Accountants offered new route to setting up ABSs

ACCA: CILEx move

Accountants and firms regulated by the Association of Chartered Certified Accountants (ACCA) will have a pathway to handling all the reserved activities under the plan to transfer supervision of their legal work to CILEx Regulation, it has emerged.

We revealed earlier this month that the ACCA has decided to withdraw from legal services regulation by the end of 2020 and is looking to transfer the work of overseeing the 54 firms and 66 individuals it currently authorises for probate work to CILEx Regulation.

In a newly published consultation paper, CILEx Regulation said that giving ACCA members a route to deliver legal services “will enable them to develop new innovative channels for delivering the wide range of professional services, including accountancy and legal, and therefore improving access to justice and provision of services”.

The arrangement means that ACCA firms will “have the opportunity to then apply to CILEx Regulation to be authorised for other reserved and regulated legal activities, such as litigation, conveyancing and immigration”.

CILEx Regulation has been able to license alternative business structures (ABSs) since last year.

The move potentially gives ACCA firms an advantage over those with the other main accountancy body, the Institute of Chartered Accountants in England and Wales, whose application to license firms and ABSs beyond just probate work was rejected by the government in 2017, a decision upheld after a judicial review last year.

A few accountancy firms have legal arms regulated as ABSs by the Solicitors Regulation Authority.

The consultation also outlined how the new breed of ‘CILEx ACCA firms’ would only be allowed to prepare the probate papers and not to administer the estate or hold client money – that would be the responsibility of the main ACCA firm.

CILEx Regulation explained that it was looking to interpret the definition of probate activities in schedule 2 of the Legal Services Act 2007 “in the narrowest sense for this authorisation”.

The regulator said: “Our intention is that the firm will only carry out the work involved in preparing the probate papers. It will not carry out any work connected with the administration of the estate nor hold any client money.

“This will mean that all other work, which is defined as unreserved, can be carried out by the accountancy firm and will be subject to the existing ACCA rules and protections under which their members and firms operate.

“In order to provide total separation between the regulated activities, we will expect all probate activities to be carried out by a separate entity to the accountancy activities.

“We believe that this is the simplest and correct approach to providing clarity to consumers, firms and other regulators.”

CILEx Regulation said that if firms wanted to hold client money and carry out the full range of estate administration activities through the CILEx ACCA firm, they would have to become an authorised law firm regulated by CILEx Regulation.

By limiting the activities that could be carried out by CILEx ACCA firms, there would be a “clear differentiation” with CILEx authorised firms, which can carry out any reserved activity.

The relationship between the regulators is to be set out in a tripartite memorandum between ACCA, CILEx Regulation and CILEx itself.

Individual accountants regulated for probate work will be able to transfer over without any further assessment, and those wanting to handle reserved probate work will be able to take the same training course as now.

CILEx Regulation said it would create a new handbook for CILEx ACCA firms, based on an amended version of the existing rules for ACCA probate firms. The existing ACCA professional indemnity and compensation requirements will continue to apply.

Complaints about firms or individuals would be dealt with by CILEx Regulation under the new regime, but given the limited nature of the authorisation, a “large number of complaints” was not expected, and it was likely that firms would initially be referred to the ACCA.

The fees paid by CILEx ACCA firms for an individual practising certificate were proposed at £100, with a firm fee of £200.

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