LEGAL NOTICES
Peters May LLP Interest Policy
1.
INTRODUCTION
1.1.
This document sets out our policy for paying interest where we hold money in our client account for a:
1.1.1.
Client
1.1.2.
Person funding all or part of our fees
1.1.3.
Trust
1.1.4.
Person to whom a stake is to be paid (where we hold money as stakeholder)
(together, Recipients)
1.2.
We are required by the Solicitors Regulation Authority (SRA) Accounts Rules 2011 to:
1.2.1.
Have a written policy on the payment of interest that seeks to provide a fair outcome
1.2.2.
Pay interest when it is fair and reasonable to do so in all the circumstances
1.2.3.
Pay a fair and reasonable sum calculated over the whole period for which any money is held.
2.
RESPONSIBILITY FOR PAYMENT OF INTEREST
2.1.
The partners are responsible for agreeing the interest rates set out in this policy.
2.2.
Jessica May, the Compliance Officer for Finance and Administration is responsible for:
2.2.1.
Devising and implementing this interest policy, in connection with the partners
2.2.2.
Helping individuals who have responsibility for calculating interest
2.2.3.
Reviewing periodically the interest rates we receive and pay
2.2.4.
Monitoring compliance with this policy
2.2.5.
Reporting on a quarterly basis to the partners on the firm’s interest arrangements
3.
WHEN DO WE PAY INTEREST?
3.1.
We do not pay interest:
3.1.1.
On money held to pay a professional disbursement, once the intended recipient has requested that we delay paying them
3.1.2.
On money held for the Legal Aid Agency
3.1.3.
On money that we have paid into our client account as an advance from the firm to fund a payment on behalf of a client or trust in excess of funds held for that client or trust
3.1.4.
If we have agreed with the recipient to contract out of our obligation to pay interest
3.1.5.
On monies that we are instructed to hold outside our client account in a manner that does not attract interest, eg cash held in our safe
3.1.6.
The amount of interest, calculated in accordance with this policy, is less than £50
3.2.
We will pay interest on all other monies held in our client account, including any monies we should have held on client account but have failed to do so.
3.3.
Interest will be calculated and paid in accordance with this policy. The amount of interest paid to each recipient will take into account:
3.3.1.
The amount held
3.3.2.
How long we held cleared funds
3.3.3.
The requirement to provide instant access to funds held in our client account
3.3.4.
The rate of interest payable on the amount held in an instant access account at the bank where we have our client account
3.3.5.
The practice of the bank where we have our client account on how often interest is compounded.
4.
TYPES OF CLIENT ACCOUNT
4.1.
Client account monies can be held in two different ways:
4.1.1.
In a separate designated client account (SDCA)
4.1.2.
In our general client account
4.2.
How we calculate interest under this policy depends on which type of account is used. It is therefore important that we use the correct type of account.
5.
INTEREST ON MONIES HELD IN A SEPARATE DESIGNATED CLIENT ACCOUNT
5.1.
As a general rule, where we reasonably expect to hold monies on behalf of a client or third party for at least the period stated below, we will pay it into a SDCA with HSBC.
INTRODUCTION
1.1.
This document sets out our policy for paying interest where we hold money in our client account for a:
1.1.1.
Client
1.1.2.
Person funding all or part of our fees
1.1.3.
Trust
1.1.4.
Person to whom a stake is to be paid (where we hold money as stakeholder)
(together, Recipients)
1.2.
We are required by the Solicitors Regulation Authority (SRA) Accounts Rules 2011 to:
1.2.1.
Have a written policy on the payment of interest that seeks to provide a fair outcome
1.2.2.
Pay interest when it is fair and reasonable to do so in all the circumstances
1.2.3.
Pay a fair and reasonable sum calculated over the whole period for which any money is held.
2.
RESPONSIBILITY FOR PAYMENT OF INTEREST
2.1.
The partners are responsible for agreeing the interest rates set out in this policy.
2.2.
Jessica May, the Compliance Officer for Finance and Administration is responsible for:
2.2.1.
Devising and implementing this interest policy, in connection with the partners
2.2.2.
Helping individuals who have responsibility for calculating interest
2.2.3.
Reviewing periodically the interest rates we receive and pay
2.2.4.
Monitoring compliance with this policy
2.2.5.
Reporting on a quarterly basis to the partners on the firm’s interest arrangements
3.
WHEN DO WE PAY INTEREST?
3.1.
We do not pay interest:
3.1.1.
On money held to pay a professional disbursement, once the intended recipient has requested that we delay paying them
3.1.2.
On money held for the Legal Aid Agency
3.1.3.
On money that we have paid into our client account as an advance from the firm to fund a payment on behalf of a client or trust in excess of funds held for that client or trust
3.1.4.
If we have agreed with the recipient to contract out of our obligation to pay interest
3.1.5.
On monies that we are instructed to hold outside our client account in a manner that does not attract interest, eg cash held in our safe
3.1.6.
The amount of interest, calculated in accordance with this policy, is less than £50
3.2.
We will pay interest on all other monies held in our client account, including any monies we should have held on client account but have failed to do so.
3.3.
Interest will be calculated and paid in accordance with this policy. The amount of interest paid to each recipient will take into account:
3.3.1.
The amount held
3.3.2.
How long we held cleared funds
3.3.3.
The requirement to provide instant access to funds held in our client account
3.3.4.
The rate of interest payable on the amount held in an instant access account at the bank where we have our client account
3.3.5.
The practice of the bank where we have our client account on how often interest is compounded.
4.
TYPES OF CLIENT ACCOUNT
4.1.
Client account monies can be held in two different ways:
4.1.1.
In a separate designated client account (SDCA)
4.1.2.
In our general client account
4.2.
How we calculate interest under this policy depends on which type of account is used. It is therefore important that we use the correct type of account.
5.
INTEREST ON MONIES HELD IN A SEPARATE DESIGNATED CLIENT ACCOUNT
5.1.
As a general rule, where we reasonably expect to hold monies on behalf of a client or third party for at least the period stated below, we will pay it into a SDCA with HSBC.
Amount of money held for client / third party
Period money expected to be held
£50,000
£100,000
£300,000
£600,000
£1,000,000
£50,000
£100,000
£300,000
£600,000
£1,000,000
16 weeks
8 weeks
4 weeks
2 weeks
1 week
16 weeks
8 weeks
4 weeks
2 weeks
1 week
5.2.
This is not a rigid rule and we will give our clients the opportunity to request that we make different arrangements. This will be explained in our client care letter.
5.3.
We will also use a SDCA:
5.3.1.
For money that we hold as or on behalf of trustees under a trust.
5.4.
Unless we are instructed to the contrary, we will pay 100% of the interest received on monies deposited in an SDCA to the recipient to whom we ultimately pay the monies on deposit. Where the monies on deposit are divided between more than one recipient, we will divide the interest in the same proportions.
5.5.
Interest will be paid gross for tax purposes.
6.
INTEREST HELD ON MONIES IN OUR GENERAL CLIENT ACCOUNT
6.1. Any money not held in an SDCA will be held in our general client account.
6.2. We will pay interest at a rate equivalent to that available to our firm.
6.3. The interest rate is likely to change from time to time and the current rates will be updated in this interest policy and posted on our website.
6.4. Interest will be paid before deduction of tax. It will be the recipient’s responsibility to declare interest received to HMRC.
7.
BEST AVAILABLE RATE
7.1.
We are required by the SRA to deposit monies in instant access accounts only. This means that the interest rate paid on monies in an SDCA or our general client account may not be as high as the recipient can achieve by placing the money on deposit themselves. We will ensure that the recipient is aware of this and, where appropriate, has the opportunity to make alternative arrangements.
8.
INTEREST PERIOD
8.1.
Interest will be calculated over the whole period that we hold the monies, starting from the date the monies are treated by us as cleared funds.
8.2.
Unless we are notified by our bank to the contrary, we will treat monies as cleared funds in accordance with the table below:
This is not a rigid rule and we will give our clients the opportunity to request that we make different arrangements. This will be explained in our client care letter.
5.3.
We will also use a SDCA:
5.3.1.
For money that we hold as or on behalf of trustees under a trust.
5.4.
Unless we are instructed to the contrary, we will pay 100% of the interest received on monies deposited in an SDCA to the recipient to whom we ultimately pay the monies on deposit. Where the monies on deposit are divided between more than one recipient, we will divide the interest in the same proportions.
5.5.
Interest will be paid gross for tax purposes.
6.
INTEREST HELD ON MONIES IN OUR GENERAL CLIENT ACCOUNT
6.1. Any money not held in an SDCA will be held in our general client account.
6.2. We will pay interest at a rate equivalent to that available to our firm.
6.3. The interest rate is likely to change from time to time and the current rates will be updated in this interest policy and posted on our website.
6.4. Interest will be paid before deduction of tax. It will be the recipient’s responsibility to declare interest received to HMRC.
7.
BEST AVAILABLE RATE
7.1.
We are required by the SRA to deposit monies in instant access accounts only. This means that the interest rate paid on monies in an SDCA or our general client account may not be as high as the recipient can achieve by placing the money on deposit themselves. We will ensure that the recipient is aware of this and, where appropriate, has the opportunity to make alternative arrangements.
8.
INTEREST PERIOD
8.1.
Interest will be calculated over the whole period that we hold the monies, starting from the date the monies are treated by us as cleared funds.
8.2.
Unless we are notified by our bank to the contrary, we will treat monies as cleared funds in accordance with the table below:
Method of payment
When are monies treated as cleared funds
Cheque
Cheque
5 working days after the money has been paid into our client account.
Debit or credit card
Debit or credit card
Date of actual receipt into the account.
Direct transfer
Direct transfer
The following working day
8.3.
We will apply the same time periods when calculating the date that monies are received by the recipient.
9.
MONIES HELD ON MORE THAN ONE MATTER
9.1.
Where we hold monies on more than one matter for a recipient, interest will be calculated separately for each individual instruction – unless it is fair and reasonable to aggregate the interest.
10.
PAYMENT DATES
10.1.
Interest will be paid at the conclusion of the retainer, or on a quarterly basis if monies are held for longer than three months.
11.
SPECIAL CASES
11.1.
If we hold money jointly with a client, the interest earned will belong to the client, unless we agree otherwise.
11.2.
If we hold money jointly with another firm, we will agree with the other firm how interest will be allocated.
12.
UNPRESENTED CHEQUES
12.1.
Where we pay monies to clients by cheque, some clients will delay in paying the cheque into their bank. We will pay additional interest only where it is reasonable in all the circumstances to do so.
12.2.
Where we do recalculate interest and/or issue a further cheque, we reserve the right to charge for the additional work involved.
13.
INFORMING CLIENTS OF OUR INTEREST POLICY
13.1.
We will notify clients of our interest policy in our terms of business.
13.2.
Failure to explain our policy on payment of interest could give the recipient unrealistic expectations about the amount of interest they will receive. Ultimately, this could lead to complaints to the firm or the Legal Ombudsman.
14.
CONTRACTING OUT
14.1.
Contracting out usually takes the form of agreeing that we will pay no interest or a reduced amount of interest. It can also include agreeing to pay 100% of the interest received on monies held on general client account, where this exceeds the amount that would normally be paid under this policy.
14.2.
We may, by written agreement with the client and/or recipient, contract out of the terms of this interest policy.
14.3.
We will only contract out where doing so provides a fair outcome. This will depend on all the circumstances, eg:
14.3.1.
The amounts involved – the larger the sum of interest, the greater the onus on us to show that the client has been treated fairly.
14.3.2.
The status and bargaining position of the client – it may be less appropriate to contract out if the client is a private individual with little legal exposure than for a commercial client where the interest represents a very modest proportion of the overall transaction.
14.3.3.
Whether there are specific reasons for contracting out, eg tax reasons or religious belief.
14.4.
When agreeing to contract out we will:
14.4.1.
Act fairly towards our client;
14.4.2.
Provide sufficient information to enable the client to give informed consent.
15.
FAILURE TO COMPLY WITH THIS POLICY
15.1.
We are required to notify the SRA if we breach the SRA Accounts Rules 2011, including the rules relating to the payment of interest. If you suspect that we have breached this policy, please report your concerns to Jessica May, our COFA by emailing jessica.may@petersmay.com.
16.
TRAINING
16.1.
All staff will receive training, as necessary, on our interest policy.
17.
MONITORING AND REVIEW
17.1.
Jessica May, the COFA, is responsible for this policy.
17.2.
All staff must be aware of and adhere to it. You may be liable to disciplinary action if you fail to comply with the provisions of this policy or related policies and procedures.
17.3.
Jessica May will monitor compliance with this policy.
17.4.
This policy will be reviewed annually.
We will apply the same time periods when calculating the date that monies are received by the recipient.
9.
MONIES HELD ON MORE THAN ONE MATTER
9.1.
Where we hold monies on more than one matter for a recipient, interest will be calculated separately for each individual instruction – unless it is fair and reasonable to aggregate the interest.
10.
PAYMENT DATES
10.1.
Interest will be paid at the conclusion of the retainer, or on a quarterly basis if monies are held for longer than three months.
11.
SPECIAL CASES
11.1.
If we hold money jointly with a client, the interest earned will belong to the client, unless we agree otherwise.
11.2.
If we hold money jointly with another firm, we will agree with the other firm how interest will be allocated.
12.
UNPRESENTED CHEQUES
12.1.
Where we pay monies to clients by cheque, some clients will delay in paying the cheque into their bank. We will pay additional interest only where it is reasonable in all the circumstances to do so.
12.2.
Where we do recalculate interest and/or issue a further cheque, we reserve the right to charge for the additional work involved.
13.
INFORMING CLIENTS OF OUR INTEREST POLICY
13.1.
We will notify clients of our interest policy in our terms of business.
13.2.
Failure to explain our policy on payment of interest could give the recipient unrealistic expectations about the amount of interest they will receive. Ultimately, this could lead to complaints to the firm or the Legal Ombudsman.
14.
CONTRACTING OUT
14.1.
Contracting out usually takes the form of agreeing that we will pay no interest or a reduced amount of interest. It can also include agreeing to pay 100% of the interest received on monies held on general client account, where this exceeds the amount that would normally be paid under this policy.
14.2.
We may, by written agreement with the client and/or recipient, contract out of the terms of this interest policy.
14.3.
We will only contract out where doing so provides a fair outcome. This will depend on all the circumstances, eg:
14.3.1.
The amounts involved – the larger the sum of interest, the greater the onus on us to show that the client has been treated fairly.
14.3.2.
The status and bargaining position of the client – it may be less appropriate to contract out if the client is a private individual with little legal exposure than for a commercial client where the interest represents a very modest proportion of the overall transaction.
14.3.3.
Whether there are specific reasons for contracting out, eg tax reasons or religious belief.
14.4.
When agreeing to contract out we will:
14.4.1.
Act fairly towards our client;
14.4.2.
Provide sufficient information to enable the client to give informed consent.
15.
FAILURE TO COMPLY WITH THIS POLICY
15.1.
We are required to notify the SRA if we breach the SRA Accounts Rules 2011, including the rules relating to the payment of interest. If you suspect that we have breached this policy, please report your concerns to Jessica May, our COFA by emailing jessica.may@petersmay.com.
16.
TRAINING
16.1.
All staff will receive training, as necessary, on our interest policy.
17.
MONITORING AND REVIEW
17.1.
Jessica May, the COFA, is responsible for this policy.
17.2.
All staff must be aware of and adhere to it. You may be liable to disciplinary action if you fail to comply with the provisions of this policy or related policies and procedures.
17.3.
Jessica May will monitor compliance with this policy.
17.4.
This policy will be reviewed annually.
