A revised accounts code that expressly allows firms of licensed conveyaners to use third-party managed accounts (TPMAs) has been approved by the Legal Services Board.
The new Council for Licensed Conveyancers (CLC) code, which will come into force on 30 September, also contains simpler, more targeted requirements to make it simpler to understand, and allow firms to deal more easily with aged balances up to £50 where they are unable to identify the rightful recipient.
In its application to the LSB, the CLC wrote: “Less prescriptive rules can lead to lower costs and higher efficiency savings… [and] mean that practices will need to properly assess the needs of their clients and how they ensure compliance rather than relying on detailed rules which may become a tick-box exercise.”
Having the option to not use a client account “could enable a practice to reallocate resources to focus on the quality and competitiveness of its services”.
CLC firms can only use TPMAs regulated by the Financial Conduct Authority, and firms must also be authorised by the CLC to enter arrangements with particular TPMA providers.
Firms must ensure that the decision to use a TPMA, and the TPMA provider selected, is “appropriate in the circumstances of each case”.
The Legal Services Board welcomed the move on TPMAs, noting that the Solicitors Regulation Authority and CILEx Regulation have also issued rules and/or guidance on their use.
The board said it concluded back in 2015 that TPMAs “can benefit consumers by enhancing the security of client money (with the appropriate safeguards in place), providing a wider choice of payment arrangements and greater transparency of process”.
For practitioners, potential benefits included lower compensation fund contributions and lower professional indemnity insurance premiums, “which could in turn result in benefits to consumers if these savings are passed on”.
Simon Blandy, director of regulatory standards at the CLC, said: “This is a positive step towards removing unnecessary detail in favour of an emphasis on the most important aspects of the proper management of client money and ensuring protection of the client’s interests.”