The Solicitors Regulation Authority is to press ahead with a consultation on extending the use of third-party managed accounts as an alternative to the client account.
The regulator revealed today it will defer a decision on whether to make changes to the accounts rules. It first proposed the idea earlier this year.
But SRA executive director Crispin Passmore was resolute that the idea has not been kicked into the long grass and will be revisited next spring.
‘A number of respondents said that because it wouldn’t work for them we shouldn’t allow it at all,’ he said. ‘We were trying to create another option to free up people who wanted to run their business in a certain way. It is about opening up the marketplace.’
Firms are already allowed to use third-party accounts without SRA permission, with the regulator monitoring them on a case-by-case basis.
The proposal was to broaden that approach and allow firms and their clients to use third-party managed account facilities.
The SRA said a number of firms have made requests to be allowed to use BARCO, a wholly owned company of the Bar Council, to manage client money. Supporters of the change say third-party providers can reduce risk to clients and offer a lower-cost alternative.
The SRA said most of the 44 responses it received to its consultation were supportive, although many also qualified this with calls for caution and putting in place appropriate consumer protections.
The Law Society commented that the fee structure of an alternative provider would be fine for small funds but ‘extortionately expensive’ for the average conveyancing solicitor.
The SRA stressed that its proposal would operate only as an alternative to a client account.