With there being an estimated 3,800 (and rising) providers of unregulated legal services in England and Wales alone, the Competition and Markets Authority has marked the provision of unregulated will writing, online divorce and pre-paid probate administration services as ones to watch for compliance with consumer protection law.  To help providers of these services understand and comply with their obligations, the CMA issued guidance to the sector on 9 October 2024.

As well as issuing guidance to providers, the CMA has written to 7 of them cautioning them against using particularly concerning practices, such as aggressive upselling, the refusal of refunds and failing to respond to complaints. Whether or not you received such a letter, if you are involved in the provision of unregulated legal services to UK consumers, now is a good time to review your business practices and terms and conditions.

To complement the guidance to business, the CMA has also issued guidance to consumers who are making a will or going through divorce.  The “things to look out for” in these guides such as ensuring that, as a consumer, you are clear on the costs of the service before proceeding, also indicate the areas of concern that the CMA has with this sector’s current practices.

Highlights of the guidance 

The guidance sets out businesses’ obligations around various themes including:

• Consumers having the information they need to make informed decisions
  • The guidance sets out the information which the CMA considers likely to be “material information” for such services under the Consumer Protection from Unfair Trading Regulations 2008 and therefore required to be provided in a clear, intelligible, unambiguous, and timely way, before the consumer makes a purchasing decision.  The information includes the total price of the service and details of the service to be provided, including how it will be delivered and the likely timeframes.
  • The pre-contract information which the business must give consumers in accordance with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and the additional obligations arising where the contract is a “distance contract”.  For example, informing the consumer that they have a right to cancel the contract within 14 days of the contract being concluded.
  • Ensuring that the information provided is accurate and not misleading. The practices of “drip pricing” (where the initial price information is incomplete and it is revealed later in the consumer journey that there are other fees and charges to be paid) and the use of fake or misleading online reviews are amongst practices highlighted. Given that the new Digital Markets, Competition and Consumers Act 2024 (“the DMCC Act”) provides enhanced powers to the CMA in relation to both, these could be areas ripe for enforcement action.
• Ensuring terms and conditions between providers of unregulated legal services and consumers are fair 
  • As well as making the point that most terms will be subject to the fairness test set out in the Consumer Rights Act 2015, the guidance highlights particular terms that a business should review.  These include pricing terms, terms that seek to unduly exclude or restrict the business’s liability to consumers, and terms about cancellation rights (which should be consistent with the consumer’s legal right to cancel).
  • Businesses providing their services by subscription should note there is guidance about how subscription terms would likely be considered fair under the current law, as well as looking forward to the new subscription rules coming into force via the DMCC Act.
• Ensuring services are performed with reasonable care and skill
  • This requirement will be viewed against the backdrop of consumers being unlikely to have significant experience of such services and potentially being at a disadvantage relative to providers in detecting shortfalls in quality.  Areas highlighted include the competence of the individuals delivering the service and the need for record keeping and having an effective complaints handling service.
• Ensuring sales practices are not misleading or aggressive or otherwise contrary to statutory obligations
  • The CMA provides a list of behaviours that it considers would likely be aggressive.  These include pressuring consumers to purchase additional services by presenting the decision not to buy such a service as a legal risk.
  • There’s a specific reminder not to attempt to charge consumers for amounts over and above the amount agreed for the main services they will receive unless the consumer has first given their express consent.

Spotlight on this area

By issuing this guidance, those providing unregulated legal services are on notice of the CMA’s interpretation of consumer protection law and how it applies to their businesses.  By setting out many “Dos” and “Don’ts” in the guidance, the CMA is clearly signalling to providers the types of conduct that they will and will not tolerate.  It’s worth noting that the CMA makes the point that often consumers purchasing these services are doing so at “challenging times in life”, possibly indicating that the CMA views consumers of such services as “vulnerable” consumers and acting as a further incentive for the CMA to stamp out any non-compliance. This is particularly so given that, in accordance with the CMA’s Prioritisation Principles, enforcement action leading to direct effects which can specifically benefit people who need help the most, can be reason to prioritise it. 

The CMA will gain significant new powers in 2025 via the DMCC Act to issue financial penalties of up to 10% of annual global turnover.  The message to unregulated legal service providers is clear:  read the guidance and change your ways or face the will of the CMA.