Controversial government plans to change legal requirements for transporters and other professional service providers have been given the green light.
Anyone who interacts with HM Revenue and Customs (HMRC) about a client’s tax matters will soon be required to register as a tax adviser. This does not matter whether you consider yourself a tax advisor or describe your work as tax advice.
A less imminent, but still important, change is to make the Financial Conduct Authority (FCA) the sole professional services provider for anti-money laundering (AML) and anti-terrorist financing compliance. The transfer of responsibility for this is expected to be completed in 2028-2029.
The Council for Licensed Conveyancers (CLC) has spoken out against both of these reforms, which we believe will duplicate regulatory efforts and could reduce consumer protection and the risk of non-compliance by regulated professionals.
However, we recognize our responsibility to work constructively with the government, the FCA and other regulators to ensure these changes are communicated and implemented as efficiently and effectively as possible.
Register as a tax advisor
We raised our concerns about this in a letter to the Principal Secretary of the Treasury earlier this year, but the Government is determined to press ahead, even though extensions to deadlines have recently been announced for parts of the financial sector. Currently, registration by lawyers must be completed within three months from May 18. More details can be found here here.
CLC-regulated carriers are not allowed to provide tax advice, and we believe this move will only lead to a duplication of regulatory efforts and an increase in regulatory burden in an area where there is currently no significant problem. It will also inevitably lead to higher costs being passed on to customers.
It is expected that HMRC will provide additional guidance on the registration requirements, and we are also seeking further clarity on how these will apply.
We remain committed to ensuring our regulated community has clear and timely information and will also publish our own guidance as soon as possible.
AML supervision
It has been confirmed that the FCA will become the sole professional services provider for the legal and accountancy sectors, as well as trust and corporate service providers – a responsibility that currently lies with 22 Professional Body Supervisors, including the CLC.
HM Treasury says this move is intended to make the system simpler, more consistent and more robust, even though there is no evidence or compelling arguments that money laundering will actually be reduced.
The Treasury first held consultations on the future of AML supervision in 2023 and our position remains the same, although our original concerns have increased since then.
We believe this move will also lead to a doubling of regulation, increasing regulatory burden while simultaneously reducing individual regulators’ visibility into their regulated communities. The significant coordination and resources required to compensate for the lack of regulatory oversight will inevitably lead to an increased financial burden passed on to consumers.
Next steps
These reforms risk weakening the very systems they are designed to improve, but we must ensure that they are implemented to the best of our ability and continue to meet the high standards of consumer protection that the CLC currently provides.
Practices must be given sufficient time to prepare, and we await more details and further consultation on how the new arrangements will operate.
In the meantime, we will do everything we can to minimize disruption to those we supervise and ensure they understand exactly what is required of them and when, to remain compliant.
Stephen Ward is director of strategy and external relations at Council for recognized transporters