The Council for Licensed Conveyancers (CLC) is proposing to streamline the rules on how CLC practices handle client money as part of a drive to reduce regulatory burdens and facilitate innovation while keeping client money safe and improving consumer confidence. This follows a series of workshops with CLC Lawyers to identify opportunities for improvement.
Launching a consultation on proposed changes to its Accounts Code, which governs the handling of client money by CLC Lawyers and Practices, the regulator is proposing to reduce the time limit on practices for delivering an Accountant’s Report from six to three months, reflecting their importance in identifying potential risks. It is also proposing to amend the format of the Accountants Report to allow greater freedom for reporting accountants to use their professional judgment.
The Consultation Paper proposes to amend the provisions so that practices have the freedom to move aged balances of up to £50 (the current limit is £20) into their office account when the client cannot be located and donate any sums up to £10 to a nominated charity (a new provision). They will continue to be liable to account for those funds if the client subsequently makes a claim.
The regulator is explicitly allowing the use of Third Party Managed Accounts (TPMAs) as an alternative to regulated practices holding client money. The CLC says the use of TPMAs would appear to offer practices the opportunity for more streamlined management of client funds, allowing them more time to focus on other aspects of the transaction that are their specialisation and unique strength.
Simon Blandy, Director of Regulatory Standards, at the CLC, says: “The CLC is committed to doing all it can to ensure that the right levels of consumer protection are in place while allowing those we regulate the freedom to innovate, compete and grow.
“Misuse of client money is one of the key risks to consumer protection. Effective mitigation of this risk continues to be a priority for the CLC. The changes we intend to make will provide greater clarity for CLC Lawyers and Practices, making sure there is a clear focus on the real risks to client money.”
The CLC says that its review of the Accounts Code will be completed by July following which the proposed changes will be submitted to the Legal Service Board for approval with the aim of any changes coming into force in January 2020.