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

 


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