New OPG guidance on client accounts

Topics: Private client,Regulation and compliance,Government & politics

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Solicitors have been reminded to use client accounts for those lacking mental capacity ‘in the best interests’ of the people concerned, in a new practice note.

The Office of the Public Guardian said some solicitor deputies may have received correspondence from the executive agency about the use of their client accounts to manage deputyship funds; and the interaction between a deputy’s duties under the Mental Capacity Act and code of practice, and the Solicitors Regulation Authority accounts rules.

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Deputies are authorised by the Court of Protection to make decisions on behalf of people who may lack mental capacity because, for instance, they have had a serious brain injury or illness, or they have dementia or severe learning difficulties.

Deputies may decide on property and financial affairs, such as paying bills or organising a pension, or personal welfare, such as medical treatment and how someone is looked after.

Rule 14.5 of the SRA’s accounts rules states: ‘You must not provide banking facilities through a client account. Payments into, and transfers or withdrawals from a client account must be in respect of instructions relating to an underlying transaction (and the funds arising from) or to a service forming part of your normal regulated activities.’

The OPG said it did not object ‘in principle’ to solicitors using general client accounts as a ‘temporary or holding position’ prior to deputies setting up segregated client accounts or separate bank accounts as expected, to manage ongoing transactions. But the OPG would have to be ‘satisfied’ that deputies had ‘proper safeguards’ to protect deputyship funds.

Setting up separate bank accounts for a deputyship with named signatories ‘may be simpler in practice’, the OPG suggested.

Deputies have a general duty to act in the incapacitated person’s best interests, which can include managing their funds to gain the best return.

But the OPG said there were cases where large balances in a client account ‘will not represent the best investment strategy’.

The OPG reminded solicitors that the management of funds ‘should be organised with the best interests of their client in mind’.

Readers' comments (2)

  • Am I missing something? The money in the deputies' hands must be used for the best interests of the patient. The solicitors accounts rules require the clients money to be used in accordance with the clients instructions. Where is the problem?
    Is it suggested that solicitor deputies will give instructions for the funds to be used other than in accordance wit their duties, and that the solicitor deputies will somehow misuse the funds?
    Clearly no one at the OPG has tried to set up a bank account in anything other than a private capacity recently.
    I am into the fifth year of trying to sort out problems with a major UK clearing bank following the death of a signatory to the account of a small charity. The bank in question continues to write to the deceased, and has lost three sets of mandate forms that have been completed. On each occasion the signatories have had to attend at the bank with suitable ID. Although I was a signatory to the account the bank decided that it had no knowledge of me, but corresponds with me, and sends the statements account to me.
    We have just identified ourselves at the bank for the fourth time, and fingers crossed the problem will now be resolved. In the meanwhile the account remains frozen!

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  • Maybe the problem is a conflict between this guidance re use of client accounts and the SRA's not to use client accounts for clients' banking needs?

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