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Reminder re client balances held after the conclusion of a matter

04 April 2016 | tagged Current issues

We're again reminding members that failure by practice units to have disbursed all historic client balances held following conclusion of transactions will now be reported to the Client Protection Sub-Committee.

This follows previous reminders of the need to comply with rule B6.11, which came into effect on 1 November 2011.

In terms of that rule, practice units were initially given two years to clear down historical balances.

Solicitors should be aware that any breach of Rule B6.11 may also place the regulated persons/practices in breach of the following rules:

  • Rule B6.4 requires a practice unit to remedy any breach of Rule 6 promptly upon discovery.
  •  Rule B6.13 states that the cashroom manager is responsible for securing compliance by the practice unit with the provisions of Rule 6.
  •  Rule B6.2.3(b) states that no regulated persons (solicitors) within the practice unit shall cause or knowingly permit the practice unit not to comply with any provision of Rule 6.  Therefore it is possible that the Client Protection Sub-Committee will decide that other solicitors within the firm are responsible, and action may also be taken against them.

As there is an ongoing requirement to monitor compliance with this accounts rule, it is expected that all client credit balances will be reviewed on a monthly basis to ensure compliance.

Where a breach of the rule is highlighted during inspections and not addressed urgently, the matter will be discussed by the Client Protection Sub-Committee and a complaint may be referred to the Scottish Legal Complaints Commission (SLCC). A number of such complaints have already been referred to the SLCC.

Practice units must also ensure that every accounts certificate submitted to the Society is correctly completed and discloses all rule breaches including breaches of Rule B6.11.  Where breach of the rule is noted during inspections, the Client Protection Sub-Committee will also be provided with details of accounts certificates submitted which do not disclose a breach, therefore a breach of B6.15 may also be added to any complaint.

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