Otto Thoresen, Association of British Insurers director general, welcomes government ban on referral fees to tackle 'dysfunctional compensation system':

"We are very pleased that the government has listened to the insurance industry's campaign for a ban on referral fees.

"They add no value and encourage spurious and exaggerated personal injury claims. It is important that the ban must be watertight and apply across the board.

"Banning referral fees is an important first step in tackling our dysfunctional compensation system, and needs to be accompanied by a reduction in legal costs and action to tackle whiplash if honest customers are to benefit from these reforms."