The Solicitors Regulation Authority (SRA) has issued a consultation outlining proposed plans to simplify the SRA Accounts Rules 2011. The SRA Accounts Rules govern the handling of client money by law firms and these new plans to simplify the rules should make the handling of client money easier to understand.
What are the proposals?
The proposals are as follows:
- Client money is to be kept separate from firm (office) money
- At the end of the matter, the client’s money is to be returned promptly
- Client money should only be used for its intended purpose
- Proportionate requirements to be introduced for firms to obtain an annual accountant’s report
In an effort to enhance compliance and reduce related costs, the plans consultation is based around the rules being far easier to understand and supported by an online toolkit providing guidance and real life examples.
The very definition of client money is to change, with it allowing money that is paid for fees and disbursements of which a solicitor is liable – such as barrister or council fees- to be treated as office money. The reduction in the client account balance could potentially reduce the number of firms required to obtain an accountant’s report.
The use of third-party managed accounts (TPMA) will fall under greater scrutiny under these new proposals which will also cover the treatment of payments and transactions.
Finally, the current detailed and prescriptive code of conduct looks as though it will be split into two. The SRA are preparing a new framework centered around competent and ethical practice.
Simon Bladen, legal specialist at Hawsons, had this to say about the proposed new plans: “The SRA Accounts Rules are well overdue for a complete re-write. Whether this comes as part of this consultation remains to be seen, but it is a step in the right direction. As long as the overall objective of keeping client money safe isn’t compromised, a simplification to the rules will be well received.”
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