Revisions to the Solicitors’ Accounts Rules – proposed implementation date 6 October 2011
The SRA board gave final approval of the new Handbook in March 2011.
The Handbook sets out the new regulatory arrangements due to come into force on 6 October 2011 with the introduction of outcomes-focused regulation. A summary of the main changes to the Solicitors’ Accounts
Rules is given below:
- Application of the rules to “you” rather than “solicitor” – the rules will apply equally to all those who carry on work in a firm and to the firm itself.
- Under the SRA Authorisation Rules, all firms must have a Compliance Officer for Finance and Administration (COFA) who will have equal responsibility with other managers of the firm for ensuring that the firm complies with the SAR. The COFA must report any breaches of the accounts rules to the SRA as soon as reasonably practicable. It is unclear as to whether ‘all’ or only ‘serious’ breaches need to be reported.
- A new definition for ‘out of scope money’ has been introduced which is money received by a multi disciplinary practice in relation to those activities for which it is not regulated by the SRA.
- New rules have been introduced in relation to damages and costs monies (made payable to the client) received under the Law Society’s Conditional Fee Agreement and paid into client account. The costs element must be transferred within 14 days.
- Changes to the authority required for withdrawals from client account. The list of authorised persons set out in rule 23 will be removed and the revised rules will allow authorisations by an appropriate person or persons in accordance with the firm’s procedures for signing on client account. A firm’s procedures should set out who is an appropriate person to authorise such transactions.
- The new rules will allow electronic signatures for withdrawals from client account subject to there being appropriate safeguards and controls in place.
- The detailed rules in relation to interest paid on client money will be removed. Under the new rules interest must be paid to clients on amounts held in client account (or on money that should have been held in client account but was not) when it is fair and reasonable to do so. There must be a written policy on the payment of interest which seeks to provide a fair outcome. The terms of the policy must be drawn to the attention of the client, which is usually at the outset of the retainer. The revised rules also allow a firm to retain interest earned on separate designated client accounts that is over and above the amount calculated as ‘fair and reasonable’ under its interest policy.
- Rule 32 in relation to accounting records will allow electronic versions of bank statements to be retained but the firm must save a copy within its computerised accounting records in a format which cannot be altered.
- The new rules include Part G - rules 47 to 52 – which relate to the overseas practices (firms having offices outside England and Wales).
- The guidance notes will no longer form part of the rules, although some of the guidance notes in the existing SAR will become rules in the revised SAR.
Further information is available from: www.sra.org.uk/handbook
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