The Solicitors Regulation Authority (SRA) has handed substantial fines to a director who used his firm’s client account as a banking facility and the compliance officer who allowed it.
The £9,000 fines for Martyn Green and Michael Ward, the two directors of Burd Ward on the Wirral, are the latest example of the regulator flexing its increased fining power to sanction solicitors up to £25,000.
SRA notices recorded that Mr Green acted on behalf of a client in relation to a commercial property dispute. The parties to the dispute had operated a business account to collect income and pay outgoings relating to the property. The joint account was frozen due to contested withdrawals.
Mr Green arranged for the parties to use the firm’s client account instead to collect rental income and pay outgoings for two years, in breach of the rule against using it as a banking facility. He was not motivated by financial gain in doing so, the SRA acknowledged.
In setting the level of fine, the SRA said using a client account this way was “inherently objectionable, regardless of impact or harm”.
It explained: “This type of misconduct carries associated risks, including facilitating money laundering, avoiding obligations in an insolvency situation, and improperly hiding assets.”
The SRA noted that Mr Green was an experienced solicitor, while the situation continued for several months after it first raised concerns. He also “showed a lack of insight into the potential consequences of the misconduct during the investigation”.
In mitigation, the regulator took account of Mr Green’s “unblemished” regulatory history, his co-operation with the investigation. the absence of any evidence of a pattern of misconduct and “an expression of apology for the time that the SRA had been put to”.
Mr Ward, meanwhile, holds all the compliance roles at the firm. The SRA said he was “aware of and approved this arrangement despite his responsibilities as director and COFA of the firm to ensure that the firm’s conduct adhered to the SRA regulatory regime”.
The same aggravating and mitigating factors applied in his case as Mr Green’s and he too was fined £9,000.