Probate: Regulation dispute
The Council for Licensed Conveyancers (CLC) has attacked a planned partnership between CILEx Regulation and the Association of Chartered Certified Accountants (ACCA).
The proposed arrangement, as we revealed last month, would see the ACCA transfer regulation of the 66 members and 54 firms that handle reserved probate work to CILEx Regulation.
The CLC said ACCA firms wishing to provide probate services should not be “compelled” to be regulated by CILEx and described the partnership as a “proposed ‘pre-pack’ scheme to facilitate the exit of ACCA from legal services regulation”.
A consultation launched by CILEx Regulation set out plans for a new breed of ‘CILEx ACCA firms’, which would prepare the probate papers under CILEx Regulation, while the estate administration and holding of client money continued to be regulated by ACCA.
Responding to the consultation, the CLC – which also authorises firms and individuals to conduct probate work – said ACCA-regulated firms that provide probate services should have “a free choice rather than being propelled toward and compelled to use regulation by one legal services regulator”.
The CLC went on: “The benefit of choice allows firms to choose a regulatory regime that best fits their business model and aspirations and therefore improves the client experience.
“The proposed ‘pre-pack’ scheme to facilitate the exit of ACCA from legal services regulation may have an anti-competitive effect and reduce consumer choice and undermines one of the intents of the Legal Services Act 2007.
“There must also be a question as to whether a regulator with limited experience of entity regulation would be the most appropriate choice if this model were to be implemented.”
The CLC said the “clear separation of the entities regulated by different regulators” ensured clarity in terms of what was covered by each regulator, but this only held good if the whole of a transaction was covered by one regime.
“If that is not the case the consumer interest may well be jeopardised. In the case of probate, we can see that confusion could arise very easily about responsibility when core estate management is undertaken by the entity regulated by ACCA and the probate application is assembled by the CILEx Regulation entity.
“Where there are errors or omissions that harm a client’s interest or result in loss to a beneficiary of an estate, it may be difficult to ascertain which piece of work gave rise to them and which entity is responsible.”
The CLC said it would be “very difficult to police” the boundary between the two regulators in the event of complaints by the client or “systematic failings” identified by the regulators themselves.
It warned that “blurred accountability” created “new risks and opportunities for confusion” and reduced consumer protection.
“It will be vital to understand the attitude of insurers to the significantly different possible scenarios here before any final steps are taken to go down this route.
“While the consultation paper states that the majority of the risk remains with the ACCA entity, harms arising within CILEx ACCA entity could give rise to substantial claims.”
The CLC said consideration should also be given to how consumers would be helped to understand the regulatory protections in place at each stage of the process.
The consultation closes on 7 October.
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