Interest policy

Policy purpose 

This policy sets out how Brodies LLP applies interest in relation to funds held in our client bank account, in accordance with regulatory requirements.

Brodies LLP is committed to compliance with its obligations under the Law Society of Scotland Practice Rules 2011 and the SRA Accounts Rules 2019. 

Our interest policy seeks to provide a fair outcome for clients whilst recognising that money must be immediately available unless clear instructions are received to the contrary from the client.

Circumstances in which we will accept client money 

Client money is money that we agree to receive or hold on behalf of clients or another party that relates to the legal services we are providing to our clients, including advance payments for our fees or disbursements. We hold client money in our client account to keep these funds separate from money that belongs to us. Payments into, and transfers or withdrawals from, our client account must be in respect of the professional services that we are providing. We are not permitted to provide banking facilities to any party. Clients may use our client account only with our agreement and its use remains at our discretion.

Regulatory requirements

The Law Society of Scotland Practice Rule B6: Accounts, Accounts Certificates, Professional Practice & Guarantee Funds requires us to deposit money held for or on account of a client in an interest bearing account if, having regard to the amount of such money and the length of time for which it (or any part of it) is likely to be held, it is reasonable that interest should be earned for the client.

The SRA Accounts Rules 2019 require us to account to clients or third parties for a fair sum of interest on any client money we hold on their behalf.

Brodies' client accounts

We are required to ensure that client money is kept safe and available for the purpose for which it is provided and separate from funds belonging to the firm.

Client money must be held in a client account as defined by the Banking Act. In doing this, funds are protected from being used to cover any liability to the bank by the firm.

We maintain two types of client account:

• A general client account – where the majority of client money is held. This is on an instant access basis to ensure immediate access to funds. No interest is paid to clients on monies held in the general client account.
• A designated client account – this account is set up specifically for an individual client and will include in its title a reference to the client identity. Interest will be paid to clients on funds held in a designated client account subject to the terms of this policy.

Our interest policy

Interest is paid by the Bank to Brodies LLP on the aggregate of all client money held in the general client account and, subject to this policy, is for the benefit of Brodies LLP.

Money held in the client account will be monitored on a daily basis. For each matter, consideration will be taken in regard to the balance and length of time funds are being held.

Should it be anticipated that the interest earned on the balance of funds held for a particular matter will be greater than £50 we will deposit such money in a separate designated client account on the client's behalf. We maintain designated deposit facilities with a number of
banks and these may vary from time to time.

Where we are conducting more than one matter for a client, balances will not be aggregated for calculation purposes.

We will account to the client for all the interest earned on their designated client account less deductions for handling and administration.

Interest is paid gross (no tax deducted at source). It will be the recipient's responsibility to declare any interest to HMRC. 

Interest will not be paid to clients in the following circumstances:

• on money held for payment of a professional disbursement and counsel, registration dues, LBTT, stamp duty etc.;
• if we have agreed with the client that no interest will be paid;
• on monies that we are instructed to hold outside a client account in a manner that does not attract interest e.g. cash held in a safe;
• the amount of anticipated interest, calculated in accordance with this policy, is less that £50 (below that sum we consider that the administrative costs of dealing with the funds would exceed the interest due);
• on money that we have paid into a client account as an advance from the firm to fund a payment on behalf of a client or trust where there are insufficient funds held for that client or trust in the client account.

Risk 

For funds that are to be held by us in a separate designated client account we will always negotiate with our bank in an endeavour to obtain the best available interest rate. However, clients may not receive as much interest on money held in a designated client account as they might have done had they held and invested the money themselves.

Review

This policy will be reviewed at least annually to ensure that it continues to deliver a fair outcome to clients. This policy was last updated on 23 September 2024. 

Contact us

If you have any questions please get in touch at cashroom@brodies.com