SRA thematic review of probate and estate administration

The SRA Annual Assessment of Continuing Competence 2023 found that probate and estate administration generated the third highest volume of reports to the SRA and complaints to the Legal Ombudsman.

This prompted a 2024 thematic review of firms providing probate and estate administration services, looking at how they maintain their continuing competence, manage risks and meet their obligations to clients.

Whilst the focus is on probate and estate administration, the learning from the review can be applied to all areas of legal practice.

Continuing Competence

The SRA found scope for improvement in compliance with its continuing competence requirements:

• Over half of the solicitor fee earners and four solicitor heads of department were not aware of their obligation to make sure they remain competent. Some did not understand their continuing competence obligations
• 10 out of 25 firms visited did not have a written continuing competence policy
• Legal and technical training was good but found lacking on other areas of the Statement of Solicitor Competence relevant to performing the role.
• Training records were generally lacking information about the solicitor’s reflection on their practice, identification of training needs and evaluation of whether training completed had met the identified need.
• Around a third of files reviewed showed no evidence of supervision (which should be documented)

Providing clients with relevant information

The report found the level of written information given to clients was variable, with room for improvement. Whilst explaining the process and timescales for administering the estate:

• Most firms did not provide basic written information about:
  • the client’s role and responsibilities as a personal representative
  • the firm’s role in dealing with the administration.
• Some firms didn’t tell clients
  • how often they could expect updates
  • what method of communication they would use
• Costs Information
  On most of the files reviewed, firms provided clients with costs information, but the level and quality were variable. The SRA were concerned that on three files where firms were acting for a personal representative, no costs information was provided by firms to their clients.

On only around half of the files reviewed the firm did not explain when and how the client would need to pay costs.

On four out of 50 files, firms significantly exceeded their estimates and issued bills to their clients without any warning.

Timely service

Most firms had systems in place to make sure matters were being progressed and clients were regularly updated. Of the 50 client files reviewed, there were client complaints about delay on three.

Acting as executor

Of the 23 firms visited that act as executors, most (17) gave clients general information about the costs of administering the estate. The SRA found no evidence of firms acting inappropriately or abusing their position as executor.

Interest on client funds

The SRA were pleased to find that most firms (21 out of 25) had a written policy and/or procedure on how the firm would account to clients for interest on money held. They consider this a useful way to ensure staff are aware and comply with the firms’ arrangements.

Cybercrime

Most firms reviewed took steps to mitigate the risk of cybercrime and scams when making payments to beneficiaries. All but one firm used a secure method to obtain beneficiary bank details (e.g., asking for an original bank statement to confirm bank details, or verifying written details by telephone).

Also, 17 firms routinely completed identity checks on beneficiaries. Three firms only did these checks if there was heightened risk – for example, if the beneficiaries were not well-known to the personal representatives or the deceased’s family members. The SRA state that firms may wish to consider carrying out beneficiary identity checks routinely to reduce the risk of clients being a victim of cybercrime, and the risk of mistakenly making a payment to the wrong individual. This will provide welcome clarity on a subject which often comes up during our audits.  We can help you further in this area here.

Employee fraud

All firms restricted the members of staff who could authorise payments from the firm’s client account. Of the 25 firms, 23 had controls in place so only managers of the firm could authorise transfers, which the SRA praised as good practice.

Steps that law firms can take to ensure compliant probate and estate administration services

The report provides a checklist of actions arising from the SRA’s findings. NB this advice can usefully be applied to all areas of legal practice:

• Consider putting in place a written policy about maintaining continuing competence. Have mechanisms in place to make sure all staff are aware of it and follow it.
• Ensure that all managers and employees are competent to carry out their work and have an up-to-date understanding of relevant law, policy and practice. Solicitors must be able to show they meet our requirements. This includes the Statement of Solicitor Competence.
• Check that solicitors are:
  • reflecting on their practice
  • identifying their learning and development needs
  • planning and completing learning and development to address those needs
  • recording their learning and development activity
  • evaluating the effectiveness of their learning and development
• Keep a learning and development record, this is a good way to demonstrate that the steps have been taken. You may wish to refer to the SRAs template as a guide
• Maintain supervision structures which are effective, tailored to the individual’s needs and requirements of the work. Supervision should be appropriately documented
• Make sure solicitors are receiving the training they need to provide a competent service in a timely manner. Training should be tailored to their work and needs. Learning and development should focus on all aspects of their role, not just technical legal practice (for example, ethics, professionalism and judgment, and working with other people)
• Provide clients with a clear explanation about the payment of interest on client money
• Warn clients about cybercrime and scam risks, particularly in relation to sharing bank account details
• Carry out beneficiary identity checks before legacies are paid
• Use secure methods to obtain beneficiary bank details
• Conduct appropriate checks on new and existing members of staff to minimise risks to clients and client money
• Have an effective system for the supervision of client matters. This may include oversight or peer review of the work of heads of department and other senior staff
• Make sure there are appropriate controls on the authorisation of payments and transfers from the client account
• Consider obtaining recommendations from your reporting accountant, even if your report is unqualified.