SRA Accounts Rules - Recap of key changes

28 - Norfolk Law - Advertorial SRA Accounts Rules – Recap of Key Changes

The new SRA Accounts Rules are vastly reduced in size and prescription. Law firms are encouraged to use their own judgement in applying the rules, and whilst the overarching principle remains the same, there are additional benefits for firms and their clients.

Key changes

• New requirement to reconcile clients’ own accounts. This was absent from the old rules, but the SRA deems it incredibly important as client money is being operated outside of the general, highlycontrolled client account.

Some firms are not devoting the necessary resource to comply with this rule and there are still teething issues. The SRA appreciates that there is a large shift needed to comply and has set out additional guidance on its minimum expectations. • Third party managed accounts (TPMA). This is a new area of the rules which gives firms an alternative to holding client money. Any money held in a TPMA is not deemed client money and therefore falls outside the scope of the SRA Accounts Rules entirely.

• Firms can avoid having a client account if the only money held or received by the firm is in respect of their fees and disbursements that relate to costs and expenses incurred on behalf of their client.

• Fewer set time frames. From a practical point of view, firms can set their own time frames and decide how to deal with other elements of the rules that were previously very rigid.

This provides significant opportunity for firms to adopt approaches that are more appropriate for them. However, most firms seem to be simply carrying on with the old timeframes under previous rules. There’s no reason why this can’t or shouldn’t be done, but now we are over two years on perhaps it’s time to think about how the rules could work better for you?

Whether firms are sticking to the old timeframes or have changed to new ones, the processes need to be formally documented in their procedures and manuals. The rules no longer have the time frames written within them, so the rules themselves are not enough to fall back on.

If you have any concerns regarding the SRA Accounts Rules, please get in touch. You can find contact details on the Our People section of our website larkinggowen.co.uk. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen. co.uk.

Ellis Lake

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