Reproduced with kind permission of The Daily Mail.
The shameful exploitation of bereaved families has been laid bare in a damning new report.
This backs up evidence gathered by Money Mail into the high charges banks and some will-writing services make for executing even the simplest estates.
Distraught families can also be targeted by unregulated firms offering probate services for eye-watering fees.
When someone makes a will, they appoint executors to sort out their estate when they die.
Banks and specialist firms are offering cheap wills, having themselves appointed executor and then charging tens of thousands of pounds for executing the estate.
Yet most estates can be dealt with by friends and family – with the help of a solicitor for more complex issues – for a fraction of the cost. consumer group Which? sent eight undercover researchers to make 42 visits or calls to solicitors, specialist will-writers and banks around Britain.
The researchers used a simple scenario. They posed as divorcees with two children aged over 18 who wanted to leave everything to them 50/50 and had assets of £270,000 – below the inheritance tax threshold of £325,000.
The Which? report found banks will charge on average £10,830 – around double the £4,759 charged by willwriters and £5,199 by solicitors for sorting out an estate.
The most expensive is Barclays, charging an average of £13,395 on a £270,000 estate. This includes 4.5 pc of the first £100,000 of the estate, 3.5 pc of the next £400,000, 1.5 pc of the remainder, plus £400 for each beneficiary and £75 for each asset.
Lloyds Banking Group, including Halifax/Bank of Scotland – which was not investigated in the Which? report – is also hugely expensive. our research discovered it charges 4 pc of the first £500,000 of the estate, 3 pc on the next £500,000 and 1.5 pc on any amount above that. This works out at £10,800 on a £270,000 estate.
Readers have also complained about the high charges levied by specialist probate firms such as ITC legal services. one reader says he was quoted £20,000 to handle the £500,000 estate of his aunt, almost four times the charge he was eventually quoted by a solicitor.
An estimated 90,000 people a year find themselves forced into accepting executors specified in their relatives’ wills. customers can be lured by cheap – or even free – will-writing services.
HSBC, for example, charges just £75 to write a single will.
The catch is that the bank will appoint itself as either sole or joint executor of the will and force bereaved relatives to pay through the nose for probate services when the customer dies.
Undercover researchers at Which? were not told this upfront when they phoned up to make an appointment. in three of the four visits, the HSBC salesman mentioned there would be fees for administering the will, but no one suggested the customer’s relatives could do it.
Taxpayer-supported Royal Bank of Scotland and Lloyds Banking Group also appoint themselves as executor. it is not compulsory to name Barclays as executor, although the will form recommends appointing a professional executor such as Barclays. solicitors came out of the survey rather better, with none recommending naming their firm as executor.
They all suggested the children – the beneficiaries of the will – were best placed to be chosen. it is usually possible to force firms to step down from their role as executor, but they are not legally obliged to do so. Adam Walker, from independent probate broker final Duties, says: ‘Some firms will fight tooth and nail if you ask them to renounce probate duties.
‘But in most cases a company will back down. The problem is most people who have just lost a loved one accept what they’re told and go along with it, even if they’re being ripped off.’
Earlier this month, Money Mail revealed how registrars, GPs, hospitals, churches and funeral homes are all handing out official-looking leaflets advertising the Bereavement advice centre, which appears to offer free, independent advice.
But those who call the free helpline or visit the website are directed towards ITC legal services. The firm then sends a salesman to a bereaved person’s home.
Lack of protectIon
A major concern over will-writing and probate services is the lack of protection for customers if things go wrong.
Those who deal with banks might be ripped off. But at least they have the protection of the independent disputes arbitrator the Financial Ombudsman Service. Similarly those given duff advice by their solicitor can go to the Solicitors Regulation Authority. But if you’re dealing with a ‘specialist’ will writer or probate firm, there is very little you can do.
Astonishingly, will-writing and probate is not regulated. Firms that offer these services need no training or qualifications. Most reputable firms are members of trade body the Institute of Professional Will Writers, which has its own code of conduct, but membership is voluntary.
Adam Walker, from Final Duties, who has been campaigning for statutory regulation, says: ‘It’s farcical. Anyone can set up a will-writing or probate service. I could recruit a tramp and he could be in business tomorrow.
‘If you want to buy a life insurance policy, you have to deal with a qualified, trained individual. If something goes wrong, you are protected. But if you want someone to look after your estate – which will typically involve much larger sums – you will often be dealing with an unqualified, unregulated, uninsured and untrained salesman.’
The Office of Fair Trading has worked with the Solicitors Regulation Authority and the Institute of Professional Willwriters (IPW) to introduce tougher guidelines for firms.
These include firms having to spell out charges and telling customers they don’t have to appoint a professional executor when they write a will. But it appears to have ruled out introducing statutory regulation.
David Stallibrass, of the OFT, says: ‘There is a difficult balance between ensuring good standards and ensuring everyone has access to will-writing services. Regulation will add costs for firms, which will be passed on to customers.
‘There is also very little evidence that the service of regulated solicitors is any better than that provided by unregulated firms.’
WHICH? reported concerns with the advice given by four of 12 specialist will-writing firms it visited.
One firm recommended it was named joint executor. The firm, from Northern Ireland, also recommended a complex package of services costing £1,763.
Among its recommendations were what it called a ‘family trust’ – to stop any divorced spouses or creditors that the Which? researchers’ children might have in future from getting hold of the money.
A Which? spokesman says: ‘A solicitor would not normally recommend tying up your money in this way, as a family trust is an expensive way to deal with things that might never happen.’
What you could be charged for Wills and probate:
||Cost of a single Will
||Cost of administering a £270,000 estate
|Lloyds / HBOS
|NatWest / RBS
|Will Writers’ average
Source: Which? And MoneyMail
The Bill Was £5,000 for Mum’s Estate
Soon after Angela Stevenson’s mother died in December 2008, she phoned the free Bereavement Advice Service helpline.
Instead of getting the help she was looking for, she was advised to phone ITC Legal Services. The firm sent a salesman to her and quoted £2,712 plus extra costs, to be added to the bill at the end of the process.
Mrs Stevenson, 53, from West Yorkshire, says: “They said it was very complicated. They also said there would be hidden charges and promised a ‘transparent fixed-fee service’.” In fact, Mrs Stevenson’s mother’s estate appears to have been straightforward. The final bill was £5,292.57. After querying it, the firm reduced it to £4,623.
An ITC spokesman says: “The fees we charge are competitive and accurately reflect the work undertaken. However, should a client raise a concern, of any kind, we will review their case immediately and sympathetically.”
Ends. For further information, please call 0113 245 0733 and ask for our Wills and Probate department.