Estate administration not to be restricted after all
14 February 2013
The Legal Services Board (LSB) has
unexpectedly recommended that estate administration in England and
Wales should not be restricted to qualified professionals.
Will-writing is however to be reserved, as it
already is in Scotland, and as probate application is and will
remain throughout the UK.
The LSB investigated the wills and estates
industry for two years before making its recommendations to the
Lord Chancellor. Last September it published provisional
recommendations that did include the reservation of estate
administration services, although not just to the legal profession.
Several organisations, including STEP, had supplied evidence that
criminality occurs too often in estate administration services,
leading to serious financial loss by beneficiaries. The LSB's plan
was that any professional would be able to apply for a licence to
offer such services for reward, subject to regulation to reduce the
risk of fraud.
Its change of mind is based on two main
propositions. First, it considers that there is no compelling
evidence of systemic fraudulent or dishonest practices causing
significant consumer detriment within the unregulated sector.
Second, it does not believe that statutory regulation would in
practice prevent estate fraud by dishonest practitioners, and some
level of fraud and theft will continue in the market regardless of
whether regulation is introduced or not.
‘This is a criminal rather than regulatory
issue [and] the penalty [of reservation] to the honest provider
could be far greater than the deterrent effect to the potential
criminal,’ says the LSB's final report.
Moreover, it notes that unregulated estate
administration companies only have a small market share at the
moment, and that share is likely to decrease when the will-writing
business becomes reserved to licensed providers only.
Instead, it is recommending a range of policy
initiatives to raise standards. It wants the major providers of
estate services to produce industry-wide voluntary schemes to
promote standards and provide minimum protections for consumers.
They should also provide more information to consumers when
marketing their services.
The LSB admitted its decision on estate
administration was ‘finely balanced’, and it duly disappointed many
interested parties.
‘Voluntary jurisdiction quickly needs to move
off the drawing board and into reality,’ said Elisabeth Davies,
Chair of the Legal Services Consumer Panel. ‘Having taken this
decision the LSB must work with the Legal Ombudsman on an
accelerated timetable to create the voluntary jurisdiction built
into the Legal Services Act."
‘It is during the process of estate
administration where much of the large-scale fraud and theft from
estates occurs,’ said STEP Chief Executive David Harvey. “The
overriding feeling is that the LSB has missed a big opportunity to
protect the public from rogue operators in a market which the
evidence clearly suggests is in need of statutory regulation.’
‘At the moment unregulated individuals are
charged with distributing considerable sums of money,’ commented
Law Society President Lucy Scott-Moncrieff. ‘It is becoming more
difficult to assist consumers to identify reputable service
providers [and] the evidence hints at many more cases where
beneficiaries do not obtain what they should.’
The Institute of Professional Willwriters also
criticised the LSB's conclusion on estate administration, and vowed
to fight it. ‘We will continue to work to prove this conclusion is
wrong and will continue to campaign for estate administration to be
regulated,’ it said.
However, the LSB's about-turn was applauded by
the Institute of Chartered Accountants in England and Wales, which
had lobbied against the reservation of estate administration.
ICAEW’s Head of Business Law Felicity Banks said she was pleased
that ‘common sense had prevailed.’
The ICAEW is likely to be one of several
organisations that will apply to be licensing bodies for the
will-writing business. Others will include the Solicitors
Regulation Authority, the Council for Licensed Conveyancers, ILEX
Professional Standards and the Institute of Professional
Willwriters.
The Lord Chancellor will now consider the
LSB's report, but the outcome is by no means certain. At the
report's launch, LSB Chief Executive Chris Kenny said he would not
‘take bets one way or the other’ on the government's reaction.
Sources
LSB (Press statement, PDF)
LSB (final report, PDF)
Legal Services Consumer Panel
STEP
ICAEW
IPW
Law Society
Legal Futures