Posted by Dave Seager, consulting adviser to Legal Futures Associate SIFA Professional
Seager: Unregulated advice may be better than nothing but that’s all
Last month saw the outcome of the much-anticipated Competition & Markets Authority (CMA) investigation into unregulated legal services. Importantly, to complement guidance to unregulated businesses that provide wills and online divorces, the CMA has also drafted guidance for consumers.
There is little doubt that, with a staggering 3,800 unregulated providers of such legal services, such action and guidance was required. Most of us would agree that there should be a range of choice available to consumers when choosing a legal services provider, but that MUST come with transparency and the full facts.
As Hayley Fletcher, CMA’s interim senior director for consumer protection, observed: “Alternatives to conventional high street law firms can offer convenient services for people – and when day-to-day budgets are already under pressure, they can be a more cost-effective option.
“Those offering these types of legal services often meet their customers at some of the most challenging times in life, so it’s particularly important that a difficult time is not made harder by misleading or unfair practices.”
Whilst the legal services profession, including the bodies that represent unregulated providers of wills and online divorces, have welcomed the guidance and will undoubtedly push for their members to embrace it, there is an overriding concern. Whilst Hayley Fletcher suggests that “our new guides will help empower consumers to ask businesses the right questions before they buy”, the question remains, will they?
From my perspective, there are so many parallels with other consumer services and, of course, with our own financial services sector. Consumer choice should be a positive thing, but with choice, comes risk, which is why the CMA sees the need for consumer protective guidance.
As with financial services, a consumer can buy an off-the-shelf product or solution, take some advice about a particular product or solution or, in an ideal world, work with a financial planning professional to fit those products or solutions into a long-term plan.
From a SIFA Professional perspective, all our members are professional financial planners, and all will look to collaborate with properly qualified and regulated legal professionals, rather than unregulated alternatives.
For example, an off-the-shelf, low-cost will may be written observing the CMA guidance but will it interact with a financial plan being developed for the client? Similarly, a cheap and quick online divorce may work in some cases, but will it consider a couple’s investments, their future pensions and ensure a fair and equitable settlement? This is important because, once settled, there is often no recourse.
In addition, given both our regulator’s strong and appropriate stance on advising clients in vulnerable circumstances, will the membership bodies for the unregulated providers be taking these aspects quite so seriously?
Bear in mind that, for unregulated providers, membership of a body that is embracing the new CMA guidance is not yet mandatory. Certainly, separating couples surely need an arm around the shoulder through the process, rather than a web-based solution, and that should be a collaborating financial planning and a family solicitor in most cases.
In the financial services sector, it is not necessarily that different and there will be and should always be a choice to suit requirements and budget. Appropriate financial advice is arguably better than no financial advice, just as in most cases where dependants are involved, as I have often heard, a will is most likely better than no will.
However, I am not sure anyone would be able to convince me that a standardised or off-the-peg solution or plan would be preferable to one tailored to a client’s individual circumstances by highly qualified professionals.
In conclusion, therefore, whilst it is hard not to applaud the intentions of the CMA and the direction of travel, SIFA Professional would still suggest that our members refer clients in need of wills and going through difficult divorces, to regulated and qualified solicitor partners.
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