Interest policy for monies held on behalf of clients

In accordance with Rule 7 of the SRA Account Rules 2019 it is our policy to pay clients a fair and reasonable sum of interest for funds held on their behalf in our general Solicitors’ Client Account.

When is the interest paid.

The interest due, if any, is usually calculated on completion of the client’s matter or at other appropriate intervals.  When instructed by the fee earner the interest will be calculated by our Accounts Department.

Amount of interest paid

We are required by the Solicitors Regulation Authority (SRA) to ensure client money is available on demand, unless we agree an alternative arrangement in writing with the client or third party for whom the money is held. We, therefore, hold client money in an instant access client account.  This means the interest rate paid on client money held in our general client account may not be as high as could be achieved if the client or third party placed the money on deposit themselves.  We review the interest rates regularly including when the Bank of England changes its bank rate.

How is interest calculated

Interest will be calculated at a rate of 50% of the current interest rate paid by the HSBC on any sum of cleared funds held by us on your behalf in our HSBC Solicitors client account.

Interest period

The period for which interest will be paid will normally run from the date on which cleared funds are received by us.

Unless we are notified by our bank to the contrary, we will treat monies as cleared funds in accordance with the table shown below:

Payment Method
When are monies treated as cleared funds
Cheque Five working days after the money has been paid into our client account
Debit or credit card Date of actual receipt into the account.  Usually this is three working days after payment made
Bank transfer Date of actual receipt into the account.

We will apply the same time periods when calculating the date that monies are received by the client or third party for whom the money is held.

When we will not pay interest

  1. On money we are instructed to hold outside a client account in a way that does not attract interest;
  2. Where the amount of interest, calculated in accordance with this policy, is less than £75, on the basis that the costs associated with paying that interest are disproportionate to the amount involved;
  3. Where we come to a different arrangement, in writing, with the client or third party for whom the money is held—where we do so, we will provide sufficient information to enable the client or third party to give informed consent;
  4. On money held in payment of a professional disbursement and a delay in settlement has been requested.
  5. If we have advanced funds into the client account to make a payment on your behalf.
  6. If the money is held for 28 days or less.

Administration fee

Where interest of £75 or more is payable we will deduct an administration fee of £50 plus VAT of 20% and account to you for the balance.

Monies held on more than one matter

Where we hold money on more than one matter for a client or third party, interest will be calculated separately for each individual instruction, unless it is fair to aggregate the interest.

Tax liability

Interest is paid gross, without any deduction of Income Tax, and where relevant it is the recipient’s responsibility to declare interest received to HM Revenue and Customs.

Unpresented cheques

Where we pay money by cheque to a client or third party who delays in paying the cheque into their bank, we will not pay additional interest.  If a cheque needs to be reissued additional interest will only be paid where it is fair in all the circumstances to do so. Any bank charge incurred in stopping and reissuing a cheque will be payable by the recipient and we reserve the right to charge for any additional work involved.

Contracting out

We may, by written agreement with the client or third party for whom the money is held, contract out of the terms of this interest policy.

When agreeing to contract out, we will act fairly and in the best interests of any relevant client and provide sufficient information to enable the client or third party for whom the money is held to give informed consent.

Designated deposit accounts

In certain circumstances it may be appropriate to hold client funds within a separate designated deposit account.  This decision is usually based on the amount of funds held and the length of time the funds will be held.  We will only transfer funds into a designated deposit account on request, if it is equitable to do so, taking into account, amongst other factors, the administrative cost of doing so.  If we do hold money in a separate designated deposit account, we will account to the client for all interest earned on that account.

Monitoring and review

The firm’s compliance officer for finance and administration (COFA) is responsible for this policy.

The COFA will monitor compliance with this policy and will review this policy regularly at least annually.