Bereaved families are among thousands of people being cheated out of interest on their own money by solicitors that have pocketed millions as a result.<\/p>
The latest figures reveal an annual rise of 1,000% in solicitors’ income from interest on money held in client accounts in 2023, largely driven by the rise in interest rates. <\/p>
Solicitors hold money in these accounts for many reasons – for example during a commercial deal, or during a house purchase or before distributing money from an inheritance.<\/p>
An industry survey of 147 firms in England and Wales reported that their total net interest income from clients’ money in 2023 was \u00a327.5 million, compared with \u00a32.6 million in 2022. <\/p>
The survey – the Law Society’s Financial Benchmarking Survey 2024 – was published in March and included firms handling probate, which is the process of gathering in and distributing someone’s money and assets after they die. Probate can take months, or even years.<\/p>
There are around 7,000 firms in England and Wales which handle client money, according to the industry watchdog, the Solicitors Regulation Authority (SRA). Finder estimated that, based on the average interest income in the survey, firms in England and Wales could have made as much as \u00a31.3 billion in interest during the period covered by the survey (31 March 2022-30 April 2023). This is a rough estimate because the survey was biassed towards firms with a high turnover. <\/p>
The surge in income from interest prompted the SRA to issue a warning in April, reminding firms of their duty to account to clients or third parties (such as bereaved families) for a “fair sum of interest on any client money held by you on their behalf”.<\/p>
The watchdog added: “…we have heard of cases of firms doing quite well out of the monies they hold if this involves large amounts and are held for a more significant period. <\/p>
“Similarly, we have also been told that some firms are not accounting to their clients for anything like the same rate of interest [as they get], and certainly not what could reasonably be classed as ‘fair’.”<\/p>
The SRA said that it would take action if it had evidence of firms breaking the rules on fair interest payments. A spokesman told Finder that there was nothing in its records to indicate that clients had complained about the issue, however. And a spokeswoman for the Legal Ombudsman said it did not record “that level of detail” so was unable to say if it had received such complaints.<\/p>