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Judge in referral fees clash with OFT

The Master of the Rolls and OFT are at loggerheads over referral fees to organisations, including mortgage firms, with the senior judge branding them “a mistake”.

Master of the Rolls Lord Phillips of Worth Matravers (above) says referral fees paid by solicitors to IFAs and brokers could poten- tially damage the profession’s independence and integrity.

He believes the fees ultimately increase costs to clients. But the OFT said banning referrals is unlikely. Under existing rules, it says clients should be made fully aware of referral commission paid to solicitors.

The Law Society met last week to discuss what impact paying referral fees has had since the practice was introduced in January 2004. A decision on whether the practice should continue has been deferred until next January. Spokeswoman Isobel Rowley says: “Two important stakeholders are on different sides of this issue. No one is asking for anyone to unscramble any relationships.”

Clarke Willmott partner & legal financial adviser Peter Nellist says: “It would be a retrograde step if this was overturned.”

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