View the article online at http://citywire.co.uk/money/article/a473769
Banks upbraided yet again - this time for will writing services
Four high street banks are under pressure to improve their will writing and executor services over concerns that they are not clearly explaining the costs to customers.
One of the worst financial rip-offs suffered by consumers is the huge fees charged by banks and some solicitors to act as executors on wills which they have prepared.
It is encouraging therefore to see that the Office of Fair Trading (OFT) has reacted to the problem and put pressure on the high street banks to review and improve the way they sell will writing and executor services.
Barclays Bank, HSBC, Lloyds Banking Group and RBS Group – the only banks offering will writing and executor services – have all voluntarily agreed to review and, where necessary, improve their sales methods within the next six months.
Most families and individuals don’t query it when the bank or solicitor suggests that they could use their executor services and many have no idea how high the costs can be.
Fees of £5,000 to £10,000 are commonplace for winding up a simple estate which may comprise nothing more than the family home and a few savings accounts or a portfolio of shares.
But the beneficiaries will find that once appointed it is very difficult, and in some cases almost impossible, to get rid of the firm of executors named in the will.
Unless an estate is very complicated it is much more efficient to appoint family members or friends as executors - who may also be the beneficiaries and therefore have a vested interest in keeping costs to a minimum.
If they need professional advice or help winding up the estate, they can then shop around and get quotes from accountants and solicitors rather than being left with a fixed fee from a firm of professional executors.
The OFT approached the four banks during 2010 as part of an initiative to improve the will-writing market for customers and their beneficiaries. It was concerned that some consumers were appointing professional executors without fully understanding the likely costs and other options.
The four banks approached by the OFT have agreed to meet three key principles, to ensure customers are able to make well-informed decisions.
- Customers should not be led to believe that appointing a professional executor is essential or the norm.
- They should not be encouraged to appoint a professional executor unless it is clearly in their best interests.
- Providers of will writing services must ensure that the consumer has the necessary information to make a considered choice and fully understand the charging structure.
Many firms still charge a flat percentage of the value of the estate, regardless of how simple or complicated it may be to obtain probate. Where the main asset is a valuable family home or land this can result in fees out of all proportion to the amount of work involved.
A survey published by the OFT last year showed that 88% of people paying for will preparation currently use solicitors, and 7% use professional will writers. Of these, some 43% chose to appoint the professional will-writer or solicitor who wrote their will as the executor. Almost a quarter of those customers said they had not been made aware of the likely charges.
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
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