The Council for Licensed Conveyancers (CLC) has proposed new rules on how licensed practices handle client money.
The specialist property law regulator said the changes form part of a drive to “reduce regulatory burdens and facilitate innovation” while “keeping client money safe and improving consumer confidence”.
The move follows talks in which CLC-licensed practices identified opportunities for improvement.
Under the proposed changes, the regulator would launch a new Accounts Code – currently used by licensed conveyancers in the handling of client money.
The changes would see the reduction of the time limit on practices for delivering an Accountant’s Report from six to three months. This, the CLC says, would appropriately reflect the importance in identifying potential risks.
Other changes include amending the format of the Accountants Report to allow “greater freedom for reporting accountants to use their professional judgement”. This may mean, for example, amending the provisions so that practices have the freedom to move aged balances of up to £50 into their office account when the client cannot be located.
The current limit of £20 means client accounts must be kept open for a number of years, increasing the administrative burden on practices.
The regulator is also consulting on allowing the use of Third Party Managed Accounts (TPMAs). This would be as an alternative to regulated practices holding client money.
Simon Blandy, Director of Regulatory Standards at the CLC, said TPMAs may offer benefits to legal firms, as a specialist third party firm is more likely to be better equipped to process and handle cash.
“The CLC is committed to doing all it can to ensure that the right levels of consumer protection are in place while allowing those we regulate the freedom to innovate, compete and grow,” said Mr Blandy.
“Misuse of client money is one of the key risks to consumer protection. Effective mitigation of this risk continues to be a priority for the CLC. The changes we intend to make will provide greater clarity for CLC
Lawyers and Practices, making sure there is a clear focus on the real risks to client money.”
The CLC said any approved changes are likely to go into force from January 2020.
For more information on any of the issues covered in this bulletin, please contact Mark Sharpley at firstname.lastname@example.org
With Mark Sharpley, executive committee member of the UK200 Legal Group, and fellow partners Jeremy Allison and Nicki Shipley at the helm of an experienced team of legal finance specialists, the Smailes Goldie Group is well positioned to offer tax and accounting advice to solicitors.
Whether you are a sole practitioner or a multi-partner firm, the Smailes Goldie group has the expertise and understanding of all financial matters relating to the legal profession, including: compliance services, Solicitors’ Accounts Rule audits, preparing annual accounts, tax advice for both firms and/or partners, and advising on LLP status.
For more information on any of the issues covered in this bulletin, please contact Mark Sharpley at email@example.com.