SRA Accounts Rules: changes for 2019
The new Solicitors Accounts Rules came into operation on 25th November 2019. The key message from the Solicitors Regulation Authority (SRA) continues to be that all firms, irrespective of size, are to protect client money and focus on risk.
This is defined by three aspects that need to be satisfied:
- That there are a few controls over who can access the client account
- There are good accounting controls which will protect the money
- All staff trained to keep money safe – it will not be considered to be safe if staff have not been trained
There are some other key considerations to take into account such as:
- Who will be responsible for carrying out the training on these new rules in your firm? Including training on Fraud and Cyberattacks.
- Who will carry out due diligence on potential employees?
- Who will look at the controls that the new regulations impose from a general housekeeping perspective?
Change in framework and structure
The 13 new rules have been divided into 4 sections as shown in the diagram below:
- Part 1: General – The application of rules and who is authorised by them. The rules relate to authorised bodies, manager and employers
- Part 2: Client Money and Accounts – (old rules 20-29). Client money is money held or received by you.
- Part 3: Dealings with other money belonging to clients or third parties
- Part 4: Accountants Report (whether a Report is needed and who can prepare the Report) and storage and retention of records (client records must be retained for at least 6 years.)
10 action points: what you should do now
- Ensure you understand the basics of self-regulation and self-reporting
- Update client care letters
- Check and review systems and internal controls where appropriate
- Document everything – reporting accountants will need to see proof!
- Review billing policy and the change to disbursements treatment
- Go through residual balances
- Ensure you have accurate and relevant management information
- Remember the impact of third party accounts/rent deposits
- Look at the firm trading entity and think about succession
- Consider having an SRA health check as an extra control
These controls will increasingly be checked by your reporting accountant as part of your annual SRA Accounts Rules compliance review. Further advice on ethics guidance can be found on the SRA website.