The news items and other information on this site do not purport to be comprehensive or to give legal or professional advice. cpm21 does not provide legal advice. Whilst every effort has been made to ensure accuracy, neither cpm21, its owners, employees, associates, collaborators, agents or trainers can be held liable for any errors or omissions or inaccuracies contained within each communication, on its website, or in articles, tweets, posts or blogs on social networking sites. Readers should not act upon (or refrain from acting upon) information provided without first taking further specialist or professional advice. cpm21.

Changes to SRA Accounts Rules

SRA Accounts Rules

Summary of changes effective from 6 October 2011

Rule 12 - Client v Office

(Old Rule 13)

All interest is now treated as office money.

Previously only interest on general account was treated as office money, interest on

separate designated deposit account (DDA) used to be treated as client money.

You can now either arrange for the bank to pay DDA interest straight into the office

account, or continue paying it into the DDA and any interest you decide not to pass on to

the client must then be transferred to office account within 14 days of making the

decision.

Rule 15 (3) and (4) - Residual balances

(Old Rule 14(3) and (4))

There is now a specific ongoing obligation to inform clients at least once every 12

months that money is still held (where there has been no movement).

Firm needs to:

  • identify balances and the best way to communicate to clients;
  • put a system in place to do every 12 months.

Rule 21 - Authority for withdrawal

(Old Rule 23)

Authorised signatories - Firm can now decide who signs authority - someone

appropriate, which means Practice Managers/Cashiers can now sign.

Electronic signature is now allowed, subject to appropriate safeguards eg.

Passwords/codes.

Firm needs to have clear written systems and procedures in place for authorising

withdrawals electronically.

Emails are not allowed, as no appropriate safeguard can be applied.

Rule 29 (16) - Billing details

(Old Rule 32(8))

Must still keep a central record or file of copies of all bills, but no longer need to

distinguish between:

  • 'fees' and;
  • 'disbursements paid' and 'disbursements unpaid' at the bill date.

Rule 22 - Interest

(Old Rule 24)

Interest rules - outcome focused regulation (OFR):

  • No longer any distinction between designated and general;
  • No longer have interest tables or de minimis limit;
  • Firm needs to put written policy in place on how much interest to pay, which must

be fair and reasonable for the client;

  • Send policy to new clients

No guidance has been given on fair and reasonable. Some firms may go with old rules

and pay interest over £20, others may increase this figure by inflation since the old rule

was set in 1998, or may just increase this to £50 and see how it goes.

Rule 29 - Accounting records for client accounts

(Old Rule 32)

Electronic bank statements allowed, but must be in a format that cannot be altered.

Rule 8.5c - SRA Authorisation Rules

COFA (Compliance Officer for Finance and Administration) to be appointed by 31 March

2012 and assume duties by 31 October 2012. COFA must be:

  • Sufficiently senior, responsible and knowledgeable;
  • Approved by SRA, so will have to go through a vetting process;
  • Does not need to be a principal or solicitor;
  • Must ensure compliance with the SRA accounts rules; and
  • Report any breaches of the accounts rules to the SRA as soon as reasonably

practicable, with periodic reporting - regularity has not yet been specified.

Outcome 8.5 - Solicitors Code of Conduct

Your letterhead, website and e-mails must now show the words 'authorised and

regulated by the Solicitors Regulation Authority' and either the firm's registered name

and number if it is an LLP or company or, if the firm is a partnership or sole practitioner,

the name under which it is licensed/authorised by the SRA and the number allocated to

it by the SRA.

Other changes:

  • Damages cheques payable to client, if paid into client account = client money;
  • 14 week reconciliation rule for passbook DDA's abolished, all reconciliations now

at least every 5 weeks;

  • E-billing/electronic signing of bills.

For further information contact Huw Palin of BPU Chartered Accountants

Telephone: 029 20734100 or email: huwp@bpuaccountants.co.uk