cards that were being used to send unsolicited text messages, he revealed.
Lord McNally continued that fellow justice minister Jonathan Djanogly will meet the Information Commissioner to discuss the issue, regulators are working with the telecommunications industry, and a cross-government working group has been set up to produce a guidance note for consumers explaining the functions of the relevant regulators along with advice on how to make a complaint.
The minister added that the government does not support the marketing of claims services in hospitals. “There is already an absolute ban on unauthorised marketing by claims management companies. We believe that it is more appropriate that authorised marketing should be dealt with through guidance rather than through regulation.
“In support of this approach, the National Health Service chief executive has recently written to NHS managers to make clear the position on marketing in hospitals and primary health centres.”
Separately the government accepted a change proposed by crossbencher Lord Pannick QC that will ensure the Supreme Court can make pro bono costs orders.
The bill will have its third reading next Tuesday and then return to the House of Commons on 17 April to consider the defeats suffered in the Lords.