The government has rejected a recommendation from a commons committee to extend the ban on referral fees.

A ban on receiving or paying fees for personal injury cases features in the Legal Aid, Sentencing and Punishment of Offenders bill. It is set to come into law next October once it has passed through the House of Lords.

In October, the House of Commons Justice Committee called for that ban to be extended to other types of cases and to be punished with a custodial sentence. But ministers have insisted referral fees must be a regulatory offence and for now the ban will apply only to personal injury.

In a response to the committee report, the government says today: ‘The main concerns giving rise to the proposal have arisen in relation to personal injury claimants being actively encouraged to pursue their claims.

‘The government is therefore taking immediate action in this area. However, the provisions in the bill do include powers to enable the Lord Chancellor to make regulations to extend the ban to other types of claim and legal services, should the need arise in due course.’

Sir Alan Beith, chair of the committee, said it was ‘disappointing’ that the government had chosen to limit its enforcement capacity for the most serious cases of abuse of personal information. He added: ‘It is likely that ministers will have to return both to this issue and to the issue of referral fees in areas other than personal injury, where they are taking welcome action.’

The government announced a partial ban on referral fees in September, days before a commons motion calling for the measure from former justice secretary Jack Straw. Last summer the Legal Services Board said a ban was not justified and resources would be better spent clamping down on rogue elements in the claims farming industry.