It was “fundamentally wrong” for Legal Services Board (LSB) rules to force the Association of Chartered Certified Accountants (ACCA) to withdraw from legal services, another accountancy body has argued.
The Institute of Chartered Accountants in England and Wales (ICAEW) also said that ACCA members conducting reserved probate work should be able to choose to switch to any of the remaining regulators, rather than just CILEx Regulation, as the ACCA has proposed.
The ICAEW complained that the ACCA was no longer able to offer access to “blended accountancy and legal services” because of the LSB’s stricter internal governance rules.
The ACCA’s decision to pull out of legal services, as we revealed in August, followed the deadline at the end of July for regulators of legal services to comply with the rules introduced by the LSB to ensure their separation from professional bodies.
The ICAEW said it noted “with concern” that changes made to the rules “forced a new regulator to withdraw from a market that is supposed to have opened up and become more competitive as a consequence of the Legal Services Act 2007”.
The ICAEW said legal services “sit comfortably alongside accountancy services and there are many common features across the two service provisions that provide a ripe opportunity to provide a wider choice to the consumer”.
The ICAEW’s comments came in response to a CILEx Regulation consultation on creating a new breed of ‘CILEx ACCA firms’, which would prepare the probate papers under the oversight of CILEx Regulation, while the estate administration and holding of client money – which is not reserved work – continued to be regulated by ACCA.
The ICAEW welcomed the fact that CILEx Regulation was “stepping up to assist in this area” and said it provided some “interesting and bold innovation”.
However, it was concerned that there was an “apparent attempt to direct the ACCA practitioners solely to CILEx without option”.
The ICAEW went on: “Whilst we would fully endorse the proposal that CILEx should be able to regulate ACCA firms, and even perhaps be ACCA’s recommended regulator of choice, the access into accreditation for current ACCA authorised firms should not be limited to only one of the eight remaining regulators.
“The other firms currently authorised by ACCA should be able to exercise choice in how they deal with their registrations.”
The ICAEW said the Legal Services Act had introduced “greater fluidity” into the market, with 10 ICAEW accountancy firms understood to be registered with the Solicitors Regulation Authority and a number of ACCA members being principals in firms licensed by the ICAEW for probate.
The ICAEW said the “apparent move to introduce exclusivity to CILEx” would compromise this and was “an unsatisfactory precedent which we do not believe should be set”.
The accountancy body described itself as “extremely uncomfortable” with the proposal that probate matters should be regulated through a “separate business entity” rather than within the ACCA-regulated accountancy firm, and said it would be “highly confusing” to the consumer.
“One of the cornerstones of the act is the introduction of the alternative business structures. These allowed multi-disciplinary services to be offered including the reserved ones by a single entity as a single bundle of supply.
“This arrangement appears to be counter-intuitive to that and weakens consumer protection.”
The ICAEW was also concerned that the separate labels ‘CILEx authorised firm’ and ‘CILEx ACCA firm’ would give the impression of “two different levels of quality”, leading to a “two-tier approach” which was confusing to the consumer and suggested that “only lawyers are good enough to do this work properly”.
The ICAEW argued that “any wholesale move of all ACCA oversight” should be part of “temporary transition arrangements only” and overall the proposals “appear rushed and unbalanced.”