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New SRA Accounts Rules
Norfolk Law - Advertorial - 27 New SRA Accounts Rules – Where are we now?
Monday 25 November 2019 saw the long awaited implementation of the updated Solicitors Accounts Rules.
The new rules at their core continue to focus on keeping client money safe, but there is more onus on the individual practices to set out their own procedures, time scales and controls in order to do so. Largely, the SRA expects that firms that were compliant with the old rules will be compliant with the new and this aligns with what we are seeing in the field. There are some new requirements though that are worth revisiting:
For matters where the solicitor operates a client’s own account, bank reconciliations must be carried out at least five weekly. This suggests that ledger records must now be maintained for these bank accounts. Guidance from the SRA* acknowledged that this is not practical for all firms and that they could instead maintain a central register of such accounts, a separate record of the transactions carried out in respect of the client’s own account, and a record of the bills relating to that client’s matter in order to avoid a breach. The new rules also no longer specify the exact time limit in which funds should be transferred to office in payment of bills (previously within 14 days). Similarly, there is no longer a prescribed amount of time to deposit client funds into the client account (previously by the next working day). Instead, the rules say it should be done “promptly.” Firms are therefore encouraged to set out and document their own time frames in their internal policies and procedures documents. This allows firms to set time limits that fit the needs of their business, whilst ensuring client money is protected.
It is also now mandatory for bank reconciliations to be signed off by the COFA, and there is no longer a distinction made between professional and other disbursements.
Under the old rules, firms could transfer funds from the client account to reimburse the firm for paid or incurred disbursements. Now a bill or ‘other written notification of costs’ must be raised before this transfer is made. Firms need to consider their documentation to ensure that they keep cashflow flowing, without falling foul of the new rules.
Any firms that still need help with the new rules and drafting of policies ought to find there is now a better understanding
amongst both their peers and professional advisers.
Jordan Guymer
Accounting Senior at Lovewell Blake LLP
