Considered in Grand Committee
Moved By
That the Grand Committee do report to the House that it has considered the Probate Services (Approved Bodies) Order 2009.
Relevant document: 15th Report from the Joint Committee on Statutory Instruments.
In preparing for this Motion, I discovered the hazards of being a jobbing Whip: three hours into reading my papers, I realised that I had to declare an interest. My son is some sort of certified accountant and he could conceivably be allowed to do probate work as a result of this order. I hope that the Committee is content for me to continue to take the order through.
This order is presented under Section 55 of, and Schedule 9 to, the 1990 Act. It will enable the Association of Chartered Certified Accountants—the ACCA—to become an approved body and authorise suitably qualified members to provide probate services for a fee, gain or reward. By probate services, I mean of course the preparation of any papers on which to found or oppose a grant of probate or a grant of letters of administration.
At the moment, Section 23 of the Solicitors Act 1974 restricts the provision of probate services for a fee, gain or reward to specified legal practitioners, but Section 55 of the Act provides an exception for members of an approved body. The ACCA is the third organisation to seek parliamentary approval to become an approved body since Section 55 was commenced in December 2004. Two other organisations, the Institute of Chartered Accountants of Scotland and the Council for Licensed Conveyancers, became approved bodies to provide probate services on 1 August 2008. However, only the Council for Licensed Conveyancers has begun to issue probate licences to members. To date, it has issued 18 probate licences.
The application, received in January 2008, has passed through the required statutory approval procedure set out at Schedule 9 to the 1990 Act. In doing so, it has been considered and approved by the Legal Services Consultative Panel and the President of the Family Division. The panel was keen to ensure that the arrangements the ACCA proposed to put in place in terms of training, regulation and consumer protection were on a par with those of previous applicants and existing providers before recommending approval. As a result, this application has my full support.
The ACCA is a professional body of accountants. It received its royal charter in 1974 and has more than 53,000 members in England and Wales. Members are required to meet the academic and post-qualification requirements before being eligible for membership and obtaining accountancy practising certificates. Approximately 6,400 members currently hold practising certificates.
Under the terms of the application, probate practising rights will be granted to members who currently hold practising certificates in accountancy and who wish to provide probate services in England and Wales only. Before members of the ACCA are granted practising rights, they will need to show that they can satisfy the requirements set out in Section 55 if they wish to provide probate services. These include: completing the required training course and ensuring their employees are suitably trained and satisfy the continuing professional development requirements set by the ACCA; having satisfactory insurance and compensation arrangements in place to cover adequately the risk of any claim made against them and to protect the client in the event of them ceasing to provide probate services; and having a complaints scheme in place, including a route of appeal to the Legal Services Ombudsman.
The ACCA has demonstrated in its application that consumer protection is something that it takes seriously. As an established professional body in its field of expertise, it already has in place effective systems of monitoring and enforcement and will ensure that there are additional, suitably robust monitoring systems in place for members now providing probate services.
The potential benefits to the consumer of this application being approved include more choice of provider, more competitive prices and the opportunity for ACCA members to provide a more cost-effective and efficient service to existing clients. This is precisely what Section 55 was intended to do and is in keeping with the principle central to the Government’s policy of providing new and better ways of providing legal services, with a wider choice and at more competitive prices.
Consumers who are unhappy about the way in which the ACCA has dealt with a complaint about the provision of probate services can refer the case to the Legal Services Ombudsman. The LSO’s jurisdiction was extended in October 2004 to cover bodies authorised under Section 55 of the Courts and Legal Services Act, shortly before the relevant provisions were commenced. If the order is approved, it is not anticipated that the LSO will receive a high number of additional complaints per year. In the longer term, complaints about ACCA members will be dealt with by the new Office for Legal Complaints, in line with complaints about members of other legal professional bodies.
If this order is approved, a subsequent order will need to be laid amending the Legal Services Act to bring the ACCA under the jurisdiction of the Legal Services Board. This will ensure that the ACCA retains its probate rights in the future regulatory regime and that it is subject to the same oversight as other regulators, such as the Council for Licensed Conveyancers and the Law Society. I commend these orders to the Committee.
I thank the Minister for introducing the orders. I also commend him on confessing that he has devoted three hours to being briefed on this very detailed legislation—it shows extraordinary assiduity and devotion to duty. And I commend him on declaring his interest, albeit it is a fairly remote one.
The ACCA is the third body to have applied under the Act to provide probate services. Two previous bodies have done so, and the Minister has stated that one of them has so far granted 18 licences. I should be interested to know whether he can offer any predictions on how many more licences are likely to be granted in the light of the Association of Chartered Certified Accountants also being able to provide such services, and whether the Government have made an estimate of what sort of percentage of the probate services market this might involve. My honourable friend Mr Bellingham spoke in another place about this market being worth some £440 million annually, and he reckoned that about 5 per cent of it might migrate to new providers. Obviously, we always believe in competition. However, this might have an effect on some of the small solicitors who are often dependent on these services. Having said that, we believe that it is right that they should face competition. But I should be very interested to know whether the Government have estimated whether the figures provided by my honourable friend are accurate. No doubt the Minister can tell us when he responds.
I also express my gratitude to the Minister for introducing this order. We have been through this mill before in relation to the Institute of Chartered Accountants of Scotland and the Council for Licensed Conveyancers, and I am very interested to note how little take-up there has been. As I understand it, there has been nil take-up from the Institute of Chartered Accountants of Scotland. Presumably they have found that it is not possible to make any money out of it. Only 18 certificates have been issued by the Council for Licensed Conveyancers. I would like the Minister to spell out in detail, if he can, how the licences which have been granted are monitored. I do not think that such schemes should be monitored only at the beginning of their introduction, nor should it be for the consumer or client to have to raise matters by way of complaint. There should be a way in which the Ministry of Justice carries out some oversight of how the system is working.
It is an extremely vulnerable area, of course. People who go to solicitors with probate papers seeking probate are generally the bereaved family, who are at a very delicate time. They have no way of knowing that they can trust the solicitor unless there has been a lengthy solicitor-client relationship over a period of time. I think that the public generally rely on the good reputation of the legal profession, but that does not always help. I can give one instance of a solicitor who was dealing with a will in which the Polish community was the residuary beneficiary. Having paid out substantial sums to clients, he failed for 12 years to pay the residuary beneficiary, the Polish organisation that looks after the Polish community in London. It was only when the police became involved that it was discovered what had happened. That, of course, leads to the very important question of compensation.
The conditions for anyone wishing to practise in the probate field in the organisation which we are concerned with in this case are actually quite large hurdles to get over. They have to ensure that there is proper training. They have to ensure that there is a compensation scheme that must be no less than the compensation scheme that applies to solicitors. It would be quite wrong for there to be any competitive advantage by those seeking work in this field who are not solicitors in having to pay less in premiums and so on. All these things require considerable oversight, as I said. It is not enough to make this field of potentially difficult legal work open to all without a proper consideration of how the consumer can be best protected.
Having said that, I raise no further objections to the order going forward. I simply require assurances on the safety of the provisions for consumers.
On licences, it is difficult to quantify exactly the numbers. However, the Association of Chartered Certified Accountants does not estimate that many will take up the opportunity initially. The CLC has issued 18 licences but 89 of its members are working to gain qualification. ICAS has not yet awarded any but it is waiting to see what happens in Scotland.
I shall deal first with the market and the policy direction. Clearly the policy direction has been developed over a number of years, and it is to open up legal services to competition. However, legal services are pretty efficiently delivered at this level in the UK. Frankly, what we are now doing is in practice likely to relate to the current customers of chartered accountants. As one noble Lord mentioned, some families have a family lawyer and, if a bereavement occurs, it is natural for them to contact that lawyer. Other families have a long relationship with their accountant, who may deal with their tax every year and look after their affairs.
Reading from my script, the primary market of the Association of Chartered Certified Accountants for probate services will be existing clients with whom it already has long-standing relationships, resulting in an intimate knowledge and understanding of their financial affairs. A high level of trust will have been established and therefore members of the ACCA will often be a natural choice for clients or their families to act as executives or administrators of success. The ACCA also considers that having members with probate rights will allow it to provide continuity of service to clients. Its members’ knowledge of clients’ financial affairs will also make the process of obtaining a grant of probate more efficient, less stressful and less expensive for clients.
A full regulatory impact assessment was completed for the implementation of Section 55 of, and Schedule 9 to, the Courts and Legal Services Act to open up the market for the provision of probate services. It provided details of the costs and business implications for the new providers and the impact on solicitors’ firms, and it showed that commencing Section 55 was expected to have little impact on the probate market. The potential impact of new providers on the market was estimated to be less than 5 per cent over the decade, although, in practice, the impact could well be much less than that. Although not relevant to this application, Bridget Prentice has undertaken to look at the RIA to consider whether it needs further updating in view of the expected impact of allowing new providers on to the market.
On the matter of vulnerable clients, only members authorised to engage in public practice work—those holding practising certificates from the ACCA—will be eligible to apply for authorisation to provide probate services. Members must also comply with the ACCA’s code of ethics and conduct and its fundamental principles, which set out the obligations placed on all members. In particular, members are required to demonstrate professional competence and due care, and they have a continuing duty to adequately maintain professional knowledge and skills to ensure that clients receive competent professional services. Members must act diligently and in accordance with professional standards when providing professional services.
The ACCA has a rigorous regulatory function, which includes monitoring practice members in regulated areas, including the probate service, which will clearly be a regulated area. Such monitoring includes investigating complaints, regulating hearings and applying stringent regulations under a code of ethics. At any monitoring visit, a compliance review is carried out to check a member firm’s compliance with the ACCA’s practising regulations and code of conduct. In particular, members are required to demonstrate professional competence and due care, and they have a continued duty to maintain their professional knowledge and skills to ensure that clients receive competent professional services. Only members authorised to engage in public practice work—that is, members who hold practising certificates from the ACCA—will be eligible to apply for authorisation to provide probate services.
Practising certificates are annually renewable. All applications for authorisation, including applications for renewal, are subject to approval by the ACCA’s admission and licensing committee. Part of the authorisation procedure will be to assess the training and practical experience obtained by ACCA members relevant to the provision of probate services.
The other questions from the noble Lord, Lord Thomas of Gresford, were based on the equivalence between the regulation of probate services provided by the ACCA and the regulation of probate services provided by solicitors. I went into this issue carefully at my briefing. Essentially, the system works like this: a solicitor would have regulation under the Law Society; an accountant would have regulation under the ACCA. Before this power is grantable to the ACCA it has to prove itself, under the processes in Section 55 of the previous Act, as competent to exercise that power. If there is concern among either the Law Society or the ACCA about the exercise of that power then a common, more senior body will decide. That body is about to change, I believe, under the 1997 Act. I cannot remember the name of the current body or what the new one will be, but they will converge in a current body.
The Legal Services Consultative Panel was consulted on whether this would be the appropriate body. As I understand it, the panel addresses similar questions. It is a very high-status body which is well respected by the legal profession. For this investigation, it was headed by a Lord Justice of Appeal, Lord Justice Moore-Bick, and its membership included three QCs, a number of solicitors and so on. It is the statutory body that Section 55 of the Act, or the order commencing that section, requires to consider whether the ACCA has put in place satisfactory arrangements. It conducted a number of investigations, inquiries and discussions. Key among those, as has been quite properly alighted upon, was the matter of compensation—I think that “run-off” is the term—and so on and so forth.
As I understand it, lawyers have a joint scheme approach through the Law Society. That is not a very good technical term, but, as I understand it, it is a kind of pay-as-you-go scheme. Accountants have various professional insurers and so on. The Legal Services Consultative Panel was concerned about that and wished to be assured that the accountants’ insurance arrangements were equivalent in the comfort they gave clients to those that lawyers offer. After an alteration in the amount—I believe the amount moved for the smallest practitioners from £50,000 to £100,000; I shall write if those figures are wrong—the panel concluded, and advised the Secretaries of State, that the application from the Association of Chartered Certified Accountants to become an approved body to authorise its members to provide probate services under Section 55 of the Courts and Legal Services Act 1990 should be approved.
Does the Minister agree that “run-off procedures” is perhaps not an appropriate phrase?
I am sure that I meant something intelligent by that. I shall perhaps send a note with a better term. Or perhaps the noble Lord could use in his mind the phrase that I should have used.
Motion agreed.