It is hard to see which of the frontline regulators would regulate banks if will-writing and estate administration become reserved legal activities, the British Bankers Association (BBA) has said.
The BBA accepted that there is a case for regulatory intervention over will-writing – which could mean reservation – but said there is no need to reserve estate administration, so long as there are “appropriate” internal controls, because “as the term suggests [it] essentially comprises a series of administrative procedures”.
The association’s response to the Legal Services Board (LSB) consultation on reserving these two activities said “it is striking how many of the concerns aired in the consultation document are addressed by FSA [Financial Services Authority] requirements”.
If reservation is taken forward, “we believe it would be important to review the extent to which existing financial regulation on banks could meet the concerns expressed in the consultation document. This could help to avoid (or at least minimise) the duplication and unnecessary complexity that would result if the regulatory initiative proposed by the LSB was simply super-imposed on the banks’ existing regulatory framework”.
The BBA continued: “A further consideration is that the eight regulators overseen by the LSB tend to relate to particular constituencies and it is not immediately clear which of these, if any, would be comfortable in regulating banks.”
In other responses to the consultation, both the Institute of Chartered Accountants in England and Wales and the Association of Chartered Certified Accountants sought reassurance that the proposal to regulate services “ancillary” to will-writing and estate administration would not catch their members as they are often services provided by accountants who are already regulated.
The Institute of Chartered Accountants in Scotland went further and argued that estate administration is an accountancy service, rather than a legal service, and thus already regulated.
The Solicitors Regulation Authority (SRA) took issue with the reasons given by the LSB for not passporting existing regulators into the regime, instead requiring them to apply for the right to regulate will-writing and estate administration.
The LSB said it was taking this route because “at present regulation is too focused on controlling entry through general education and training requirements that are not targeted at the risks in this market”, while there is very little “on-going risk-based monitoring and supervision to ensure that good outcomes are being delivered to consumers”.
The SRA response said: “We have reviewed these concerns and are confident that we currently implement coherent, evidence-based approaches to manage risks to consumers, and to the public interest, in the provision of will-writing and related services, in the context of our wider risk-based regulation of providers of legal services.”
The Law Society for the SRA to be passported into the new regime.
The Office of Fair Trading’s response said it continued to encourage the LSB to consider “whether regulation would add significant benefit to consumers over and above the current consumer protection levels. For instance, the use of consumer codes, consumer education campaigns and effective use of existing consumer protection legislation have the potential to address many of the current concerns in the will-writing market just as effectively as regulation”.