Professional practice updates 2016
Potential impact of interest rate cut on client accounts
On 4 August 2016, the Bank of England cut interest rates to 0.25% which is a historic low. The result of this is that some firms have been advised by their Banks that they will no longer receive interest on balances held in Clients’ accounts. This may impact upon the client’s expectation regarding the interest they may receive on funds held by their solicitor on their behalf.
Solicitors may wish to review their terms of business and consider whether any wording relating to interest requires to be amended. Where terms of business have already been issued, solicitors may wish to notify clients of changes in the interest they will receive.
Rule B4 (Client Communication) and the Guidance on it, does not require solicitors to make any reference to interest in their terms of business. However solicitors who do make such reference or solicitors who expect to hold large balances for their clients may feel it appropriate to raise awareness of the interest rate cut to their clients. The Guidance on Rule B4 states:- “It is recommended that the content of terms of business letters is kept under regular review”.
Our Professional Practice team can answer any further enquiries on these issues. Email: ProfPrac@lawscot.org.uk, Telephone: 0131 226 8896.