Referral fee disclosure to clients means telling them, in writing, before they engage your firm, that a fee, commission or other benefit was paid to whoever introduced them to you. It is not optional courtesy — it is what lets the client give properly informed consent to instructing a firm that has a financial relationship with their introducer.
For firms taking referrals from an introducer such as Harbourfirst, or from any other source, disclosure protects the client's ability to choose freely and protects the firm from a conflict-of-interest complaint later. This article sets out what a referral fee disclosure to clients should cover, when to give it, and how to show a regulator or complaints body that the client actually understood it.
It draws on the general transparency principles that run through UK consumer protection law and professional ethics codes for insolvency practitioners and solicitors. It is not a substitute for advice from your own regulator or professional body on your specific arrangement.
Why disclosure protects both client and firm
A referral relationship is not itself improper. What matters is transparency around referral fees — the client needs to know the relationship exists so they can judge whether it has coloured the advice or service they are being offered.
From the client's side, non-disclosure risks a decision made without full facts: they may not realise the firm recommending a course of action also has a commercial link to the person who sent them there. From the firm's side, an undisclosed arrangement can later look like it was concealed, even where the fee had no real influence on the advice given.
- For the client: informed consent to the arrangement, and confidence the advice is not skewed by an undisclosed payment.
- For the firm: a defensible position if the referral relationship is ever questioned by a regulator, insurer or the client themselves.
- For the introducer: a clean, sustainable relationship that does not put the referring firm's own standing at risk.
Whether referral fees are permitted at all depends on your sector and regulator — see Are Referral Fees Legal in the UK? for the underlying rules before you get to the disclosure question.
What a referral fee disclosure to clients must include
A proper disclosure is specific, not vague. "We sometimes work with introducers" is not enough. The client needs enough detail to understand the relationship in this particular case.
A complete disclosure of a referral fee typically covers:
- The name of the introducer who referred the client.
- Confirmation that a fee or commission was, or will be, paid for the introduction.
- Whether the amount is a fixed sum, a percentage, or otherwise variable, and — where practicable — the amount or basis of calculation.
- Who pays the fee (the firm, out of its own charges) and confirmation that it is not added on top of the client's own fees.
- A statement that the client is free to instruct a different firm and that the referral does not affect the service they will receive.
Insolvency practitioners have an additional layer here: their own Code of Ethics requires them to identify and manage threats to objectivity, including referral relationships. See Insolvency Code of Ethics: Referrals Explained for how that framework treats introducer arrangements specifically.
Timing: before or at the point of engagement
Disclosure needs to happen before the client instructs the firm, not after. A disclosure buried in terms and conditions the client signs weeks into the relationship does not give informed consent — it confirms a decision the client has already made without the full picture.
In practice, the safest sequence is:
- Disclose the introducer arrangement at first contact, verbally or in the initial email, so the client knows before any substantive discussion begins.
- Repeat it in writing — a letter or email of engagement, or a dedicated disclosure paragraph in the engagement letter — before work starts or fees are incurred.
- Keep a record of when disclosure was given, not just that it was given at all.
If the referral fee arrangement changes after engagement — for example, the introducer's percentage is renegotiated — the client should be told promptly, not left to find out later.
Sample disclosure wording you can adapt
Disclosure wording should be plain, specific and easy to find — not hidden in dense boilerplate. A short, direct paragraph works better than a long clause buried in a schedule.
An example a firm might adapt:
"You were referred to us by [introducer name]. We pay [introducer name] a referral fee of [amount / percentage] for this introduction. This fee is paid by us from our own charges and is not added to the fees you pay. You are free to instruct any firm of your choosing, and the referral has no bearing on the service or advice we provide you."
Solicitors should check this wording against their own regulator's current position — see SRA Referral Fees Rules for Solicitors for the specifics that apply to legal services referrals.
Evidencing the client's informed understanding
Giving a disclosure is only half the job. If a complaint or regulatory query arises later, the firm needs to show the client actually saw it and had the chance to ask questions — not just that a paragraph existed somewhere in a document pack.
Practical ways to evidence client informed consent to a referral:
- A dated, signed acknowledgement (a tick-box or short signature line specific to the referral disclosure, separate from general terms).
- A retained copy of the email or letter containing the disclosure, timestamped before engagement.
- A file note recording that disclosure was given verbally at first contact, including the date and who was present.
- A record of any questions the client asked about the arrangement and how they were answered.
Keep these records for as long as your regulator or professional indemnity insurer expects file evidence to be retained — this varies by sector, so check your own body's file retention guidance rather than assuming a standard period.
Frequently asked questions
Do I need to disclose a referral fee if the introduction was made verbally?
Yes. The method of introduction does not change the disclosure duty. If the client was referred by phone or in person, the disclosure itself should still be confirmed in writing before engagement, with a file note of the verbal conversation as supporting evidence.
What if the referral fee changes after the client has already engaged us?
Tell the client as soon as the change is agreed. A material change to a fee arrangement they were told about at the outset should not be left undisclosed — send a short written update explaining the new figure or basis.
Does disclosure work differently for clients in financial distress?
The content of the disclosure does not change, but clarity matters more. A client dealing with company debt or a winding-up petition is often under pressure, so keep the wording short, plain and free of jargon, and give them time to read it before instructing.
Who is responsible for making the disclosure — the introducer or the firm?
The firm providing the regulated service to the client is responsible for making the disclosure to that client. The introducer's role is to be transparent with the firm about the arrangement so the firm can pass accurate information on.
Does a written disclosure need to state the exact fee amount?
Where the amount is known and fixed, state it. Where it is variable or commercially sensitive, state the basis of calculation clearly enough that the client understands the scale and nature of the arrangement, even without an exact figure.
This article is general information, not legal, financial or insolvency advice, and firms should check current requirements with their own regulator or professional body before relying on it.
Harbourfirst is a commission-based introducer, not a regulated advisor: if you are weighing up a referral relationship, or have a client who needs to speak to a regulated insolvency practitioner or solicitor, we can help make the right introduction — start an enquiry.