Regulate will-writing but not estate administration, LSB recommends

The Legal Services Board will today recommend to the lord chancellor that will-writing activities, but not estate administration, should be regulated. It is the first time that the board has recommended bringing new activities under the scope of the Legal Services Act.

The Law Society has welcomed the proposed consumer protection for those making a will, but warned that the failure to regulate estate administration ‘risks consumers losing everything’.

The LSB’s recommendation follows two years of investigation, during which it said it found comprehensive evidence that the market is working contrary to the objectives outlined in the Legal Services Act 2007 to the detriment of consumers and providers.

If accepted, it said the change would give consumers better protection and consistent access to redress by allowing access to the Legal Ombudsman, increase competition by creating a level playing field between traditional law firms and new forms of service provider and require regulators to develop proportionate and targeted risk-based approaches to supervision and enforcement.

The LSB had initially proposed that estate administration activities be included in the list of reserved activities, but it concluded that statutory regulation would not be an effective or proportionate way to prevent what amounts to criminal behaviour.

Chris Kenny, the LSB’s chief executive, told a press briefing that evidence of very poor practice was proportionately less for estate administration services than for will-writing and that providers of many services, such as accountants, are already regulated. Introducing greater regulation in this area, said Kenny, ran the risk of adding to costs for ethical providers ‘without hitting the bad guys’.

Instead, the LSB recommends a range of initiatives to raise standards.

The recommendation not to add probate activities to the list of reserved activities confirms its position in its provisional report.

LSB chairman David Edmonds said that recommending new legal activities be brought within the regulatory scope of the Legal Services Act ‘is not a step we take lightly’. However the board believes that new regulation is a proportionate response to a ‘compelling case underpinned by appropriate evidence’.

The lord chancellor has 90 days to decide whether to accept the recommendations, which will then be debated in the Commons and Lords when parliamentary time allows.

Kenny said: ‘I’m not going to take bets either way. The lord chancellor will come to his own view’. Any new regulations, said Kenny, will not be in place until 2015.

Law Society President Lucy Scott-Moncrieff said: ‘We welcome the recommendations to regulate will writing activities, however we remain concerned that there is no regulation or monitoring in place to ensure that administrators do not misappropriate the estate’s assets.’

She said the Society had submitted evidence to the LSB of people who have been prosecuted for running off with estates, among other problems that have been caused by unregulated people doing this work. 

‘At the moment unregulated individuals are charged with distributing considerable sums of money. It is becoming more difficult to assist consumers to identify reputable service providers. The evidence hints at many more cases where beneficiaries do not obtain what they should,’ she said.

The Society is also urging the LSB to ensure that all those providing will-writing services are entitled to the same protections – those already in place for solicitors’ clients.

Chair of the Legal Services Consumer Panel Elisabeth Davies also welcomed the recommendation on will-writing, but expressed disappointment that it did not extend to estate administration activities.

She said: ‘Dealing with an estate can involve life-changing amounts of money, but this decision will leave people without a safety net should things go wrong, and at a time when they are feeling at their most vulnerable.’