Industry News

SRA Accounts Rules 2011 Consultation

14 October 2016

The SRA is currently analysing responses to its consultation on changes to the above as part of its regulatory reform programme.

The main purpose of the Rules is to ensure that money belonging to clients is kept safe and they aim to ensure that all firms handle money in the same way.  However, they have not changed significantly for years and are now considered to be too prescriptive and restrictive.  In particular, new entrants to the market and consumers find them difficult to understand and the SRA has found that technical breaches are occurring when there is really no risk to client money.  The SRA’s intention is to:  

  • simplify and rationalise the Rules by focusing on key principles and requirements for keeping client money safe including:
    • keeping client money separate from firm money;
    • ensuring client money is returned promptly at the end of a matter;
    • using client money only for its intended purpose; and
    • proportionate requirements for firms to obtain an annual accountants report;
  • change the definition of client money so that money paid by the client for fees and disbursements for which the solicitor is liable are to be treated as the firm’s money (as opposed to where the client is liable, such as SDLT, which will continue to be treated as client money);
  • provide an alternative to the holding of client money through the introduction of third party managed accounts (TPMA) to manage payments and transactions.
Despite the proposed changes, effective mitigation of the risk of misuse of client money and consumer protection continue to be priorities for the SRA.  Responses to the consultation were required by 21 September and the SRA is intending to publish its response in the first half of 2017. 

Ian Braithwaite
Client Relationship Manager

T: 0113 385 4483
M: 07432 695 289
E: ian.braithwaite@lbslegal.co.uk

For General Enquiries: Email enquiries@lbslegal.co.uk
24 hour Helpline 0845 0563949
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