Protecting client money held by practice units remains a crucial requirement during these unprecedented times. However, we appreciate that there will be solicitors who will encounter difficulty in complying with certain aspects of the accounts rules in the current environment. The following note responds to some questions we have received from the profession. It also outlines our plans to maintain our compliance monitoring activities during the lockdown period.
We encourage solicitors facing difficulties to contact our Financial Compliance Department. We will always look to assist solicitors where we can, suggesting practical and proportionate solutions where needed.
Please read our frequently asked questions below - and if you have further queries do get in contact.
The Society is committed to the continued protection of client money during the current crisis. It is our intention to undertake a programme of remote inspections during this period. These will have a more limited scope than usual and will focus on client accounting information and the financial health of the practice unit. We are much less likely to perform full file reviews during this period but will build a small number of requests for files into our programme. Most remote inspections will not include file review.
We consider this to be a proportionate adjustment to reduce the resource impact on a practice unit which arises when supporting an inspection. We expect that most practice units will be able to send key client accounting information to us remotely.
Our Accounts Rules set out that you should promptly pay client money (above £50) into your practice unit’s client account in all circumstances. If you are delayed in paying in such cheques because of the impact of the coronavirus on your practice unit or your bank, we would expect you to keep your client updated and document any decisions you make. We will take all such circumstances into consideration in any future inspection and would look for evidence that reasonable steps appropriate to the circumstances had been taken.
You may also want to look at other banking options so you can continue to effectively deal with your client’s money, such as requesting electronic payments where these are possible.
Solicitors should do everything they reasonably can to comply with our Accounts Rules including the requirement to submit accounts certificates.
However, given these exceptional circumstances, we will take a pragmatic and proportionate approach to any delay in the submission of an accounts certificate. The accounts rules allow solicitors to apply for extensions to accounts certificate submission timescales.
If you anticipate difficulty in submitting your accounts certificate on time you should email email@example.com requesting an extension. You should make clear how long an extension you are requesting and the reasons why it is required. We understand the difficulties arising from the current crisis and may accept your extension request in full. We may also agree to a more limited extension (e.g. one month instead of three) if we feel this is more appropriate to the situation set out.
Most of the information in the previous section applies here. However, the Society does not require you to use an external accountant to complete a certificate.
A short-term extension may be considered in the situation where a practice unit has a history of using an external accountant to assist in the preparation of the accounts certificate and there has been some delay in receiving input from the accountant. However, we do not expect this situation to require a three month extension.
If a practice unit is simply unable to obtain its usual input from an external accountant within a reasonable period, it should submit the accounts certificate with appropriate notes to explain any restriction to its usual assurance processes that have been necessary. However we expect that a Cashroom Manager will be able to complete an accounts certificate without external help, using information available within the practice unit.
This is a decision for the practice unit taking into account the cashroom workloads anticipated during the lockdown period.
We expect a Cashroom Manager to put arrangements in place to ensure compliance with the Accounts Rules as far as possible in the current circumstances. We expect a practice unit to ensure there is proper capacity to monitor the client account, make timely postings (even in a period of much reduced activity) and support essential rule compliance such as the Accounts Certificate process.
Where cashroom resource is reduced to a minimum level, the practice unit should consider what its contingency plan is should the remaining resource be impacted by illness.
As noted above, we expect a Cashroom Manager to put arrangements in place so that the Accounts Rules can be complied with as much as possible. We expect a practice unit to leave itself with proper capacity regarding cashroom functions. We would ask any solicitor in this position to contact the Financial Compliance Department on firstname.lastname@example.org to discuss the matter so that we can fully understand the situation and help in identifying solutions.
Carrying out key client accounting controls (such as reconciliations) are a key part of making sure you are protecting clients' money and are required by the accounts rules. These should still be completed during the lockdown period utilising retained in-house or external resource where applicable.
Practice units should make contact with the Financial Compliance Department on email@example.com if they anticipate any difficulties in completing the key client account controls required by the accounts rules.