Says the Government.
Well I won’t tell you I told them so but….
You see the problem they have is, money changes hands in all sorts of transactions in return for business and so although they are called ‘referral fees’ and have been made to look dirty by certain members of the press and parliament, in reality they are payments for business.
Let’s look at some other so called ‘referral fees’ shall we?
- When your mortgage adviser finds you a mortgage – the bank pays them some money – is that a referral fee?
- When a price comparison site passes through a customer wanting car insurance, they take a share of the policy – is that a referral fee?
- When an estate agent puts you in touch with a surveyor, they get a payment – is that a referral fee?
- When you recommend your bank to a new business customer, some of them pay you for the introduction – is that a referral fee?
- When you sell something on eBay, they take a percentage – is that a referral fee?
I could go on. And on. And on.
For some reason, because the ‘thing’ being sold is not an insurance policy or a customer buying a widget but a person who has been injured, the Government et al are in uproar but why should someone needing to find a legal service just because they have been injured be any different from someone needing to find a mortgage or car insurance? Well the simple answer is there shouldn’t be a difference.
And there lies the problem. You see there are European laws against restraint of trade and lots of other regulations which mean the Government is going to find it difficult to ban fees for just one area of business. And that is before they try to actually define what a referral fee is (see my earlier blog on this one).
They have backed down following all the shouting by Jack Straw that it should be made a criminal offence and I think they will back down on a ban. It will be too difficult to define and enforce and will open the door to challenges, judicial review etc.
You er, heard it here first.
P.S. I am now off for week (it’s half term don’t you know). Will endeavour to post something from Toys R Us or wherever I end up.