By Legal Futures Associate Kord
There are a few common misunderstandings about third-party managed accounts (TPMAs).
Perhaps the most common is that it hands compliance responsibility over to that third party. It does not, and this confusion is a big part of why firms hesitate over deciding on whether to adopt one—even if the benefits are clear.
What the rules say
Under the SRA Accounts Rules, money held in a TPMA doesn’t fall under the definition of client money because it is never received or held by the firm. Rule 11 of the Accounts Rules, however, does still apply.
Since TPMAs often contain funds used for extremely sensitive or important transactions—for instance, for a house purchase—extra care is required by firms looking to adopt one.
So, before engaging a provider, firms should confirm it is authorised by the Financial Conduct Authority (FCA), either as an authorised payment institution or an equivalent status.
Firms are expected to take reasonable steps to make sure clients understand the arrangement as well as keeping regular statements and keep records showing an ongoing overview of transactions. This helps to reduce risk and uncertainty.
What stays with the firm
Firms also need to notify the SRA when they start using a TPMA provider, and again if they switch or stop.
None of this robs the firm of any agency or authority. It is still the firm who decides who gets paid, when they get paid, and how much they get paid. The TPMA provider is simply carrying out those instructions on its behalf.
The benefit, then, is that firms get a safe, secure, trusted place to hold their clients’ funds without taking on the risk associated with a traditional client money arrangement.
Get a live walkthrough
Providers such as Kord have built compliance checks, statements, and dashboards into their custody tools. This gives firms the tools they need to meet these obligations and do so with true operational efficiency.
To build a clearer picture of what shifts to the provider and what stays firmly with the firm, Kord’s live webinar, ‘Client money on trial: TPMAs are coming for law firms’, takes place on Tuesday 8 September 2026 at 2:00pm BST.
The 45-minute session, hosted by Yazad Bajina and David Casey, includes a live Q&A where you will be able to ask all things TPMAs to the experts at the forefront of this approach to client money management.
