A national firm has been fined £16,200 over an arrangement allowing third parties to pay funds into the client account without any services being carried out. The breach in the rules came to light at an internal training session.
Ashfords LLP, headquartered in Exeter, allowed more than £1m to be held for payments related to building projects being completed by its client. The funds were held until a stage of work was completed then paid out to the client, without Ashfords providing any significant element of legal services.
The issue was reported to the Solicitors Regulation Authority after the fee earner with the main conduct of the matters became aware of the breach while on an internal training session.
Under SRA accounts rules, any payments into, and transfers or withdrawals from a client account, must be in respect of instructions relating to an underlying transaction.
The regulator said there were no money laundering concerns over the transactions, but the firm had breached the rules by providing banking facilities.
When considering sanction, the SRA took into account admissions by the firm and several points of mitigation: there was no loss suffered by the client, the matter was reported at the earliest opportunity and steps were taken immediately to ensure the conduct did not continue. The firm has improved its procedures, systems and controls to ensure future compliance.
The appropriate fine was set at £27,000, reduced by 40% to take account of the firm’s early admissions and cooperation with the investigation. Ashfords will also pay £1,350 costs.