It is the firms policy to pay clients interest on funds held on their behalf in clients account in accordance with Rule 7 of the SRA Account Rules.
The interest due (if any) will be calculated on completion of any client instruction / return of monies to clients and will be added to the balance due to the client.
Clients are unlikely to receive as much interest as might have been obtained had they held and invested the money themselves. The rate of interest we receive and are therefore able to pass on, can be lower than other investment rates available, and also lower the Bank of England base rate.
In the case of matters where we are holding funds long term, interest will be calculated on balances that are greater than £5000.00 twice annually to the Tax Year End (5th April) and to the 5th October. Interest will be calculated by the accounts department at the bank interest rate received on Stephensons instant access client account with the RBS, which as at 15th August 2023 is 1.7%.
In the event that the calculated total interest accruing to a client for the duration of a matter is less than £50.00 then no interest will be paid on the basis that it is a de minimis amount.
We believe this is a fair sum, as required by Rule 7 of the SRA Accounts Rules, as:
- The starting point should be the level of interest we receive from our bank, which is significantly different to, for example, the Bank of England Base Rate; and
- Offering a lesser rate than the rates paid by banks and not paying interest, unless it is calculated to be more than £50.00, takes into account the cost/time expended in managing the client account.
The interest rate and threshold for payment will be reviewed at regular intervals by Stephensons finance team – usually April in each calendar year and when RBS interest rates change.
We will only transfer funds to a designated deposit account on request, provided that, in the opinion of the Stephensons accounts department it is equitable to do so, taking into account amongst other factors, the administrative cost of doing so. If we do hold money in a separate designated deposit account on your behalf, we will account to you for all the interest earned on that account. Legal Aid Agency funds are not liable to interest.
This policy will be reviewed periodically by the COFA to ensure over-riding objectives are met. Any changes will take immediate effect whether or not notified to clients.
The client is to be informed of this interest policy in their client care leaflet, as follows
We comply with the Solicitors Account Rules, of which Rule 7 relates to payment of interest. In accordance with such, we will account to you for a fair sum of interest on client money held on your behalf.
When calculating interest due to you, we will apply a rate of interest determined by our Finance team, based on the interest rate received on our RBS instant access client account. These rates do fluctuate.
Where money is held in our general client account, we will only account to you for any interest where it is equitable to do so, taking into account amongst other factors the administrative cost of processing calculations and payments. Where it is likely that the amount of interest payable is less than the administrative cost of processing, no interest payment will be made. Details of the current threshold for receipt of interest payable, are also contained in our Interest Policy.
We will not account to you for interest on money held for the Legal Aid Agency.
Interest is paid without any deduction of tax and where relevant must be disclosed to HM Revenue & Customs on Self Assessment (individuals) or Corporation Tax (companies) returns.