LSB keeps door open on regulation of estate administration

There is not enough evidence of malpractice to justify a recommendation that estate administration should be regulated, the Legal Services Board has said.

The supra-regulator maintained the position it took earlier this year when it recommended to the Lord Chancellor that will writing, alongside probate, should be a reserved activity, but not estate administration.

The case for regulating will writing was 'right and unequivocal' but 'with estate administration we found the evidence a lot less clear cut', chief executive Chris Kenny told a committee of MPs yesterday.

Kenny was appearing alongside LSB chairman David Edmonds before the Commons' Justice Committee to answer questions about the board's work.

Unlike will writing, where unregulated proportion is 15-20 per cent, the totally unregulated market in estate administration was only 3-4 per cent, Kenny said.

He went on: 'We also found that a lot of these 3-4 per cent are unregulated will writers, so by catching them at the will-writing stage, when the sale is made for estate administration, you cut off any potential mischief there, so the amount of danger becomes smaller and smaller.'

Committee member Elfyn Llwyd, MP for Dwyfor Meirionnydd, said it was right that will writing should be regulated, 'because a badly drafted will can create havoc' but didn't understand why estate administration was not regulated similarly.

'When I was in practice, one of the complaints often levied was that the banks are muscling in and often ripping people off '“ putting down a flat fee of thousands of pounds on a small estate, time after time, with complete impunity,' the former solicitor said.

Kenny explained that the board had not come across as many examples of 'flagrant bad practice' as in the will-writing sector and that the LSB was mindful that a lot of the non-legally regulated bodies were already regulated '“ by the Financial Services Authority or the accountancy regulators.

'On balance, we decided that rather than having regulatory creep, in an area where the evidence was a lot less clear cut, we wouldn't make a recommendation now but signal that our door was open to further evidence as it emerged,' he said.

Resisting the temptation to control the market by regulating any activity that had a legal flavour was also an important consideration.

'There may be a need for statutory underpinning but estate administration didn't quite fall into that category.'

Providing further indication that the LSB wold be prepared to review the position, he concluded: 'I won't pretend it was anything other than a 55-45 decision, and we remain vigilant and will return to the issue if it looks in two or three years' time that we called it wrongly.'

In a separate series of questions, LSB chair David Edmonds suggested that there should be a single regulator for the legal services sector and also rejected accusations that the board had been 'too complacent about referral fees'.

Research by the board showed no detriment to consumers, Edmonds replied to committee chair Sir Alan Beith MP.

'The secretary of state took a different view and it is for the SRA to make the case [for a ban],' Edmonds said.

A ban, he said could have 'unintended consequences' which would be detrimental to consumers. 'I worry that we end up in situation worse than we have at the moment.'