CMA issues new guidance to unregulated legal service providers in the UK

The new guidance was published along with an open letter to businesses providing those unregulated legal services to consumers, following a year-long investigation into concerning practices such as aggressive upselling, the refusal of refunds and failing to respond to complaints. 

The guidance sets out examples of practices or conduct viewed by the regulator as breaches of the UK’s consumer protection law, and provides some of the practical steps businesses can take to help them comply with the law. It contains different chapters focusing on the provision of will writing, online divorce services and pre-paid probate schemes respectively, with service-specific ‘do and don’t’ lists as well as case studies illustrating compliant practice in the sector.

Angelique Bret, competition and consumer law expert at Pinsent Masons, said that the CMA has recognised the need to protect consumers using these unregulated legal services through investigations and is prepared to launch consumer law enforcement action against businesses that breach their obligations.

“As with its other recent consumer protection investigations, the CMA has focused on areas that are most likely to have a significant impact on consumers. Life events involving probate and divorce will often have a substantial financial impact on individuals and will typically occur at a time when consumers might be at their most vulnerable, highlighting the need for consumer protection measures,” she said.

According to the CMA, it has cautioned seven providers of unregulated legal services due to concerns about their contract terms and business practices, and warned them about formal investigations if concerns are not addressed. It has highlighted that from next spring, the regulator will receive stronger enforcement powers under the DMCC Act, which received royal assent in May 2024. It is expected that from April 2025, the CMA will have the power to impose financial penalties for breaches of consumer protection law.

Tadeusz Gielas, also a competition and consumer law expert at Pinsent Masons, said: “The CMA first launched its consumer protection investigation back in July 2023, following complaints regarding these unregulated legal services. Now, it has once again issued tailored guidance to address concerns identified during an investigation.”

“The new guidance collection – which also includes guidance for consumers buying will writing services and divorce services – combined with warning letters to businesses, suggest that the CMA is poised to launch future consumer law enforcement action against businesses that do not comply. Non-compliance risk will be much higher once the DMCC Act comes into force and the CMA begins to use its new direct enforcement powers,” said Gielas.

The CMA has not issued separate new guidance for consumer pre-paid probate services because the UK’s Financial Conduct Authority already did so in early 2023.

Under the DMCC Act, businesses will face maximum fines up to 10% of their total annual turnover for substantive breaches of consumer protection law, while individuals may also face substantial fines in certain circumstances. Fines for businesses and certain individuals will also apply for procedural infractions, such as failing to cooperate with a CMA consumer law investigation.

In its open letter, the CMA has asked providers of will writing, online divorce and pre-paid probate services to review their contract terms and general business practices based on the guidance and make necessary changes to ensure compliance, or face enforcement action. It emphasised that they should ensure they provide consumers with the information they need to make informed decisions, draft fair terms and conditions in their contracts, provide services with reasonable care and skill, and stop using any aggressive or misleading sales practices.

The CMA has clarified that this guidance is not addressed to unregulated providers of other legal services or to regulated providers of legal services.