How firms must classify, hold and move client money — the core machinery of the SRA Accounts Rules that keeps client funds separate from the firm's own.
Almost every breach of the Accounts Rules traces back to money being put in the wrong place or moved without authority. This chapter begins with the classification of receipts into client money and business money — including the awkward cases where the line is unclear — before turning to how client money must be paid into and held in a properly named client account, and how mixed payments are handled. It then works through the permitted grounds for withdrawing client money, the conditions for transferring funds to the business account for costs, and the duty to return money once there is no longer a proper reason to hold it. It closes with the corrective steps required when money is misapplied, the safeguards for inter-client transfers, and the stakeholder, record-keeping and reconciliation obligations that hold the whole system together.
