Version 9 of the Handbook was published on 1 April 2014. For more information, please click "History" above.
SRA Intervention Powers (Statutory Trust) Rules 2011
Rules dated 17 June 2011 made by the Solicitors Regulation Authority Board under sections 79 and 80 of and paragraph 6B of Schedule 1 to the Solicitors Act 1974, paragraphs 32 to 34 of Schedule 2 to the Administration of Justice Act 1985, and paragraph 6 of Schedule 14 to the Legal Services Act 2007, with the approval of the Legal Services Board under paragraph 19 of Schedule 4 to the Legal Services Act 2007, governing the treatment of sums vested in the Law Society under paragraphs 6 or 6A of Schedule 1 to the Solicitors Act 1974, and under paragraphs 3 or 4 of Schedule 14 to the Legal Services Act 2007.
Part 1: General
Rule 1: Interpretation
The SRA Handbook Glossary 2012 shall apply and, unless the context otherwise requires:
all italicised terms shall be defined; and
terms shall be interpreted,
in accordance with the Glossary.
Rule 2: Holding statutory trust monies
The SRA will place all statutory trust monies in identifiable statutory trust accounts.
All interest earned on any statutory trust account will be added to that account.
Rule 3: Proportionality
Nothing in these rules shall require the SRA to take any action which it considers unreasonable or disproportionate in the context of any statutory trust account.
The SRA may apply a level to beneficial entitlements within a statutory trust account below which it will not attempt to identify and/or locate potential beneficiaries where in the opinion of the SRA it would be unreasonable or disproportionate to do so. The level applies to the principal sum identified as relating to a particular beneficiary, after the application of any pro-rata adjustment which may be made under rule 7.2 and ignoring the addition of any interest as set out in rule 8.1.
Rule 4: Identifying beneficial entitlements
In respect of the statutory trust monies held following an intervention, the SRA will create a reconciled list or a best list from the evidence which it has available, including documents and other evidence provided by or on behalf of claimants.
In creating a reconciled list or a best list, any sums of money which are identified within a statutory trust account as being payments on account of costs, or which are equivalent to the costs incurred in the matter to which the funds relate, will be treated as due to the client rather than the intervened practitioner, unless there is sufficient evidence of a bill or other written notification of costs having been sent to the client.
The SRA will attempt to contact all persons identified as having a potential beneficial interest in the statutory trust monies inviting them to submit a claim in accordance with rule 5.
Part 2: Claims
Rule 5: Claimants to money
Every claimant must deliver to the SRA a completed and signed claim form. The claim form shall require such information as may be prescribed by the SRA from time to time.
A claimant must provide such documentation and other evidence as may be requested by the SRA in order to support the claim including a statement of truth and proof of identity. Failure to provide such documentation or evidence will be taken into account by the SRA when deciding whether to make a payment in respect of a claim.
The SRA may, in its discretion, waive the requirements of rules 5.1 and/or 5.2.
Rule 6: Verification of claims
Subject to rule 6.2, the SRA will verify the individual potential beneficial entitlements claimed under rule 5 by examining all available evidence.
The extent of verification work will be determined by the SRA by considering, but not limited to, the circumstances of the intervention, the reliability of the accounts of the intervened practitioner and the perceived integrity of the list of beneficial entitlements prepared.
Rule 7: Shortfall in statutory trust account
In cases where a shortfall is revealed between the statutory trust monies held and the beneficial entitlements shown in a reconciled list or best list, the SRA may rectify the position, in whole or in part, by the use of other monies taken into its possession following the intervention to which that account relates.
Where a shortfall still exists on a statutory trust account after the application of the additional funds set out in rule 7.1, the SRA will decide on the method for distribution of the deficient account.
Rule 8: Distribution of beneficial entitlements
Any interest which has accrued on the statutory trust account under rule 2.2 will be distributed to beneficiaries on a pro-rata basis in proportion to the payments made to them or on such other basis as the SRA may decide.
In a case where the accounting records of the intervened practitioner are reconciled accounts, payments to beneficiaries will be made on the basis of the reconciled list.
In a case where the accounting records of the intervened practitioner are not reconciled accounts, payments to beneficiaries will be made on the basis of the best list.
Rule 9: Residual balances
The SRA may use any funds which remain in a statutory trust account following the distribution to beneficiaries under rule 8 to offset any costs, charges or other expenses which it has incurred in establishing the beneficial entitlements to the statutory trust monies and in distributing the monies accordingly.
If funds remain in a statutory trust account after payment to beneficiaries and the deduction of costs, charges and expenses in accordance with rule 9.1, the SRA may transfer such remaining funds into the compensation fund held by the SRA in respect of the activities carried on by the intervened practitioner and thereupon any claim to such funds shall be extinguished.
Rule 10: Miscellaneous
The SRA may make an interim payment to a beneficiary before the full distribution on a statutory trust account takes place. This will be done only where the SRA is satisfied that the circumstances are such that the payment can be made without prejudicing other claims on the statutory trust account.
The SRA may issue guidance notes to claimants to assist in the making of a claim and to explain the steps and processes which the SRA takes in dealing with a statutory trust account.
Rule 11: Commencement and application
These rules shall apply to all statutory trust accounts, whether such accounts were created before or after the 6 October 2011.
Rule 12: Transitional provisions
These rules shall not apply to licensed bodies until such time as the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA and all definitions shall be construed accordingly.
In these rules references in the preamble to the rules being made under paragraph 6 of Schedule 14 to the Legal Services Act 2007 shall have no effect until the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA.