New OPG guidance on client accounts
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.
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’.