Interest policy

The Solicitors Regulation Authority Accounts Rules require us to account to clients for a fair and reasonable sum of interest on any money held on behalf of a client at any time as an ancillary part of the legal service we provide.

These Accounts Rules require us to ensure that money held on client account is immediately available on demand unless otherwise expressly agreed in writing with clients. In practical terms, this means that we hold client money in an instant access account where the interest earned is correspondingly low. Clients will not therefore receive as much interest as might have been obtained had they held and invested to money themselves.

1/ When interest is paid.

We will account to clients for interest on their funds held in our client account only when it is equitable to do so.

In assessing when it is equitable to account for interest, we take into account factors such as the administrative burden and cost to the firm of managing our client account and of processing interest calculations and payments, and the period of time when a client might reasonably expect interest to accrue given the nature of their transaction and the reason that we are holding the money in our client account.

Bearing in mind these factors, we will not pay interest on client money in the following circumstances:

1.1 if the amount calculated is £50 or less per annum;

1.2 if we hold money for a period not exceeding three working days for the purpose of facilitating the purchase of a property;

1.3 if the funds are held for the purpose of making a third party disbursement payment on behalf of a client;

1.4 if there is a debit on our office account from making a third party payment or having an outstanding bill to the extent of this debit only where funds are held in our client account at the same time;

1.5 if we have requested to pay funds to a client or beneficiary and they have not co-operated with this request.

In addition, we recognise that it is not always in a client’s best interests to receive interest from our client account because of the resulting cost ineffective need to submit a tax return and account to HM Revenue & Customs for the income tax due on any credited gross interest.

As a general rule, we assume that it is in a client’s best interests to receive interest from our client account unless: (1) a client instructs us not to pay any interest to them or (2) the payment of interest to a trustee, personal representative, attorney or deputy would amount to no more than £375 per annum and would create a need for that fiduciary to submit a formal income tax return that would not otherwise be necessary.

2/ Amount of interest

We align the interest rate paid on our account to the rate paid by Natwest Bank on our Client Deposit Manager Account.

At present, our Client Deposit Manager Account offers interest at 1.45% per annum on funds held up to £1m, 1.70% per annum on funds held over £1m but below £10m and 1.90% per annum on funds above £10m.

Given the combined sums held in our client account, we currently apply a 1.70%  per annum interest rate to all clients where we hold less than £10m for that individual client. In the event that we hold more than £10m for an individual, then we will instead apply a 1.90% per annum interest rate.

These rates are likely to change from time to time.

3/ Period over which interest is calculated.

Interest will be calculated from the time the funds become cleared for interest purposes.

On cheques or banker’s drafts this will be 10 working days after the cheque or draft has been deposited with our bank.

For direct transfers or same day payments the funds become cleared on the day after receipt.

Interest will be calculated on a daily basis and calculated on amounts held overnight from the day the funds become cleared for interest purposes.

If we make a payment via cheque and the recipient delays in presenting the cheque to their bank, we will not pay additional interest after the date of the cheque unless we consider that there were exceptional circumstances outside of the client’s control that would make it fair in the whole context to do so.

4/ When interest is paid.

Interest will be calculated throughout a matter at suitable substantive junctures and we will credit the client ledger on that date or on 31st March every year if earlier.

Where further interest is due on conclusion of any matter after the previous substantive juncture, we will not pay any remaining interest where it amounts to less than £25 per annum.

Where a client owes any costs or disbursements to the firm, we can offset any interest credited to a client account against these outstanding sums due to the firm.

5/ What happens if interest rates become negative

We reserve the right to charge negative interest if the Bank of England base rate were to fall below 0.01% because of the extra cost burden that would be placed on the firm to operate your legal transaction.

Negative interest will not be charged onto you where the total amount of negative interest calculated over the course of the matters is £50 or less per annum.

18 April 2024