Interest Due on Client Funds Held by Solicitor

harlequin55

The Administration of a family members estate is drawing to a close and final accounts have been drawn up by the Solicitor. It is apparent from these that sums held on account pending distribution to beneficiares have attracted an interest rate of 1.3%. This seems a very low when rates in excess of 4% are readily available in the market for no notice easy access accounts. Does anyone have any experience of rates typically paid by Soloicitors?

MattMattMattUK

harlequin55 said:

The Administration of a family members estate is drawing to a close and final accounts have been drawn up by the Solicitor. It is apparent from these that sums held on account pending distribution to beneficiares have attracted an interest rate of 1.3%. This seems a very low when rates in excess of 4% are readily available in the market for no notice easy access accounts. Does anyone have any experience of rates typically paid by Soloicitors?

You might get 4% in a consumer account, but not in a business account approved as a holding account for use by solicitors. Interest paid will be detailed in your contract and terms of engagement. In short though, no, they will not pay you a higher rate.

Keep_pedalling

1.3% is actually pretty good a lot of business accounts are 0%.

DullGreyGuy

harlequin55 said:

The Administration of a family members estate is drawing to a close and final accounts have been drawn up by the Solicitor. It is apparent from these that sums held on account pending distribution to beneficiares have attracted an interest rate of 1.3%. This seems a very low when rates in excess of 4% are readily available in the market for no notice easy access accounts. Does anyone have any experience of rates typically paid by Soloicitors?

Where are you seeing a comparison of client money accounts?

Consumer products are very different from business accounts and client money accounts are even more niche. Lloyds (https://www.lloydsbank.com/business/business-accounts/client-accounts.html) for example are offering 1.7% but only on balances over £10m, NatWest is 1.6% but again only if over £10m https://www.natwest.com/business/savings/client-deposit-manager.html

Your challenger banks dont offer client money accounts in most cases. 

SoozyJ22

Just deleted my previous text as I've now found our solicitor's exact terms and conditions. The Lloyds Standard Saver rate is currently between 1.1% and 1.35% depending on balance. 

"As part of carrying out your instructions to us, we may need to hold your money. In holding clients’ money, we have an obligation to pay interest on that money at a fair and reasonable rate. We are also required to have an interest policy, which is set out in this section of our terms of business. We aim to account to you for interest at a reasonable rate of interest.

However, as the holding of your funds is incidental to the carrying out of your instructions to us on legal matters, the rate is unlikely to be as high as the rate that you may be able to obtain elsewhere if you were depositing the money yourself. This is because we must ensure that money held on client account is immediately available. The requirement for instant access is taken into account when setting the rate of interest payable by us.

We align our interest rates paid on both monies held on general client account and separate designated deposit account to the higher of Lloyds Standard Saver or National Westminster Designated Client Monies Accounts. These rates are likely to change from time to time."

harlequin55

Thank you all for your feedback on this issue. Very helpful.

Related to the question of interest payable on Client accounts, the Solicitor I am unfortunately having to deal with has attempted to retrospectively to introduce amended conditions regarding the circumstances under which they will pass on interest. They have said that interest will only become payable after 30 days held in the Client account. Therefore Interest only becomes payable from day 31. After complaining this has now been withdrawn from my case and the original Ts& C's will apply in which interest becomes payable from the date of receipt of funds. They have stated however that this approach will be applied to future commissions. 

I am minded to bring this approach to the attention of Solicitors regulating bodies but first I thought it best to see whether this may now be standard practice and if others had had similar experience

Marcon

harlequin55 said:

Thank you all for your feedback on this issue. Very helpful.

Related to the question of interest payable on Client accounts, the Solicitor I am unfortunately having to deal with has attempted to retrospectively to introduce amended conditions regarding the circumstances under which they will pass on interest. They have said that interest will only become payable after 30 days held in the Client account. Therefore Interest only becomes payable from day 31. After complaining this has now been withdrawn from my case and the original Ts& C's will apply in which interest becomes payable from the date of receipt of funds. They have stated however that this approach will be applied to future commissions. 

I am minded to bring this approach to the attention of Solicitors regulating bodies but first I thought it best to see whether this may now be standard practice and if others had had similar experience

Not sure there is anything to bring to their attention - Rule 7 is pretty clear and this approach doesn't seem to be at odds with it:

https://www.sra.org.uk/solicitors/standards-regulations/accounts-rules/#:~:text=Rule%207:%20Payment%20of%20interest,them%20to%20give%20informed%20consent.

harlequin55

Thank you for the link. Has anyone else had experience of receiving no interest on Client account funds for the first 30 days? It does not seem to me to reflect the SRA requirement to pay a fair sum of interest on Client funds.