CMA: Enforcement warning
The Competition and Markets Authority (CMA) has written to seven unregulated providers of wills and online divorce services, warning them about “aggressive upselling, the refusal of refunds and failing to respond to complaints”.
The move came as the CMA launched guidance for unregulated firms following its investigation into unregulated will writing, online divorce and pre-paid probate services, which was launched in July 2023.
The CMA said the currently unnamed firms who received a letter “should acknowledge it and act on any recommendations to review and revise their contract terms and practices”. If they do not, they could face a formal investigation.
In an open letter to the unregulated legal services sector to highlight the guidance, following a consultation on a draft earlier this year, the CMA said its investigation had “identified concerns that some traders in the sector may not be complying fully with their responsibilities to consumers under consumer protection law”.
Businesses are required to ensure their terms and conditions are fair to consumers – for example, by being accessible – “do not allow for unfair price increases or for ‘hidden fees’ to be charged”, do not seek to unfairly exclude or limit liability and do not include unfair provisions relating to subscription services (such as will storage).
Businesses must “perform their services with reasonable care and skill” and “not use sales practices that are aggressive, or otherwise contrary to statutory obligations”.
“The CMA will continue to monitor the sector and we expect to carry out a compliance review in due course, to assess businesses’ compliance with consumer law in relation to the provision of will writing, online divorce and pre-paid probate services.
“If we continue to have concerns with a business’s practices, the CMA will consider taking enforcement action.”
But it stressed that the investigation, which followed the CMA’s probe of the wider legal services market in 2016, followed up in 2020, did not mean that “unregulated providers are worse than regulated ones”.
The CMA said businesses should note that local authority trading standards services were able to enforce consumer law independently.
Separately, the Digital Markets, Competition and Consumers Act 2024 gives the CMA additional enforcement powers, including financial penalties for breaches of consumer protection law, without recourse to the courts. These should come into force in April 2025.
The guidance warns unregulated firms not to make “misleading comparisons” with solicitors.
They should not lead consumers to think that “they are engaging a firm of solicitors or other regulated legal professionals on their behalf, or that the service provided is otherwise subject to regulatory oversight”. Indeed, they must make it clear that they are unregulated.
The CMA has also published new consumer guides outlining the options available when choosing a will writer or divorce service provider.
Hayley Fletcher, CMA’s interim senior director for consumer protection, commented: “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.
“To ensure they comply with the law, we expect businesses in the sector to read the new guidance and make the necessary changes to their terms and practices. Those who don’t could face enforcement action.”
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