Concern over emergence of referral fees once will-writing and estate work is reserved
Scott-Moncrieff: risk of wasteful use of resources
The regulation of will-writing and estate administration needs to be drawn widely to ensure that the referral fee culture that has prevailed in personal injury does not emerge in private client work, the Law Society has warned.
Responding to the Legal Services Board’s (LSB) final consultation on making will-writing and estate administration reserved legal activities ahead of making a formal recommendation to the Lord Chancellor, the Law Society urged the LSB to reconsider its decision not to include powers of attorney and setting up and administering trusts within the work that is reserved.
“When an activity becomes regulated, there is an incentive for referral fees to be used to provide regulated providers with work captured by unregulated providers and for unregulated providers to undertake and charge for (possibly through the referral fee) unreserved work done in connection with the will,” the society said.
“An analogous situation occurs at present in respect of personal injury work where many claims handlers undertake significant investigatory and other preparatory work prior to selling the claim to the solicitor. Such work may be wasteful or inadequately performed. The society’s view is that the scope for such activity should be limited as far as possible through a wide definition of reserved activities.”
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The society also highlighted anecdotal evidence that some unregulated providers are preparing probate papers and then getting the executors of an estate to give them a power of attorney so that the unregulated provider can deal with the Probate Registry and gain control of administering the estate. It said such arrangements need to be stamped out by the new rules.
The Law Society also called on the LSB to reverse its decision not to passport the Solicitors Regulation Authority into regulating the new activities. The current plan is that as well as any new regulators, existing regulators will have to apply for specific designation to oversee will-writing and estate administration.
The society argued that this would needlessly delay the introduction of regulation, which is slated for 2015, adding: “The LSB has only recently approved the SRA’s move towards outcome-focused and risk-based regulation, which are key elements of the proposed regulatory approach for will writing and estate administration services. To impose another hurdle on solicitors who are already regulated is an unnecessary bureaucratic hurdle.”
It also expressed concern at the prospect of several different regulators of this work. “Unless there is consistency in the regulatory approach and uniform standards, there is a real danger that will writers will flock to the regulator whose arrangements are cheapest and least onerous.”
Law Society president Lucy Scott-Moncrieff said: “Plans by the LSB to make will writing and estate administration services reserved activities are a major boost for consumers, but a multiplicity of different regulators and the possibility that existing regulators might have to amend the existing satisfactory arrangements would be a wasteful use of resources and time as well as cause confusion for firms and clients.”
Tags: estate administration, Law Society, Legal Services Board, referral fees, reserved legal activities, Solicitors Regulation Authority