City firms would not be interested in having a third party manage client accounts, their representative body has said.
The City of London Law Society this week said it has no objection to the use of third-party accounts as an alternative, but that its members are ‘firmly in favour’ of the status quo.
The Solicitors Regulation Authority is consulting on whether to allow law firms to use a separate entity to manage client funds.
In its response, the CLLS said using an alternative was unlikely to lower costs, and it warned that any rule change should not act as a precursor to restrictions on the use of client accounts.
The response stressed that the current system already offers flexibility to choose a bank or building society and the best interest rates available.
‘The accounts that can be used as client accounts are strictly defined and are held in secure institutions,’ said the CLLS.
‘Clients are familiar with these institutions and understand that their funds are held securely.’
The response noted that whatever the sum that is held, the same processes apply to the transfer of funds.
The CLLS also called for a wider consultation before any changes to accounts rules and for safeguards to be drawn up to protect monies that are held with a third party.
The SRA has stressed it is only exploring third-party alternatives as an extra option for solicitors and has no intention of removing client accounts.
In its consultation paper, the regulator said the misuse of client money was a ‘consistent risk’ to consumers and that third-party managed accounts could provide a safe and low-cost alternative.
The Law Society has stated it is willing to listen to proposals that reduce the burden on solicitors, but that the SRA suggestions would not necessarily reduce costs or increase consumer protection.