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The rules set by the Solicitors Regulation Authority (SRA) for firms on handling client money and maintaining client accounts. It covers the definition of client money, requirements for prompt payment into client accounts, separation of client and firm money, and procedures for withdrawals and interest payments.
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These rules set out our requirements for when firms (including sole practices) authorised by us receive or deal with money belonging to clients, including trust money or money held on behalf of third parties. The rules apply to all firms we regulate, including all those who manage or work within such firms. Firms will need to have systems and controls in place to ensure compliance with these rules and the nature of those systems must be appropriate to the nature and volumes of client transactions dealt with and the amount of client money held or received.
1.1 These rules apply to authorised bodies , their managers and employees and references to “you” in these rules should be read accordingly. 1.2 The authorised body’s managers are jointly and severally responsible for compliance by the authorised body , its managers and employees with the rules.
2.1 “ Client money ” is money held or received by you: (a) relating to regulated services delivered by you to a client ; (b) on behalf of a third party in relation to regulated services delivered by you (such as money held as agent, stakeholder or held to the sender’s order); (c) as a trustee or as the holder of a specified office or appointment, such as donee of a power of attorney, Court of Protection deputy or trustee of an occupational pension scheme; (d) in respect of your fees and any unpaid disbursements if held or received prior to delivery of a bill for the same. 2.2 In circumstances where the only client money you hold or receive falls within rule 2.1(d) above, and: (a) any money held for disbursements relates to costs or expenses incurred by you on behalf of your client and for which you are liable; and
(b) you do not for any other reason maintain a client account ; you are not required to hold this money in a client account if you have informed your client in advance of where and how the money will be held. Rules 2.3, 2.4, 4.1, 7, 8.1(b) and (c) and 12 do not apply to client money held outside of a client account in accordance with this rule.
3 .1 You only maintain a client account at a branch (or the head office) of a bank or a building society in England and Wales. 3 .2 You ensure that the name of any client account includes: (a) the name of the authorised body ; and (b) the word “client” to distinguish it from any other type of account held or operated by the authorised body. 3 .3 You must not use a client account to provide banking facilities to clients or third parties. Payments into, and transfers or withdrawals from a client account must be in respect of the delivery by you of regulated services.
9 .1 If, when acting in a client's matter, you hold or receive money jointly with the client or a third party, Part 2 of these rules does not apply save for: (a) rule 8.2 - statements from banks , building societies and other financial institutions; (b) rule 8. 4 - bills and notifications of costs.
10 .1 If, in the course of practice, you operate a client's own account as signatory, Part 2 of these rules does not apply save for: (a) rule 8.2 - statements from banks , building societies and other financial institutions; (b) rule 8.3 - reconciliations; (c) rule 8. 4 - bills and notifications of costs****.
11 .1 You may enter into arrangements with a client to use a third party managed account for the purpose of receiving payments from or on behalf of, or making payments to or on behalf of, the client in respect of regulated services delivered by you to the client , only if: (a) use of the account does not result in you receiving or holding the client's money; and (b) you take reasonable steps to ensure, before accepting instructions, that the client is informed of and understands: (i) the terms of the contractual arrangements relating to the use of the third party managed account , and in particular how any fees for use of the third party managed account will be paid and who will bear them; and (ii) the client’s right to terminate the agreement and dispute payment requests made by you_._ 11 .2 You obtain regular statements from the provider of the third party managed account and ensure that these accurately reflect all transactions on the account. PART 4 : ACCOUNTANTS' REPORTS AND STORAGE AND RETENTION OF ACCOUNTING RECORDS
12 .1 If you have, at any time during an accounting period , held or received client money , or operated a joint account or a client's own account as signatory, you must: (a) obtain an accountant's report for that accounting period within six months of the end of the period; and (b) deliver it to the SRA within six months of the end of the accounting period if the accountant’s report is qualified to show a failure to comply with these rules, such that money belonging to clients or third parties is, or has been, or is likely to be placed, at risk.
13.1 You must store all accounting records securely and retain these for at least six years.
Made by the SRA Board on 30 May 2018. Made under sections 32, 33A, 34, 37 of the Solicitors Act 1974, section 9 of the Administration of Justice Act 1985, and section 83(5)(h) of, and paragraph 20 of Schedule 11 to, the Legal Services Act 2007.