MHA | SRA Account Rules & Rule 3.3: Practical examples

SRA Account Rules & Rule 3.3: Practical examples

Sam Evans · Posted on: May 17th 2023 · read

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So far in our guide, we have looked at the SRA Accounts Rules in place regarding banking facilities, and the potential money laundering implications which banking facilities could unintentionally result your firm becoming involved with. 

We also considered the actions that should be being taken now to ensure that your firm is not providing any banking facilities to your clients, and the importance of ensuring that all fee earners are adequately trained on identifying what a banking facility is. As mentioned, these individuals are your first line of defence in ensuring the Firm does not fall foul of this Rule.

SRA banking facility case studies

Alongside the warning notice issued by the SRA in March 2023, they have also provided some useful case studies highlighting some common situations where your firm may be deemed to be providing a banking facility to your clients. 

Below we look through some of these situations and how your firm can protect itself against breaching Rule 3.3.

Unconnected payments from client account

One of the most common occurrences of providing a banking facility is where the Firm, in trying to be helpful to the client, makes payments on their behalf to third parties at the client’s request. 

At the forefront of each fee earners’ mind should be the question of whether the payment requested relates to the regulated transaction which the Firm is engaged to be performing for the client.

Transfers between related matters

There is the further risk in relation to this where you are also providing services for related parties to a client, where a request is made to transfer funds between these matters. 

Clearly in some instances there is no issue here, such as when acting for an individual on a sale and purchase. However there are other occasions when your firm may be deemed to be providing a banking facility by allowing these transfers to occur. 

Two such examples would be where you are acting for a company, and one of the directors of that company on a personal matter; or where you are acting for two companies under common ownership. 

Your client may request that the balance on one matter is transferred to the other, however as they are different clients these transfers should not be performed without legitimate reason, such as where there is a transactional link between them.

Holding onto client monies

In accordance with Rule 2.5 regarding dealing with residual balances, your Firm should ensure that it has procedures in place for returning client monies once the firm has no reason to be holding onto those funds.

At the end of a matter, a client may request that you hold onto their funds as they have intention to undertake a new matter shortly. 

Whilst this may be true, as the transaction which you are currently engaged to complete has been finalised, the Firm has no proper reason to be retaining these funds. 

As such, the funds should be returned to the client at this stage. A regular review of the client matter listing for any inactive matters, with funds held, should be performed to identify such instances.

It is important that there are effective procedures in place to continually review whether the funds held are still required in relation to the matter. An example provided is a retention on a conveyancing transaction. Whilst initially the funds may rightly remain within the client bank account, the firm should be reviewing the situation on a regular basis to determine whether the funds are still required to be held. Where not, these should be returned promptly.

Alongside this common example which is likely to occur upon completion of a matter, the Firm also needs to be mindful of accepting the receipt of unconnected funds from a client at any stage of a matter. Where a client has paid funds into the client bank account, a question should be asked “why?”. Where there is no clear link to the transaction you are undertaking on their behalf, these funds should be returned.

Powers of Attorney

One such matter where a lot of the above transactions can occur, legitimately, is where the solicitor is acting as an attorney under an LPA. In this instance, the SRA’s view is that undertaking these transactions would not give rise to the Firm carrying out a banking facility for its client. The SRA and the Office of the Public Guardian both advise that it may be better in this instance to either operate the client’s own bank account as a signatory, or using a designated deposit client account, to enable segregation of these funds.


In summary, over the three blogs we have highlighted that there are many seemingly legitimate circumstances in which your firm could be unintentionally providing banking facilities for your clients. The key message from these blogs is ensuring that all staff within your Firm are aware of what a banking facility is, and that these cannot be provided for your clients.

Make sure that you have read the SRA Warning Notice and the case study examples.

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