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Ministers have been warned that banning personal injury referral fees will put thousands of jobs at risk and do nothing to reduce insurance premiums. Darren Werth, chairman of the Claims Standards Council, which represents claims management businesses, admitted he was shocked by the government’s announcement. Werth accused the insurance lobby of running a ‘propaganda campaign’ against the industry and warned that many people will be worried about their jobs following the ban. ‘I cannot understand any motivation for this other than a witch hunt and it has caught everyone totally unawares,’ he said. ‘There are roughly 3,500 claims management companies in this country with thousands of staff. You’re talking about a loss of revenue in corporation tax and VAT, not to mention potential unemployment for many. ‘Insurers are the real offenders here and as a result claims management companies and solicitors will suffer, with no benefit for the client – indeed premiums will probably rise.’ Werth stressed that just 14% of personal injury cases are filed as a result of a referral fee, with a far greater proportion of clients finding a solicitor through advertising or word of mouth. He said claims management companies usually receive around £200 for an average referral involving a name and contact details, with the charge only rising when the CMC carries out lengthy vetting work and background checks that save time for both the solicitor and insurer. ‘Referral fees are an effective way of marketing and why should the legal profession not be allowed to market their services? ‘One insurer in 2009 spent £182m on advertising but no-one is questioning that. There is no evidence that premiums will fall as a result of this and the worry is that it will push referral fees underground.’ He said the Claims Standards Council will now wait for more details on the ban, including how the government plans to define a referral fee and when the ban is likely to implemented.