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SRA Warning Urges Firms To Address Client Account Shortages Immediately
June 25, 2024

A recent warning notice from the Solicitors Regulation Authority (SRA) reminds firms of the critical need to promptly rectify any shortages in client accounts as soon as they are discovered.

Client account shortages can arise for a number of reasons, including administrative errors, cyber-attacks, or, in rare cases, employee dishonesty. Regardless of the cause, firms are reminded of their regulatory obligations to replace any missing funds immediately to safeguard client interests.

The new warning notice from the SRA highlights the potential risks to both solicitors and clients if shortages are not addressed quickly. Clients looking to deposit money into already deficient accounts must be fully informed of the situation to avoid further complications.

Furthermore, the regulator has emphasised its expectation for firms to ‘make good’ on any deficit or losses from a client account, including cases where this has resulted from Cybercrime and not just due to technical or human error.

Paul Philip, SRA Chief Executive, reinforced the vital importance of this directive, saying:

“Caselaw is very clear that the client account is sacrosanct. However, firms do report shortages on the client account for a variety of reasons.

“Our rules are also very clear – you must make good on any deficit promptly. A shortage on the client account presents a risk to all clients for whom you hold money.

“Ultimately, solicitors have a trusted position when they hold client money, and it is in the best interests of every solicitor to maintain that trust.”

The warning notice also advises firms to establish clear processes for regularly verifying client account balances and to be mindful of other obligations, such as notifying insurers if discrepancies are found.

For further information, read the full article here: Client Account Shortage.

Read the full warning notice here: Client Account Shortage Warning Notice.

Regulatory Guidance from Industry Experts

  • Accounts and Finance Manual Service: Our Accounts and Finance Manual Service has been devised to provide law firms with an effective solution for the implementation and management of their procedures for managing the office generally and the accounts processes. We will then work with you to communicate and train your staff on the firm’s requirements and maintain your accounts manual and accounts procedures, so that they are always relevant and up to date.
  • Training: Our tailored training programs equip your staff with the knowledge and skills to fulfil their compliance responsibilities, including understanding Accounts Rules, AML regulations, Risk Assessment, and Suspicious Activity detection. For example, we can provide specialist in-depth training programs on:
    • Accounts Rules Training for All Staff – Our tailored Accounts Rules Training provides a detailed run through of the accounts rules and how to avoid breaches or what to do if one occurs.
    • Cybercrime Training – Our tailored Cybercrime Training course is specifically designed for law firms to understand, avoid, and respond to a cyber-attack.

We deliver ALL training live, enabling the delegates to ask questions and clarify understanding.

We do not provide pre-recorded webinars because we believe that interactive training adds more value than simply being convenient. Additionally, we offer discounts when two courses are booked for the same day. For costs and further information on these courses, please get in touch via the details below.  

Get in Touch

For more information on The Strategic Partner and to discuss how we may be able to assist in accelerating your training, risk management or compliance and regulation, you can call us on 020 3911 9710 or email us at info@thestrategicpartner.co.uk. 

View & download the PDF of this article here

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