ICAEW: Rechecking demand
The Institute of Chartered Accountants in England and Wales (ICAEW) is considering a new push to regulate reserved legal activities, it has emerged.
The accountancy body has also suggested that the government remove decisions on how reserved legal activities are regulated from the “political influence” of ministers and transfer them to the Legal Services Board (LSB).
The ICAEW has regulated probate services since 2014. In 2017, the then Lord Chancellor David Lidington rejected the LSB’s recommendation that the ICAEW be allowed to regulate the remaining five reserved legal activities as they related to taxation work. The CMA supported the ICAEW.
It responded by launching a judicial review. This was rejected by the High Court in March 2019, citing the Lord Chancellor’s concerns about separation of the ICAEW’s regulatory and representative functions.
In its submission to the progress review of legal services being undertaken by the Competition and Markets Authority (CMA), the ICAEW noted that, in April, Parliament approved statutory orders enabling it to regulate the reserved legal activity of administering oaths.
It continued that “subject to rechecking demand” among member firms, it may consider making a further “targeted application” to regulate additional activities.
The accountancy body said the application would have “a focus on those services which are complementary to services already provided by accountancy firms, for example legal instruments (trust deeds)”.
It argued that the “time and costs of dealing with two regulators” was a barrier to accountancy firms moving into legal services.
The ICAEW said it was “no coincidence” that over 300 accountancy firms entered the probate market after the ICAEW was authorised.
“We believe that the barrier which is now limiting the growth in the number of ICAEW firms doing legal services work is the limited number of reserved legal services which we are authorised to regulate.
“More such services will encourage more firms to make the investment in this area and this will increase competition and drive up quality and down costs for the consumer.”
The ICAEW said the concerns which led to its first application being rejected should “no longer prove a barrier to authorisation” given the changes it has recently made to comply with the LSB’s revised internal governance rules, which include replacing the ICAEW’s probate committee with a regulatory board.
The accountancy body described the current process for legal regulators to extend their reach as “long, arduous and expensive”, culminating in the need for orders to be passed by Parliament and often requiring “two to three years” to complete.
“Given that the LSB has been in place for over 10 years, and demonstrated itself to be a competent supervisory authority, we believe that consideration should be given to extending its powers in the area of approvals/extensions and deregistrations and that these decisions should be taken away from the political influence of Parliament and ministers.”
Last week, we reported that the ICAEW had complained that the stricter internal governance rules had pushed another accountancy body, the Association of Chartered Certified Accountants, out of legal regulation.
Elsewhere in its CMA submission, the ICAEW detailed the measures it had put in place to improve transparency, particularly with regards to price. Unlike other regulators, such as the Solicitors Regulation Authority, the ICAEW relies on voluntary guidance rather than compulsory rules to ensure compliance.
The ICAEW said it had increased its funding to the legal regulators’ website for consumers, Legal Choices, and was “as a whole” content with progress.
However, the accountancy body complained that the website “continues to be lawyer-focused” and does not “adequately reflect offerings of the many legal services providers other than lawyers”.
The ICAEW described the “inevitable dominance” of the SRA both in financing and delivering the platform for Legal Choices as a “significant challenge”, but said incorporation of the project, currently an unincorporated association, and a document setting out voting and control rights “may help the balance of discussion”.
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