SRA Handbook

Operation of a client's own account

Version 21 of the Handbook was published on 06/12/2018. For more information, please click 'History' Above

Rule 10: Operation of a client's own account

10.1

If, in the course of practice, you operate a client's own account as signatory (for example, as donee under a power of attorney), the rules in general do not apply, but the following must be complied with:

(a)

rule 30.1 to 30.4 - accounting records for clients' own accounts;

(b)

rule 31 - production of documents, information and explanations; and

(c)

rule 43A.1 - reporting accountant to check compliance.

Operation by you only

10.2

If the account is operated by you only, you must ensure that you receive the statements from the bank, building society or other financial institution in accordance with rule 30, and have possession of any passbooks.

Shared operation of the account

10.3

If you share the operation of the account with the client or a co-attorney outside your firm, you must:

(a)

ensure that you receive the statements or duplicate statements from the bank, building society or other financial institution and retain them in accordance with rule 30.1 to 30.4; and

(b)

ensure that you either have possession of any passbooks, or take copies of the passbook entries before handing any passbook to the client or co-attorney, and retain them in accordance with rule 30.1 to 30.4.

Operation of the account for a limited purpose

10.4

If you are given authority (whether as attorney or otherwise) to operate the account for a limited purpose only, such as the taking up of a share rights issue during the client's temporary absence, you need not receive statements or possess passbooks, provided that you retain details of all cheques drawn or paid in, and retain copies of all passbook entries, relating to the transaction, and retain them in accordance with rule 30.1 to 30.3.

Application

10.5

This rule applies only to private practice. It does not cover money held or received by a donee of a power of attorney acting in a purely personal capacity outside any legal practice (see rule 4, guidance notes (iii)-(iv)).

10.6

A "client's own account" covers all accounts in a client's own name, whether opened by the client himself or herself, or by you on the client's instructions under rule 15.1(b). A "client's own account" also includes an account opened in the name of a person designated by the client under rule 15.1(b).

Guidance notes

(i)

Money held in a client's own account (under a power of attorney or otherwise) is not "client money" for the purpose of the rules because it is not "held or received" by you. If you close the account and receive the closing balance, this becomes client money subject to all the rules.

(ii)

Merely paying money into a client's own account, or helping the client to complete forms in relation to such an account, is not "operating" the account.

(iii)

If as executor you operate the deceased's account (whether before or after the grant of probate), you will be subject to the limited requirements of rule 10. If the account is subsequently transferred into your name, or a new account is opened in your name, you will have "held or received" client money and are then subject to all the rules.