Commercial Awareness Update – W/C 6th February 2023

AN UPDATE ON THE EU RETAINED LAW (REVOCATION AND REFORM) BILL:

WHAT IS NEW FOR BUSINESSES?

The Retained EU Law (Revocation and Reform) (REUL) Bill, which originated in the House of Commons in September 2022, is due to have its second reading in the House of Lords on 6 February 2023. 

After 1,400 pieces of EU legislation were recently discovered in the National Archives, the UK government just announced that an additional 1,000 pieces of legislation had been added to the 2,700 which were already being considered for revocation or reform under the Bill.

The purpose of the REUL Bill

If it is enacted, the REUL Bill will thus allow for the revocation, restating, replacing, or updating of 3700 pieces of retained EU law, which cover over 400 policy areas (for a more detailed overview of the Bill and its anticipated effects on employees’ rights, employers, and businesses, see previous article [LINK]. 

The retained EU law, soon to become “assimilated law”, must be actioned by the sunset date of 31 December 2023, after which it will “expire” and therefore hold no weight in the UK courts. 

The REUL Bill’s significance: societal and legal

The Bill bears great implications for businesses, as it will brutally unsettle the legal landscape. Indeed, adding 100 new policy areas to the existing 300 under scrutiny, which already covered over 20 areas of the economy, is causing increased apprehension among firms and their clientele. 

A significant cause of concern is the slow rate at which retained EU law is being reformed. Only 17,92% of the 3700 pieces of legislation have been actioned (around 650). This level of inaction is especially alarming since only ten months are left before all that has not been expressly revoked or assimilated becomes “expired”. This risk of a legal vacuum, which adds to the prospect of sudden and drastic legislative reform, will lead to more significant uncertainty and destabilise businesses’ ordinary course of dealings. 

In the Department for Environment, Food and Rural Affairs, for instance, only 18% of the 1,781 pieces of legislation under scrutiny have been actioned. In the Department for Business, Energy, and Industrial Strategy, although the reformation process has been more efficient (30% of actioned REUL), the changes would still need to be sped up, primarily since they govern environmental standards for energy-related products, intellectual property, product safety and standards, and gas and electricity markers, among other policy areas of particular interest to firms and their clientele. 

In its impact assessment on the REUL Bill, the government informed that businesses would “benefit from faster regulatory reform aimed at reducing existing burdens and boosting economic growth”. It did, however, recognise that the Bill would lead to uncertainty and that businesses would bear the cost of changing regulations, including linked familiarisation and implementation costs. 

Moreover, the report pointed out that deregulation leads to divergence, often reducing opportunities for businesses to maintain their competitiveness in international markets and gain global shares. This may harm businesses, just as the potentiality of policy divergence between devolved administrations, which “could add administrative burdens, complexity and uncertainty” and “disincentive inter-regional trade”. Businesses should be prepared to see a loss in the coherence of the UK’s internal market and the erection of new barriers to international dealings.

The potential outcome of the REUL Bill for businesses is mixed, especially since its impacts are impossible to assess at its current state and will mostly depend on the content of the legal reform. 

The government’s impact assessment indicates that there will be immediate costs and momentary disruptions after reform but that these inconveniences will be outweighed by their long-term gains thanks to the deregulation. 

Only time will tell.

Article written by Mahault Dignet

THE FINANCIAL CONDUCT AUTHORITY WARNS AGAINST PRE-PAID PROBATE PLANS

The Financial Conduct Authority (FCA) issued a report on 25 January, warning consumers against the dangers of pre-paid probate plans (also known as “Confirmation” in Scotland). 

These plans, which are relatively new to the market, can seem miraculous in that they are meant to relieve executors of a will (or closest living relatives to the deceased in the absence of a will) from the financial burden of applying for a Grant of Probate. Therefore, the process for an executor to obtain the legal right to control the deceased’s assets has never been this easy.

The debate on pre-paid probate plans

Although pre-paid probate plans remain largely unheard of, they have recently gained popularity. An increasing number of companies offer their services; these services cover the costs of one’s estate administration for a set fee previously paid by the now-deceased client so that their executors are exempt from paying any fees. These companies generally hold the funds in a trust until the death of the client.

However, the FCA’s new report indicates that pre-paid probate plans are not as advantageous as they seem. Oftentimes, these operations can prove quite risky due to the lack of regulation of this financial service. 

Indeed, companies offering pre-paid probate plans are neither regulated by the Financial Conduct Authority nor the Solicitors Regulation Authority. This means that, firstly, there needs to be more transparency concerning how the funds are held. 

Secondly, if the operation goes wrong, the consumer rarely benefits from any protection; this is fatal in cases where companies become insolvent or go into liquidation, as they neither offer refunds on the plans nor offer insurance to their clients. 

Thirdly, pre-paid probate plans are unsuitable for adapting to a change in one’s asset value. As the plan is generally based on the value of one’s estate at the moment of purchase, it may become inefficient if the estate’s value goes up and executors have to pay the remainder of the probate. Likewise, it may become unprofitable if the value of the estate is reduced and the fee paid becomes excessive as opposed to what would have been paid after death. 

According to the FCA, it is not surprising that many customers have lost money after trusting companies to set up their pre-paid probate plans in the past months.

Pinsent Masons Senior Associate Hannah Ross predicts that this warning on pre-paid probate plans indicates the FCA’s intention to regulate the pre-paid probate plan market. This possible intention seems interesting to explore, considering this financial service could be highly convenient had it not come with so many harmful drifts.

Article written by Mahault Dignet

TRANSPARENCY ORDERS: NEW PRECEDENT AND THE FAMILY LAW COURTS

A Transparency Order (TO) is an injunction against members of the public, particularly journalists and reporters, which prevents the reporting or the identification of parties at the centre of a case, as well as their families and those closely tied to a case.

This Order is particularly useful in family law and family court cases as a means to protect those who are particularly vulnerable.

Conversely, such an injunction restricts clarity and transparency and increases doubts about family court proceedings.

A new precedent for TOs

On 25 January 2023, the Leeds Family Court, in the case of BR & Ors Re (Transparency Order: Finding of Fact Hearing) [2023] EWFC 9, set a precedent under a family court pilot scheme.

Under this new pilot scheme, ‘journalists will be able to attend and report on family court hearings or hearings in the Court of Protection, without prior permission for the first time in a “long overdue” move to increase transparency and public confidence’ according to thetimes.co.uk.

In particular, although s. 12 of the Administration of Justice Act 1960 disallowed any such reporting without prior consent from a judge, journalists could still attend family court hearings. Should journalists want to report on the cases attended, they had to adhere to the strict conditions of a TO.

A breach of the injunction by members of the public could lead to the finding of contempt of court, with resulting penalties including fines, asset seizures or prison terms, as evidenced in Office of the Public Guardian v Stalter [2018] EWCOP 27, when the former party made an application for the committing to prison, the partner of the Protected Party for his unauthorised disclosure of sensitive information relating to the Protected Party’s case.

The new pilot scheme follows The Transparency Review in October 2021, marshalled by Sir Andrew McFarlane, which proposed journalists should be permitted to report on court cases without the need for omission or ‘sugar-coating’.

So long as those reporting on the cases are accredited and refrain from disclosing the identities of those involved, either directly or indirectly, the reports are factual and are published following the conclusion of a case, cases can be reported to the public with brutal honesty, as previously witnessed in the Channel 4 Dispatches documentary, Torn Apart: Family Courts Uncovered.

General impact

There has always been a substantial public interest in the family court system. However, the subtleties and intricacies of how cases are dealt with and decisions are arrived at are kept behind what many feel is an unnecessary veil and, to be precise, an impenetrable one.

This pilot scheme primarily aims to maintain and increase public confidence and transparency in the family court system whilst continually observing the privacy of the parties involved in such cases.

The level of transparency set by the new pilot scheme offers the opportunity to demonstrate court processes, such as the practices of the principles of fairness, along with presenting to the public the often gut-wrenching decisions judges must make, thereby mitigating often unsubstantiated preconceptions and augmenting understanding, whilst also humanising its judiciary and legal professionals.

In terms of increasing public confidence, fair and unbiased reporting, so long as it poses no dangers to Protected Persons or parties to the reported case, would create less general apprehension in potential litigants seeking justice.

Impact on the legal sector

Although the scheme is in its infancy, it has been mostly positively received and presents a considerable opportunity to transform the family court system.

From 30 January 2023, the Family Courts in Cardiff, Carlisle and Leeds will trial the scheme. How the legal sector primarily reacts to the amendments depends on the scheme’s success and, not less significantly, the overall adherence to it.

There are bound to be some teething problems as this is a new precedent. The most likely problem envisaged would be the unwitting breach of the new TO.

Retaining journalistic integrity requires honest reporting of a case or an issue; however, there is a likelihood of misconstruing sensitive details of a case to the public, whether willfully or accidentally, by the author.

Further, there is every possibility that journalists and other members of the public breach the terms of the newly improved TO owing to some uncertainty of respective parameters, resulting in the offender requiring legal counsel.

Legal professionals involved in family law cases must be familiar with the latest variations of a TO to continue acting in their clients’ best interests and to prevent the breach of their duties of care.

The overall difficulty lies in counterpoising transparency against safeguarding those who need it the most. However, notwithstanding all its potential difficulties, the recently improved TO serves as a step towards achieving that fine, albeit extremely sensitive balance.

Article written by Aqua Koroma