The SRA Handbook is no longer in effect. It was replaced by the SRA Standards and Regulations on 25 November 2019.
SRA Handbook
Other client money withheld from a client account
Back to version 21Version 17 of the Handbook was published on 12/08/2016. For more information, please click 'History' Above
Rule 16: Other client money withheld from a client account
- 16.1
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The following categories of client money may be withheld from a client account:
- (a)
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cash received and without delay paid in cash in the ordinary course of business to the client or, on the client's behalf, to a third party, or paid in cash in the execution of a trust to a beneficiary or third party;
- (b)
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a cheque or draft received and endorsed over in the ordinary course of business to the client or, on the client's behalf, to a third party, or without delay endorsed over in the execution of a trust to a beneficiary or third party;
- (c)
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money withheld from a client account on instructions under rule 15;
- (d)
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money which, in accordance with a trustee's powers, is paid into or retained in an account of the trustee which is not a client account (for example, an account outside England and Wales), or properly retained in cash in the performance of the trustee's duties;
- (e)
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unpaid professional disbursements included in a payment of costs dealt with under rule 17.1(b);
- (f)
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in respect of payments from the Legal Aid Agency:
- (i)
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advance payments from the Legal Aid Agency withheld from client account (see rule 19.1(a)); and
- (ii)
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unpaid professional disbursements included in a payment of costs from the Legal Aid Agency (see rule 19.1(b)); and
- (g)
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money withheld from a client account on the written authorisation of the SRA. 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.
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Guidance notes
- (i)
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If money is withheld from a client account under rule 16.1(a) or (b), rule 29 requires records to be kept of the receipt of the money and the payment out.
- (ii)
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If money is withheld from a client account under rule 16.1(d), rule 29 requires a record to be kept of the receipt of the money, and requires the inclusion of the money in the monthly reconciliations. (Money held by a trustee jointly with another party is subject only to the limited requirements of rule 9.)
- (iii)
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It makes no difference, for the purpose of the rules, whether an endorsement is effected by signature in the normal way or by some other arrangement with the bank.
- (iv)
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The circumstances in which authorisation would be given under rule 16.1(g) must be extremely rare. Applications for authorisation should be made to the Professional Ethics Guidance Team.