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Probate best practice

New ICAEW guidance designed to make it easier for consumers to understand the cost of accountants’ probate service offerings could raise the bar on pricing. Rachel Willcox investigates

Bearing in mind our collective reluctance to talk about money, it’s perhaps no surprise that many firms struggle to broadcast the fees they charge for services. But all that is about to change, certainly for those offering probate services, following new guidance from ICAEW that will make both service offerings and the way they are priced easier for clients to understand.

The new ICAEW Best Practice Guide to Price and Service Transparency was launched in June this year after a consultation with authorised probate firms. It forms a cornerstone of ICAEW’s consumer engagement strategy, which it committed to developing when it became an approved regulator and licensing authority for probate in 2014. It is also a by-product of the year-long investigation by the Competition and Markets Authority (CMA) into the supply of legal services in England and Wales. In short, the CMA concluded that individual consumers and small businesses needed better information about legal services to help them shop around, and that consumers experience “substantial detriment” when accessing services due to the lack of transparency of information provided.

The ICAEW Code of Ethics already requires firms to uphold the values of honesty, fairness and clear communication. Nonetheless, Peter James, ICAEW’s head of regulatory policy, believes consumers will further benefit from this latest guidance on service and price transparency because they will be better equipped to choose the best deal for them. “This will also benefit firms tremendously by educating consumers on the benefits of engaging with our regulated firms and the advantages of being provided with professional services as a one-stop-shop,” James says. “ICAEW and the accountancy profession have service of the public and the public interest at the centre of their activities. We believe the development and implementation of ICAEW’s consumer engagement strategy illustrated through the production of this best practice guide will ensure it continues to be relevant and effective in meeting these goals.

Encouraging transparency

At last count ICAEW had accredited 311 firms to offer probate services to clients. As part of its regulatory commitment to beef up the information made avail - able to consumers, the Institute has conducted an audit of licensed firms’ websites, a process which it intends to repeat in a year to see whether its voluntary recommendations on pricing and transparency have struck a chord.

It may not be the definitive barometer of transparency, however ICAEW’s analysis suggests that efforts to lay bare service and pricing are at best a work in progress. Just 45% of firms licensed for probate provide a clear description of the services they offer, only 13 firms disclose their pricing and, of those, around half weren’t clear whether VAT was included. If the Legal Services Board considers progress insufficient, the guide may be developed into a set of compulsory regulations. “However, we believe the outcome is better achieved by voluntary encouragement,” James says. “Although legal services form only a small part of what our firms do, this is good marketing practice generally.” Clive Stevens, former chairman of Kreston Reeves and now a consultant for the firm specialising in trusts and estates and inheritance tax, agrees. “If anyone comes to you for a service, you ought to be able to tell them how much it costs.

I’m very clear we have to be transparent with clients so they know what they’re getting and how much it will cost. That’s a good principle for all professional services.” Although some advisers charge an hourly rate for probate services, the practice of charging a flat fee plus a percentage of the estate value (typically 1-5% plus VAT) is commonplace. Jonathan Russell, a partner at Rees Russell, isn’t alone in questioning it. “Bearing in mind we’re talking about non-contentious probate, is it really any harder to sort out a £200k estate compared to a £400k estate? Amid concerns that the push for transparency could lead to a race to the bottom on price, the solution is not trying to be everything to everyone, Stevens advises.

“Know your market, make sure you price work appropriately and be transparent. To quote low and then not deliver is worse than not getting the work in the first place, and reputationally it’s a disaster.” Daniel Carson, senior tax manager at Jackson Stephen LLP, agrees more transparency could make it easier to compare service offerings. “But it has the potential to create unrealistic expectations depending on where [the probate is] on the complexity scale,” he adds. Fundamentally the issue is one of pricing services, Russell says. “As accountants, we’re frightened to sell our expertise so we hide behind the mystery of hourly billing.”

There’s no excuse for a lack of clarity on fees, he warns. “If you’re embarrassed to have a conversation up front about how much you’re going to charge, imagine how embarrassed you’d be sending the bill.” Paul Dell leads the probate and estate administration service at Essexbased accountancy firm Raffingers, which was licensed for probate in April 2017 and last year generated revenues of around £70,000 from the service line. “There are two stages to the probate work; getting up to grant and then administration and distribution. Increasingly it’s a collaborative approach with clients deciding how much they want to take on themselves and we price accordingly,” says Dell.

Marketing services

In reality, the pricing conundrum is just one issue facing firms keen to turn probate into a successful revenue stream. The broader question of how they market probate services is clearly leaving many firms scratching their heads. The Institute recently published a much-welcome marketing guide to help firms capitalise on the probate opportunity, available at icaew.com/consumerengagement. “With other services there is often someone more senior in the firm that people can go to for advice. As a result, some firms are a little nervous about the best way to market probate services. The guide is about demonstrating how firms have used their probate licences and offering tips on making the most of it,” James says.

Julia Gallagher, head of tax at Curo Chartered Accountants, admits that probate has been a “bit of a slow burner” for the firm, despite working hard to market the service. The combination of referral arrangements with law firms and regular reminders to existing accountancy clients about their probate offering keeps things ticking over. “We’ve tried targeting funeral directors and end of life hospitals with leaflets but none of it has worked for us. It’s really difficult,” she admits. Nonetheless, Gallagher firmly believes that probate should be on the radar of any firm with a significant private client business.

“It brings everything full circle and adds value to my clients. I see them every year and I know what’s going on in their estate,” she says. With revenues from compliance work continuing to shrink for many firms, being able to offer a cradle to grave service to clients can only be a good thing.

Originally published in Economia on 6 September 2019.