A senior executive at the Solicitors Regulation Authority has assured solicitors that no firm decision has yet been made on scrapping the client account.
The option of finding a third party to hold monies was one of the key aspects of the recently-closed consultation on consumer protection. The SRA asked whether there were feasible or credible alternatives which may be better at safeguarding clients’ money, and whether it was necessary in the longer term for firms to run client accounts at all.
Speaking yesterday at the Law Society’s risk and compliance conference, Aileen Armstrong, the SRA’s executive director of strategy, innovation and external affairs, said it was important to explore options, but nothing has been decided.
‘It is not a fait accompli but it is important to engage and think about these options,’ said Armstrong. ‘I don’t think there is a question of this happening today or this year. [But] there is the potential for things to be developed.’
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She posited that an intermediary account such as that used by the Bank of England could be an option but added: ‘The most useful alternative might not exist yet.’
Armstrong revealed that more than 300 responses have come in to the consumer protection consultation and that this had met the objective of sparking a conversation with the profession.
‘We were very much wanting to stimulate debate and generate intelligence to inform the way forward and we certainly got lots of food for thought.’
In a separate session, solicitor advocate and regulation specialist Jayne Willetts had said the regulator was ‘naïve and simplistic’ by proposing that a third party managed account could replace the solicitor’s client account.
‘This is a step too far, and the SRA seem to have prepared the ground rather before they launched the consultation,’ said Willetts. ‘They are saying we are not to be trusted with the client account when we have been doing it for years – how on earth are we going to deal with transactional work if we can’t deal with client money?’
Armstrong was directly asked during the Q&A session whether the SRA had work to do to win the hearts and minds of the regulated community.
‘I understand and appreciate the question,’ she replied. ‘In order to have a strong sector we need strong firms and solicitors and we need the regulator to play its part. We [the SRA] need to be credible and engage well with the sector.’
The Law Society’s latest Financial Benchmarking Survey, published last week, showed that interest on the client account was a huge contributor to law firm profits last year.
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