The number of requests to use money from dormant client accounts fell by nearly a fifth after the Solicitors Regulation Authority raised the threshold for seeking the regulator’s permission, the Gazette has learned.
SRA guidance issued in October 2014 stating that solicitors can withdraw residual client balances of £500 or less from the client account provided they establish the owner’s identity, make adequate attempts to ascertain the proper destination of the money, pay the funds to charity, record the steps taken and keep a central register.
Residual client balances above £500 can be donated to charity on written authorisation of the SRA. The guidance states that the SRA 'may impose a condition that the money is paid to a charity which gives an indemnity against any legitimate claim subsequently made for the sum received’.
Prior to the SRA raising the permission threshold from £50 to £500 in October 2014, the average number of requests was 800 a year. This figure dropped to 560 in 2015.
The threshold was raised following an SRA consultation in spring 2014, when 89% of respondents said they favoured the regulator increasing the self-certification level to £500.
According to a consultation response document published by the regulator, the Law Society commented that they 'believe that the current £50 de minimis amount imposes significant burdens on firms and that a proportionate increase would ease this burden without endangering client money'.
Last week Queen Mary University of London announced that global giant Dentons had used money from dormant client accounts to support a new bursary scheme for future lawyers.
The firm has donated £48,000 to help fund three undergraduate bursaries at the university’s School of Law.
Professor Valsamis Mitsilegas, head of the school, said the bursary scheme would provide ‘much-needed support’ to students from low-income families from the local community.