Unregulated businesses are an important part of the legal service industry. They provide flexible and often cheaper alternatives to regulated law firms. Falling outside the Solicitors Regulation Authority (SRA), it is estimated that there are at least 3,800 unregulated businesses providing legal services in England and Wales alone, with the largest number providing services in the areas of Wills and estate administration. These businesses may fall outside the SRA’s jurisdiction; however, they must still comply with consumer protection law.

On 9 October 2024, the Competition and Markets Authority (CMA) announced that it had written to providers of unregulated legal services, cautioning them against failures to comply with consumer protection law. It has also published compliance guidance for unregulated providers of Will writing, online divorce, and pre-paid probate services.

Why has the CMA published the guidance?

The CMA published the guidance in recognition that people accessing unregulated Will writing, online divorce, and pre-paid probate could easily fall prey to unscrupulous market practices because these services:

• Are not the type a person purchases regularly. In addition, they involve complex legal concepts and terminology which may be new to many consumers.
• Can result in decisions that may impact the consumer’s life in the short and long term.
• Are purchased at a challenging and stressful time when people are often more vulnerable to misleading or aggressive sales practices
• By their nature, problems often don’t come to light until years after the purchase is made.
• Do not provide access to complaints processes and redress mechanisms available to consumers who purchase from regulated law firms.

What are consumer protection laws?

Most of the laws around consumer protection are contained in the Consumer Rights Act 2015, which provides legal protection for people who are treated unfairly or purchase a product or service that goes wrong.

There are several other pieces of legislation providers of goods and services must comply with, including:

• Consumer Contracts Regulations 2013 – provides protection for people buying items online or via distance-selling.
• Consumer Protection from Unfair Trading Regulations 2008 – prohibits any commercial practice that fails to meet a standard of professional diligence and could significantly distort, or is likely to distort, the economic behaviour of the average consumer.
• E-commerce Regulations 2002 – sets out specific actions online traders must take to protect consumers’ interests, including providing contact details and receipts.

Failure to comply with consumer protection law can lead to a regulatory investigation, prosecution, a fine, and reputational damage. Businesses in breach may also have to pay redress to any customers harmed and may also face legal action from individual consumers in the civil courts.

In addition to legislation, the CMA states that businesses, including non-regulated legal providers, must ensure that:

• Prospective consumers have the information they need to make knowledgeable decisions.
• Their terms and conditions are fair.
• Services are performed with reasonable care and skill.
• Sales practices are not misleading, aggressive or generally unfair.

How does the CMA guidance apply to Will Writing, online divorce, and pre-paid probate?

In terms of Will-writing services, the guidance states that businesses must not “provide insufficient information regarding pricing and costs, or use aggressive ‘upselling’ practices to sell services the consumer was not initially seeking. Nor should they use contract terms that seek unfairly to limit or avoid the usual obligations they are under, and the usual rights and protections consumers have, under the law.”

When providing online divorce services, the guidance makes clear that businesses must not deceive customers regarding how much they can do for them. Also, they mustn’t charge simply for administering forms that the client could quickly fill in online themselves (unless they are requested to do so).

The CMA regards pre-probate services as particularly problematic when it comes to consumer protection. This is because it can be challenging to predict in advance the complexity of a particular probate and how long it will take. In addition, the business providing pre-probate services plans may cease trading by the time the consumer is deceased.

The risks associated with pre-probate services have been pointed out by the Financial Conduct Authority (FCA), which has published consumer warnings, alerting consumers that such plans are unregulated in the UK.

Wrapping up

Unregulated businesses providing Will writing, online divorce, and pre-probate services need to familiarise themselves with the new guidance to ensure they comply with all relevant consumer protection regulations. If you are unsure of your organisation’s compliance requirements, a specialist in risk management and regulatory compliance for legal practices can advise you on how to put appropriate policies and procedures in place to protect your commercial interests.

If you require expert legal advice and representation on regulatory compliance, please email us at [email protected] or phone 0121 249 2400.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article, please contact 43Legal.