Seaside road

SRA Clarifies Rules On Use Of Client Account As A Banking Facility

The rule against solicitors providing banking facilities for their clients gains some clarity.  

Ross Prince, Partner, Audit
Seaside road

On 6 August 2018, the Solicitors Regulation Authority (SRA) updated its December 2014 warning notice which clarifies the requirements of Rule 14.5 of the SRA Accounts Rules 2011.

In addition, the SRA has also published ten case studies of the most common problem areas. These include:

  • holding rent deposits
  • where the solicitor is acting under a lasting power of attorney
  • holding monies in a transaction where the firm is advising on contract performance criteria  
  • administration of trusts

Firms must be familiar with the content of the warning notice and be prepared to justify to the SRA any decision they make if they decide it is appropriate for the firm to hold or move client money.

The SRA cautions that “Failure to have proper regard to this warning notice is likely to lead to disciplinary action.”

Next steps

  1. Ensure your team understands when it is acceptable to receive and hold client money.
  2. Review your firm’s policy in respect of holding client funds, ensuring that for each retainer the solicitor questions why the firm is being asked to receive funds and for what purpose.
  3. Identify any client monies currently held where there isn’t clear proximity to the firm’s provision of ongoing legal advice. Test the rationale for holding those funds against the warning notice criteria and case studies. The more unusual the transaction is when compared to the usual services a solicitor provides, the higher the risk that you may be in breach.

How we can help

Our specialist team regularly advise and support law firms with SRA Accounts Rules and other regulatory matters.  

We can help you to stay compliant – ask us about:

  • interpreting and implementing the SRA Accounts Rules 2011
  • training for fee earners and support teams
  • completing annual Accountants Report
  • network discussion groups for COFAs

Contact us

Ross Prince
Ross Prince
Office Managing Partner, Audit