To switch on the referral system, navigate to Set up > Settings > Additional Settings.
First, switch on the referrals system here:
You now need to decide if you would like the referral rewards to be automatic (in which case move the tog to the right), or manual (move the tog to the left):
Further down in the additional settings, there are two text boxes relating to referrals:
The first box refers to the confirmation text which is shown when a member completes their sign up:
The second box refers to the text which appears on the member's profile, and is also accessible to the member from the members' area: