Firm fined after failing to deal with residual client money

A north London firm which failed for more than a decade to properly deal with residual client balances has been fined by the SRA.

Curwens LLP, based in Enfield, accepted that from 2008 to 2021 it allowed almost £105,000 to be built up in the client account by failing to address inactive or completed matters.

When a matter has ended but the firm still retains client money, regulations state that clients must be informed in writing every year and systems must be in place to return money promptly.

An SRA notice said that the firm did not have procedures in place to deal with these residual balances, and its systems did not identify receipts in the client account.

The notice further stated that for 10 years, the firm allowed its client account to receive, hold and transfer funds in relation to rent and rent deposits. This breached the rule that firms may not provide a banking facility through the client account.

The SRA said the firm had self-reported its conduct and expressed remorse that systems and processes were not sufficiently robust. It has put in place an action plan to oversee compliance and in particular to improve timeliness about dealing with remaining client money. Regular updates are made to the regulator and more training is being provided to staff to raise awareness of the accounts rules.

The SRA accepted there was no lasting significant harm to clients, but said the firm showed a ‘disregard’ to its obligations and that the issue continued for longer than was reasonable. Had the firm sent annual letters to clients regarding the money held on their behalf, it was noted, this would have raised a red flag.

The firm was fined £14,116 and agreed to pay £600 costs.