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Firm Fined a Formidable £120,885 for SRA Rules Breach
May 23, 2024

On 19 April, a solicitors firm based in Norfolk was fined for failing to replace client money that had been inappropriately withdrawn from the client account between 1 April and 25 March 2022.

Back in 2001, the fined firm’s predecessor was instructed to manage the administration of an estate. A mistake was made when interpreting the rules of intestacy, and the estate was distributed improperly. Monies were paid out incorrectly to beneficiaries, indicating the money had been incorrectly withdrawn from the client account. A portion of this money was then replaced between 2001 and 2014. Despite this, after becoming a licenced body, its client account had a shortfall of £21,958.38. However, the shortfall was not replaced until 25 March 2022 as the result of a qualified accountant’s report.

Between 1 April 2014 and 25 March 2022, the firm failed to replace client money, meaning the firm was in breach of rules 13.8 and 7.1 of the SRA Accounts Rules 2011 and Principle 6 of the SRA Principles 2011. Due to the fact the conduct took place on or after 25 November 2019, the firm also breached rules 2.4. and 6.1 of the SRA Accounts Rules 2019 and Principle 2 of the SRA Principles 2019.

Alongside the financial penalty of £120,885, the firm, headquartered in Norwich, was also directed to pay costs of £1,350. The conduct was placed in conduct band C, which has a financial penalty bracket of between 1.6% and 3.2% of the firm’s annual domestic turnover in the previous year.

Recap: What Rules and Principles Were Breached?

  • SRA Accounts Rules 2011. Specifically, Rule 7.1, which dictates any breach of the rules must be remedied as soon as they are discovered. In so far as the conduct of the firm described above, this includes the replacement of any money inappropriately withdrawn from a client account. Additionally, Rule 13.8 was breached. Money held in a client account must always be available unless the client has dictated otherwise.
  • SRA Principles 2011. Principle 6 dictates your conduct must maintain the trust of the public when providing legal services.
  • SRA Accounts Rules 2019. Rule 2.4 dictates you ensure client money is available whenever it might be required unless something else besides has been placed in writing and agreed on prior. Rule 6.1 dictates you must do everything within your power to correct any and all breaches of the rules as soon as possible. Any funds withheld or withdrawn from a client account must be promptly paid into the account or replaced.
  • SRA Principles 2019. Principle 2 dictates you must always behave in a way that upholds public trust and confidence in the profession and in the legal services provided by any authorised person.

The regulator was able to issue such a considerable penalty because the firm is an alternative business structure and not subject to the SRA’s £25,000 fining power limit for traditional firms.

To read the full SRA report, please follow the link below:

Solictors Regulation Authority: Decision – Fined

Get in Touch with TSP

If you ever believe yourself or your firm may be non compliant in any capacity, the Strategic Partner is here to help. We specialise in assisting businesses of all sizes in their respective pursuits of maintaining the highest standard possible. If you would like to learn more about the Solicitors Regulation Authority’s rules and principles or would simply like to enquire further about our expert-led services and products, reach out now.

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We strive in giving all our clients the peace of mind that comes with knowing your business is doing everything it can to remain compliant with regulation. We also understand a considerable amount of breaches are often the result of simple ignorance, and so do all we can to lead your firm forward by means of our specialist industry knowledge, to ensure you are always ahead.  

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