Consultation: mandating transparency disclosures through regulation
This consultation has now closed and the results are being collated. View the proposed changes.
ICAEW’s consumer engagement strategy
Following its successful application in 2014 to become an approved regulator and licensing authority for probate, ICAEW gave a commitment to the Legal Services Board (LSB) to develop and implement a consumer engagement strategy. The purpose of this strategy was to place the consumer at the heart of regulation; in turn, improving access to legal services for less well-off consumers and increasing competition in the sector by enabling consumers to make informed purchasing decisions.
On 13 January 2016 the Competition and Markets Authority (CMA) launched a market study into legal services to see if they were working well for individual consumers and small businesses and published its final report on 15 December 2016 which concluded that competition in the legal services sector for individuals and small businesses was not working well. The CMA’s main concern was that a lack of information weakened the ability of consumers to drive competition through making informed purchasing decisions. The CMA made a series of recommendations centred on improving transparency of costs and service provision to enable consumers to compare legal services providers.
ICAEW’s Action plan and consultation
To develop and advance ICAEW’s consumer engagement strategy and to address the concerns and recommendations outlined in the CMA’s report, ICAEW opted for a voluntary approach to improving the provision of price and service information to consumers. ICAEW has performed the following initiatives to encourage improvements in transparency disclosures by its probate accredited population:
- carried out research in 2017 to assess the transparency of ICAEW accredited firms costs and services;
- produced an Action Plan in February 2018 which set out how we would ensure that ICAEW accredited probate firms were more transparent with their costs and service provision;
- produced an ICAEW Best Practice Guide to Cost and Service Transparency (the Guide). We sent this to all ICAEW accredited probate firms in June 2019;
- published its legal services price and service transparency benchmarking report (benchmarking report), in September 2020, that was based on 2019 research;
- presented its Transparency of pricing and service report, published in January 2021, that was based on October 2020 research to the ICAEW Regulatory Board (IRB) in December 2020;
- set up a dedicated webpage Price and Service Transparency | ICAEW;
- sent a letter from the legal services chair of the IRB on 14 January 2021 to every ICAEW probate accredited firm, drawing attention to the published CMA report and the need for improvements in this area;
- produced and communicated a training webinar in February 2021; Transparency – what you need to know, setting out the requirements and benefits associated with pricing and service transparency; and
- carried out further research and reassessment in April 2021, that was presented to the IRB in June 2021.
To date, the uptake of the voluntary guidance has been disappointing. At its meeting in December 2020, the IRB noted that should the results of the April 2021 research show that insufficient progress had been made by ICAEW’s probate accredited population in displaying pricing and service information it would, at its board meeting in June 2021, introduce regulation and enforcement in this area. To aid improvement a letter was sent to probate licensed firms by the IRB legal services chair on 14 January 2021 and a webinar produced in February 2021.
At its meeting in June 2021, the IRB considered the results of the research and reassessment carried out in April 2021. It noted that whilst the results showed some improvements in disclosures around price and service provision, they were still some way short of acceptable. Consequently, it recommended mandating transparency measures through the introduction of regulation.
The current version of the Probate Regulations are those effective from 23 February 2017. We are required by the Legal Services Board (LSB) to alert you to the following proposed changes to the Probate Regulations, approved by the IRB at its meeting in June 2021, to mandate transparency disclosures within section two of the regulations under the heading ‘continuing obligations’ as an addition to paragraph 2.7:
2.7 An accredited probate firm and its principals and employees must at all times:
(t) publish details of the total fees it charges for the service it provides to consumers, or an estimate of the likely fees for services it provides, including VAT and disbursements (if applicable). It must provide an explanation of the basis upon which fees are calculated, for example fixed fee or an hourly rate / time spent. It must provide an explanation of what services are covered by the published fee.
(u) make readily available to consumers the following service information:
- a clear and brief description of the services it offers;
- a description of the key stages of a service; and
- an indication of likely timescales of the service and any likely affecting factors.
(v) in accordance with its duty under the bye-laws to investigate complaints, make the following information readily available to consumers:
- details of its internal complaints procedure;
- details of how and when its clients can make a complaint to ICAEW and / or the Legal Ombudsman.
(w) provide the following regulatory information:
- that it is regulated by ICAEW for probate services;
- details of the compensation arrangements, namely the consumer’s ability to claim from the ICAEW compensation fund; and
- that it has professional indemnity insurance (PII).
The primary way a firm should display price, service, complaints and redress and regulatory information is by publishing it on its website. If it does not have a website, it should publish it on other platforms such as social media, or on request by email or post.
Ongoing monitoring and compliance with the revised Probate Regulations
All ICAEW probate accredited firms are subject to ongoing monitoring by ICAEW’s Quality Assurance team (QAD) in line with probate regulation 2.7(q). QAD aim to carry out a first monitoring visit to newly accredited firms within their first 24 months of accreditation and on a risk-based cycle thereafter. It is the intention of ICAEW to monitor its probate accredited firms’ compliance with the additions to the probate regulations in line with its current approach to monitoring by QAD.