The Association of Chartered Certified Accountants (ACCA) has decided to withdraw from legal services regulation, in the first move of its kind.
In its place, Glenn Collins, head of technical advisory at ACCA, told Legal Futures that the organisation was negotiating a partnership with the Chartered Institute of Legal Executives (CILEx), which would be another first.
Mr Collins said this would allow the 52 ACCA firms accredited for probate work to be regulated by CILEx Regulation in a “seamless transfer”, which would have “no impact at all” on their ownership or structure.
He said there was no fixed timetable for the negotiations with CILEx, but the 52 firms were engaged in a consultation process with ACCA and would be able to access additional support in areas such as training.
“We will continue promoting the probate sector, and hopefully the number of our firms that do probate will carry on growing.”
The move by the ACCA coincides with the deadline, at the end of last month, for legal regulators to comply with the stricter internal governance rules (IGRs) introduced by the Legal Services Board (LSB), ensuring their separation from professional bodies.
The ACCA has been an approved regulator for probate activities since 2009, but did not become an active regulator until January 2018.
Unlike the ACCA, the Institute of Chartered Accountants in England and Wales (ICAEW) intends to remain a legal services regulator, transferring oversight from its probate committee to the ICAEW Regulatory Board (IRB) to make sure it complies with the new governance rules.
More than 300 firms and 500 individuals are regulated by the ICAEW to handle probate work.
The LSB has allowed the ACCA six months of non-compliance with the IGR on the basis that it would be applying for “de-designation as an approved regulator of probate services” under the Legal Services Act 2007.
The ACCA is only permitted to regulate firms where all the partners are individually authorised to handle probate work through its training scheme – having completed six two-hour training sessions and an assessment.
This is because the ACCA is not a licensing authority for alternative business structures (ABSs) – a problem viewed as “a potential blocker” by many firms, according to a message to members it sent this month.
“Therefore, for ACCA to truly open up the legal services market, it would need to gain recognition as a licensing authority for ABS and expand the range of reserved legal activities authorisations (such as the administration of oaths).”
Doing so in light of the IGR would increase the ACCA’s costs and require bespoke governance arrangements.
“Against that backdrop and that the provision of legal services sits as an adjunct to general practice, we believe partnering with another legal services regulator provides a pragmatic and cost-effective way to support practitioners to diversify their service offerings.”
Carilyn Burman, chief executive of CILEx Regulation, said she was confident that it could offer “a number of benefits, including an opportunity for ACCA probate practitioners join forces with other legal and non-legal professionals as ABSs, which will further encourage competition and diversity within the legal services market”.
CILEx chief executive Linda Ford added: “This ground-breaking move by the ACCA recognises the need for a different and more collaborative approach to legal services regulation.
“Together CILEx and CILEx Regulation are committed to working with ACCA to ensure the public can benefit from the provision of high quality legal services which enables competition in the legal market.”
“While others are focused on protecting traditional models, CILEx is looking further ahead to build a network of diverse legal professionals who can meet the future needs of consumers.
“Our model of independent regulation through CILEx Regulation and highly practical, business focused route to qualification makes us the partner of choice for those looking for a more modern and relevant approach.”
The LSB said the remaining legal services regulators had complied with the new IGRs, by meeting the stricter requirements to separate regulatory and representative functions.
This meant the ICAEW has separated its legal services regulatory and representative functions formally for the first time. Before the revised IGR, it was not required to do this and the ICAEW has been reluctant to take this step.
Approving the rules required to do this, the LSB said the ICAEW – which can authorise the reserved activities of probate and the administration of oaths for individuals and firms as ABSs – has decided to remain a “unitary corporate entity”, but to transfer all responsibilities for legal services regulation from its probate committee to the IRB.
Dr Helen Phillips, chair of the LSB, said: “Enhancing regulatory independence has been a long-term strategic priority for the LSB and I am pleased the regulators are now able to confirm they have the appropriate separations in place between regulatory and representative functions.
“This is a significant achievement and means consumers can have increased certainty that decisions made by regulators are independent.”