News release

SRA warns about client account usage

We have published a warning notice reminding solicitors why a client account should not be mis-used for clients or others.

The notice explains why use is prohibited, what represents mis-use of the client account, and what action might be taken against those breaching the Code of Conduct. Payments into the client account or transfers and withdrawals from it must relate to a solicitor's normal regulated activity, as outlined in Rule 14.5 of the SRA Accounts Rules 2011.

David Middleton, Executive Director for Legal and Enforcement, said: "The High Court and Solicitors Disciplinary Tribunal have made it clear that law firms must not mis-use client account by effectively providing a banking facility for clients. The role of law firms is to provide legal services, not to provide banking facilities. Rule 14.5 of the SRA Accounts Rules 2011 makes this clear and it is also clear in the decided cases.

"Solicitors who breach the rule may, for example, be helping organised crime to launder the proceeds of crime. The warning notice acts as a reminder of why solicitors should decline clients requests to use their client account as a banking facility, and reiterates that we will take action if the rule is breached."

The warning notice was published in December and can be accessed here:

Go to the warning notice

 

Note to editors

Rule 14.5 exists to ensure client accounts are not improperly used for criminal or other improper purposes. Anyone who allows the client account to be used as a bank account could be in breach of numerous Principles.

There have been increasing reports of firms using their client account in this way. We have produced the warning notice to remind the profession of the rules, outline in detail why it is prohibited, and provide further guidance on remaining compliant. There are case studies on incidents we have been made aware of where the rule was breached.

Other warning notices that we have produced, for example on anti-money laundering, publicity for in-house firms and high-yield investment fraud, can be found in the Guidance section of our website here:

Go to the Guidance page

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