SRA Rules

Introduction

The **Solicitors Regulation Authority (SRA)** requires every solicitor to know how to deal with **client money** held by the solicitor or the firm. Solicitors occupy a **position of trust**, so they must understand the safeguards needed to protect client money. This chapter provides a complete walk-through of the **SRA Accounts Rules** (in force from **25 November 2019**), which are deliberately short and outcomes-focused: they are designed to **reduce the risk of accidental or deliberate misuse of client money** and to protect clients. You will master **who is bound** by the Rules, **what client money is**, how a **client account** must be operated, **withdrawals**, **breaches**, **interest**, **accounting systems**, **joint and own accounts**, **third party managed accounts (TPMAs)**, and **accountants' reports**.

Assessment focus

For the SQE1 FLK2 assessment, Solicitors Accounts is examined as a discrete topic and the SRA Accounts Rules are tested heavily. You must be able to **identify client money**, **apply the client account requirements**, decide whether a **withdrawal is permitted**, and recognise when an **accountant's report** is required. Questions are single best answer questions (SBAQs) set in **realistic firm/client scenarios** — you must **apply** the rule to the facts, not merely recite it. Common traps include the **prohibition on banking facilities** (Rule 3.3), the rule that **client money may only be withdrawn if sufficient is held for that specific client** (Rule 5.3), and the **accountant's report exemption thresholds**. This is a closed-book assessment, so commit the rule numbers and their effect to memory.

Study tips

1) Memorise the **four limbs of 'client money'** in Rule 2.1 (regulated services for a client; held for a third party; held as trustee/office-holder; fees and unpaid disbursements received before a bill). 2) Remember the **golden rule**: client money must be **kept separate** from the firm's money (Rules 4.1 and 2.1) and paid in **promptly** (Rule 2.3). 3) Note that the 2019 Rules deliberately **do not prescribe a fixed time limit** for 'promptly' — the old 14-day rule was removed; judge it on the facts. 4) Master **Rule 3.3** (no banking facilities) and **Rule 5.3** (only withdraw what is held for that specific client) — both are heavily examined. 5) Learn the **accountant's report exemptions**: legal-aid-only money, or average client balance **≤ £10,000 and maximum ≤ £250,000** (Rules 12.2 and 12.3).