WIREDGOV

Failing to shop around for will preparation and executor services could be costing consumers around £40 million a year, the OFT warned last week, as it welcomed new steps to help people understand their options.

Eighty-eight per cent of people paying for will preparation currently use solicitors, and seven per cent use professional will writers. While the costs for preparing a will can be relatively modest (more than half pay less than £100), the costs for a professional executor to administer an estate can be high and vary considerably - for an average estate, consumers can pay between £3,000 and £9,000.

Although there is no requirement in law to appoint a professional executor, 43 per cent appoint the solicitor or professional will writer who wrote their will according to figures for the OFT, released today. Almost a quarter of those customers (23 per cent) said they had not been made aware of the likely charges.

People preparing wills have the option to shop around for professional executor services, or to appoint a lay executor, for example a friend or family member, who can then choose to be assisted by a professional if required.

The OFT has been working closely with the Solicitors Regulation Authority (SRA) and the Institute of Professional Willwriters (IPW) in order to help people preparing wills understand that they have these options. This is reflected in new guidance published last week by the SRA and in the code of practice of the IPW given approval recently by the OFT under its Consumer Codes Approval Scheme.

David Stallibrass, OFT Director of Services said:

'Preparing a will is important to make sure that your wishes are respected after your death. We welcome the steps taken by the SRA and the IPW to provide greater clarity for consumers, who need to be fully aware of their options when signing up for executor services. People should be able to make an informed choice about the costs and benefits of appointing a particular professional executor in their will, compared to leaving lay executors to decide whether they need professional support.'

New OFT advice for those considering making a will and appointing an executor has been published today on the Consumer Direct website.

NOTES

1. An OFT survey of 2000 adults was carried out in February 2010 by GfK for the OFT. Almost half of respondents (47 per cent) stated that they had a will. Fifty-five per cent of those who recollected the cost of their will paid less than £100. Forty-three per cent of those that had a will appointed their will writer as executor, of whom 23 per cent stated that they had not been made aware of the likely charges.

2. The Solicitors Regulation Authority (SRA) is the independent regulatory body of the Law Society of England and Wales, and is responsible for ensuring that solicitors meet high standards. It regulates more than 100,000 solicitors in England and Wales, as well as registered European lawyers and registered foreign lawyers.

3. The SRA's 'Question of Ethics' guidance, published on 10 June 2010, says solicitors should:

• explain the options available to their clients
• ensure that the client understands that the executors do not have to be professionals, and that lay executors (for example friends and family) can choose to instruct a solicitor to advise them, or act for them
• explain clearly the basis on which executor fees would be charged

The guidance also highlights that solicitors offering online will writing services need to take particular care to ensure that clients have all the information necessary to make an informed decision.Non-compliance with this guidance may mean that a solicitor is in breach of their duties. See the 'Question of Ethics' guidance.

The provisions of the SRA code apply to solictors whether they are directly instructed to write wills or where clients are referred to them by a third party. A solicitor's obligations are the same whether it is a third party or the solicitor who is appointed as the executor of the will.

4. The Institute of Professional Willwriters' announced on 2 June 2010 that its Code of Practice received OFT approval (the code received approval on 31 March but an announcement was postponed due to the General Election) and is available. Among other things, the code forbids members from making the appointment of themselves as executor a condition of accepting instructions, and requires them to provide information about the duties and responsibilities of executors, in order to help clients make an informed choice about appointments. Before an IPW member is appointed as an executor, the code requires him to provide written indications of current executor fees. In addition, if an IPW member is appointed as executor, the code states he must renounce his appointment if requested by all his co executors or by all the beneficiaries.

5. The OFT conservatively estimates that consumers who fail to shop around for executor services may be losing out by around £40 million per year. This calculation is based on the Ministry of Justice's data on the number of grants of probate in 2008, HMRC data on the average estate size, and information obtained by the OFT's own survey and mystery-shop findings on charges.

6. A fee range of between 1.5 per cent and four per cent of the value of the estate represents a cost of between £3,400 and just over £9,000 for an average estate. The actual cost could be far higher when account is taken of tiered charges, additional hourly rates and other charges or disbursements.

7. According to a Ministry of Justice report published in March 2010, 88 per cent of will writing is carried out by solicitors and seven per cent by professional will writers. The report also found that will writing accounts for the second highest use of solicitors after conveyancing.

8. The OFT has looked particularly at online and postal will-writing services, and is of the view that whatever the method of selling, the costs of the executor service should be as prominent in the client's mind as the option to purchase that service.

9. For more information on the OFT's work on professional services, including legal services, see the professional services page.