Solicitors’ Accounts Rules: ensure you change with the times

As part of a move towards outcomes-focused regulation, amendments to the Solicitors’ Accounts Rules will come into force on 6th October 2011. It is important to start considering these modifications now and incorporating them into your work, so as to minimise the impact once they are introduced.

To help you fully understand how the changes to the rules will affect you, we will now summarise the main points:

• Objective: there will be a greater emphasis on proper governance and the safety of client money
• Interest: firms will be required to pay a ‘fair and reasonable’ amount of interest at an appropriate time, although there will be no de-minimis amounts
• Electronic access: it will be possible to obtain and retain copies of bank statements electronically, as well as electronic signatures for withdrawals, although suitable safeguards will be required
• Authorised signatories: appropriate systems and controls will be needed for withdrawals from client accounts, with authorised signatories having regular involvement in the firm and an understanding of current client matters
• Compliance: a Compliance Officer for Finance and Administration (COFA) must be appointed to report breaches to the Solicitors Regulation Authority (SRA)
• Passbook-operated designated client accounts: these will need to be reconciled at least every five weeks
• Conditional fee arrangements: the costs received under such arrangements will need to be paid into the office account within 14 days
• Alternative Business Structures: if the ABS is owned by the same bank that the client account is held at, this must be made clear to clients from the beginning

Although these are the key changes, there may be other amendments that affect your firm and the way it operates.

To find our more about how we can help you, please contact us.