Legal Services & Solicitors Accounts Flashcards
What facts or matters constitute a serious breach and may warrant a SRA investigation?
- Discriminating against a client based on your personal views
- Breach of an undertaking
- Knowingly acting in a situation where there is a significant risk of conflict
- Breaches of SRA rules
- Failure to appropriately handle client complaints
What is a regulated activity under FSMA?
Activity of a specified kind carried on by way of business and relates to
- specific investment
- carried out in relation to property
What things constitute as by way of business?
Deposit-taking business
Investment business
Managing Investments (Occupational Pension Schemes)
What are the main excluded activities under FSMA which do not require regulation?
Arrangements not causing a deal
Enabling parties to communicate
Arranging transactions to which the arranger is a party
Arranging deals through authorised persons
When are solicitors excluded from FSMA regulation in terms of shares?
Sale of a Body Corporate
- when the transaction involves the acquisition or disposal of at least 50% of the shares
- object of the transaction is the acquisition of the day to day control
What are the conditions for property to be criminal property?
- benefit from criminal conduct
-alleged offender must know or suspect it represents a benefit
When may enhanced due diligence be required?
- Relevant transactions between parties based in high risk countries
- Customer is beneficiary of a life policy
- ## Customer is a third-country national seeking residence rights in exchange for property or investments
When must due diligence be carried out?
If the person
- establishes a business relationship
- carries out an occasional transaction which amounts to transfer of funds
- suspect money laundering
- doubts the veracity or authenticity of documents provided
When should simplified due diligence be done?
Low risk of money laundering (repeat customer based in the UK)
What are the defences to money laundering?
When are referrals prohibited?
When a claimant claims for personal injury or death
SO referrals for a fee is not allowed
What is the definition of harassment?
A engages B in unwanted conduct related to a relevant protected characteristic which has the effect of
- violating B’s dignity
- creating an intimidating or hostile environment for B
What is the definition of victimisation?
Protects individuals where A subjects B to a detriment because
- B has done a protected act
- A belivees B has done a protected act
What duty is a service provider under to disabled people under the Equality Act?
Under a positive duty to take steps to remove or prevent obstacles
What is client money?
Any money held or received by a solicitor
- relating to regulated service delivered to a client
- on behalf of a third party
- where the solicitor is holding the money as a trustee
- in respect of the solicitors fees or unpaid disbursements
What are the requirements for a client account?
must include the name of the authorised body
must include the word ‘client’
When will client money not need to be held in a client account?
- When the only money held or received is money in respect of solicitors fees and any unpaid disbursements prior to bill (if the solicitor is liable eg expert fees), then the solicitor can hold this money in one of the firms business accounts (must relate to costs and there must not be a client account)
-
When must the solicitor pay client money into the client account?
Solicitor must pay client money into the client account promptly
Exceptions
- when the solicitor has received money as a trustee
- payment received from Legal Aid Agency
- solicitor and client agree another arrangement
What is the prohibition on the use of the client account to provide banking facilities for third parties or clients?
Payments into and transfers from the client account must be in respect of delivery of regulated services
What should the solicitor do if they have two clients (buyer and lender) who transfer money to them?
The solicitor need not open two client ledger, just one is fine as long as the lender was an institutional lender providing loans in the normal course of business and provided the funds were clearly identifiable
What accounting must you do when you receive client money?
Obtain an accountants report for that accounting period within six months of the end of the period
Deliver it to the SRA within six months of the end of the accounting period IF it shows that client money has been put at risk
What are the requirements for an accountant?
Accountant is a member of a chartered accountancy bodies AND who is or works for a registered auditor
How long must you retain accounting records for?
Must retain accounting records for at least six years
Who is liable for compliance of the rules?
Authorised bodys managers are jointly and severally liable
What is a joint account?
Joint account is not a client account but money held in a joint account is still client money
Is money held in a third party account client money?
no
- client must be informed of the use of the third party account
What interest must you account to the client?
You account to clients or third parties a fair sum of interest on any client money held by you on their behalf
Is interest client money?
No it is non-client money therefore it must be transferred to the business account and then paid to the client
