The Lord Chancellor, David Lidington, has rejected the ICAEW’s application to become an approved regulator and licensing authority for the six remaining reserved legal services, which came as a surprise as the accounting institute was backed by the Legal Services Board (LSB)
The ICAEW is ‘very disappointed’ at the Lord Chancellor’s decision and ‘struggled to understand the basis on which he has reached it’.
The ICAEW’s application aimed to level the playing field between accountants and lawyers as currently accountants who offer tax services are at a disadvantage against lawyers as they do not have professional privilege and cannot conduct cases in court.
Duncan Wiggetts, ICAEW executive director of professional standards, said: ‘The Legal Services Board encouraged our application and recommended it to the Lord Chancellor. The decision also cuts across the recommendations of the Competition and Market Authority who, in its market study in 2016, had found that competition in legal services for individual consumers and small businesses was not working well and had indicated their support for the application.
‘The Lord Chancellor and the Ministry of Justice have not seized this opportunity to liberalise and regulate the market for legal services in England and Wales, to encourage more competition and to create better options for the consumer.
‘We now need to study the detail contained in the Lord Chancellor’s decision notice to determine our next steps.’
Lidington’s reason for not allowing the ICAEW’s application include: concerns over governance arrangements and independence, restricted scope of regulation to taxation services, impact on notarial services and the distinction between taxation services and legal services.
Lidington said: ‘I appreciate that this will come as a disappointment to you.
‘I believe that it is extremely important that regulation should be, and also be clearly seen and understood to be, sufficiently separate from any representative functions.
‘I am of the view that before any extension of the ICAEW’s legal services regulatory work can be agreed, this and each of the other highlighted issues need to be fully addressed. I would be happy to consider a further application in the future if my concerns can be suitably addressed.’
One of the Lord Chancellor’s main concerns was that the ICAEW, which is already an approved regulator of probate services, planned to restrict its scope of regulation to taxation services. He shared concerns with the Lord Chief Justice, Lord Thomas, and Legal Services Consumer Panel that such a limitation would be difficult to manage and would further complicate the process.
The Lord Chancellor’s letter to Michael Izza, chief executive of the ICAEW, is available here.
Report by Amy Austin
