CMA issues warning to unregulated legal service providers amid consumer protection concerns

The Competition and Markets Authority (CMA) is stepping up its efforts to protect consumers opting for unregulated legal services, such as will writing and divorce arrangements, which are becoming increasingly popular alternatives to traditional high street solicitors.

As the use of these services grows, the CMA is acting to ensure that providers offering them, comply with consumer protection laws, safeguarding people from unfair practices.

Rising demand, growing risks

While alternative legal services can offer cost-effective solutions, especially when budgets are tight, the CMA is concerned that people may not always be fully informed about what they are paying for, or the options available.

This is particularly important in situations like writing a will or getting divorced, where services are not frequently purchased, and consumers might be unfamiliar with the process.

The CMA is therefore releasing new guidance for providers of these services, outlining their obligations to ensure that they:

• Provide fair contract terms and transparent pricing.
• Deliver services with reasonable care and skill.
• Avoid misleading or aggressive sales tactics.

To boost compliance, the CMA has issued an open letter to all providers of unregulated legal services, urging them to adopt best practices. The authority plans to monitor the sector and conduct a formal compliance review in the near future.

Empowering consumers

In tandem with its guidance to providers, the CMA has also published consumer guides to help people make more informed decisions when selecting will writing or divorce services. These guides are designed to encourage consumers to ask the right questions and be aware of their rights.

A particular area of concern highlighted by the CMA is pre-paid probate services, which come with significant risks, including the potential for providers to go out of business before the person’s death, leaving their estate unprotected. Consumers are advised to carefully consider these services before purchasing, with additional warnings issued by the Financial Conduct Authority.

Stronger powers on the horizon

The CMA’s intervention follows the introduction of the Digital Markets, Competition and Consumer Act 2024, which will grant the authority stronger enforcement powers. From next year, the CMA will be able to directly determine whether providers have breached consumer law and impose fines, as well as requiring providers to compensate consumers who have been harmed by unfair practices.

Hayley Fletcher, the CMA’s Interim Senior Director for Consumer Protection, stressed the importance of compliance, stating: “Unregulated legal services can offer convenient and affordable alternatives to traditional solicitors, but it is essential that businesses treat consumers fairly. Our new guidance empowers both consumers and businesses, helping to ensure that people are not misled or taken advantage of during difficult life events.”

Ongoing monitoring and compliance

The CMA will continue to monitor the unregulated legal services market closely, and is prepared to take further action if necessary. Issuing guidance and warnings now, appears to be an initial effort to improve standards, but it seems clear that the authority will take increasingly severe action if this becomes necessary.

If you would like further information on the new guidance for businesses and consumers, see: https://www.gov.uk/cma-cases/will-writing-and-other-unregulated-legal-services or if you have any questions, please contact Gary Brown on 0238 046 1240 or email Gary Brown.