The Legal Services Board is to launch a formal investigation that will consider regulation of will-writing, following a recommendation from its consumer watchdog.

The regulatory overseer stressed, however, that ‘a monopoly for solicitors is not the answer’. In its second major piece of advisory work for the board, published today, the Legal Services Consumer Panel (LSCP) recommends that a relatively free market in will-writing services should remain.

However, it says that all providers, including solicitors, should be obliged to satisfy regulators that they are competent, follow a code of conduct and allow complaints to the Legal Ombudsman.

The starting point for a regulatory scheme could be the code of the Institute of Professional Willwriters, it suggests.

About half of all solicitors’ firms, some 5,300, provide will-writing services.

However, their market share has been declining in the face of growing competition from other providers such as banks, will-writing companies and online providers.

Estimates suggest that solicitors now prepare only two-thirds of all wills.

Unregulated will-writing companies prepare about 10%, amounting to 180,000 annually.

The LSB asked the panel to consider the longstanding issue of regulating will-writers last year, amid mounting concern about the impact of the present free-for-all on consumers.

Scotland moved to regulate will-writing companies in 2010, and earlier this year the Law Society launched a campaign calling on the government to make will- writing a reserved activity in England and Wales, to better protect consumers.

The panel’s report uncovered evidence of poor quality wills, sharp sales practices, and lost wills where companies disappear without trace.

Worryingly for solicitors, following a mystery-shopping exercise the same proportion of wills prepared by solicitors and will-writing companies (one in five) were ‘failed’ by the panel’s expert assessors.

LSCP chair Dianne Hayter said: ‘It is vital that advisers do a competent job, especially since any defects are unlikely to be discovered until it is too late.

‘The panel was shocked by the poor quality of wills in the mystery shopping.

'Although the sample was small [101 wills], will-writing companies and solicitors were equally culpable, pointing to the need for tighter controls across the sector.’

The report also calls for training standards for solicitors to be raised and for the Office of Fair Trading to lead an enforcement campaign targeted at the ‘minority’ of will-writing companies responsible for the worst sales practices.

The LSB considered the report at a meeting yesterday and last night announced a statutory investigation into how best to protect consumers in the will-writing, probate and estate administration markets.

This is the first time that the board has used its powers under the Legal Services Act 2007 to examine whether a specific activity should be added to the list of reserved activities - meaning those services which can only be provided by persons authorised by approved regulators.

LSB chairman David Edmonds said: ‘The board is grateful for the thorough analysis which has been produced by Baroness Hayter and her panel.

'On the basis of these findings, and the evidence we have seen, we agree that is a prima facie case to start a statutory investigation into regulation, not just of will-writing but also of estate administration and probate.

'This will be the first time that this process has been used and we will be consulting widely on responses to these findings, which clearly indicate consumer detriment across wills produced by different types of providers.

‘Importantly, solutions will need to be targeted at the actual problems - it is clear from the results of the mystery shopping exercise - and the Consumer Panel’s analysis - that the challenges are common to all providers and that a monopoly for solicitors is not the answer.

'We are asking the existing regulators and trade bodies to explore the steps that can be immediately taken to raise standards across the market place.’

Law Society chief executive Desmond Hudson said: ‘The Society has seen too many examples of dishonesty and bad practice from unregulated will-writers, and we have been campaigning for many years to have this addressed.

'We are delighted that the Consumer Panel has recognised the seriousness of these concerns.’

He added: ‘We strongly support steps to improve training in the market and will be looking ourselves at initiatives to provide support and encourage improved standards for solicitors.

'What is most important to remember, however, is that solicitors are required to be covered by insurance, are subject to a strong complaints and disciplinary process and a compensation fund exists to ensure that consumers using solicitors do not lose out.

'This means that there is real protection for consumers if, as will inevitably happen on occasion, solicitors make mistakes.

'Consumers who pay to have something as important as a will made out should benefit from these protections in all circumstances.’