Banning referral arrangements between conveyancers and introducers, such as mortgage advisers, is not in consumers' interest, according to a report from the Legal Services Board Consumer Panel.
Nevertheless, the panel has recommended disclosure arrangements must be tightened, including the potential requirement to obtain written client consent prior to a referral.
The Consumer Panel said there was no evidence to suggest referral fees compromise the independence of legal advice or result in more expensive or poorer quality service.
It concluded referral arrangements should be allowed to remain in place.
Eddie Goldsmith, senior partner at Goldsmith Williams, says: "The recommendations made by the Legal Services Board are both sensible and proportionate and they are right to emphasise the importance of proper disclosure.
"Non-disclosure of referral fees can not only result in severe sanctions, but perhaps even more importantly it undermines the relationship which exists between an introducer and their client. We believe that full disclosure ensures clients fully appreciate the important role played by intermediaries in helping their mortgage application move swiftly through to completion."
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