As an approved legal services regulator, ICAEW is required to have in place appropriate compensation arrangements (the Scheme) for the purposes of consumer protection. The Scheme has been in place since 2014. ICAEW has therefore undertaken a review and is now inviting you to respond to its assessment of the Scheme and a proposal to continue with the current format.
About the scheme
The Scheme is intended to operate as a scheme of last resort for consumers and small businesses or charities. It is in place in case of a loss, as a result of fraud or dishonesty by an ICAEW accredited probate firm, during the course of authorised work ie, probate and estate administration.
2024 review of the scheme
Scheme limits
The ICAEW Legal Services Committee has powers under the Scheme regulations to make discretionary grants of up to £500k per estate, £5 million in the aggregate in a single calendar year. After a review overseen by the ICAEW Regulatory Board (IRB) and with consumer protection very much in mind, it has been proposed that these limits should not change.Scheme funding
Each year the IRB reviews the budget and fees and levies payable by probate firms.A consultation on the 2024 budget and fees was operated with relevant stakeholders from 15 June to 11 August 2023. The volume of responses is not considered representative of the community. However, the data and comments received are highly useful and informative eg, a small number of comments informed us of challenging market conditions for smaller firms. This has been into account when setting 2024 fees and levies. There was no discovery of any adverse impact on persons with any of the protected or other characteristics.
The probate levy is in place to fund the operation of the Scheme including the cost of managing any claims and contributing towards building the cash reserve. The reserve is ring-fenced, kept separate from wider ICAEW reserves, in Legal Services Compensation Scheme Ltd.
There have been no claims on the Scheme. Consideration has therefore been given to reducing the annual levy. While there is no claims pipeline and there haven’t been any claims or grants, example analysis of a projected claims pattern showing impact on the Scheme cash funding has been shared with the IRB. After careful review, and to ensure no additional cost requirement to firms in future, were the cash reserve to fall because of claims, there is no proposal to reduce the levy.
In 2023, the IRB agreed to continue with an unchanged levy and to continue to build the cash fund beyond £2m.
Consultation and timeline
ICAEW consulted its proposal to continue with the current Scheme including the regulations, claim limits and levy from 11 April 2024 to 24 May 2024. This consultation is now closed.
