‘Unethical’ to benefit from client-account interest
Britain’s Solicitors Regulation Authority (SRA) is backing away from plans for sweeping changes to the client account, the England and Wales Gazette reports.
In February the regulator closed a consultation that raised the question of reducing the client money held by solicitors.
SRA chair Anna Bradley said that the SRA had heard some appetite for change to address the root causes of risk to client money but that these were “complex issues, that cannot be solved with quick fixes”.
'Strong case to explore'
“We consider there is a strong case to properly explore the long-term transformation of the model of holding client money and how the compensation fund is funded,” Bradley told the Gazette.
However, the immediate focus was on changes to better protect and safeguard client money under the current system, she said.
The SRA said in its consultation that it was concerned about the interest that some firms were making from client money, noting that the potential financial benefit might be driving unethical behaviour.
The regulator was clear that it was not appropriate for firms to continue to profit from holding money on behalf of clients and that clients should receive the interest instead.
Firms should instead reflect the costs of holding client money through the fees they charge, the regulator said.