Interest Policy

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Fees

Interest Policy

FOR MONEY HELD ON CLIENT ACCOUNT (August 2023)

This document sets out our policy for paying interest where we hold money in client account for a:

Breakdown of Costs:

Disbursements

Disbursements are costs related to your matter that are payable to third parties, such as court fees. We handle the payment of the disbursements on your behalf to ensure a smoother process.

client

person funding all or part of our fees

trust

person to whom a stake is to be paid (when we hold money as stakeholder) collectively called ‘the recipient(s)’.

We are required by the SRA Accounts Rules 2011 to:

have a written policy on the payment of interest that seeks to provide a fair outcome

pay interest when it is fair and reasonable to do so in all the circumstances

pay a fair and reasonable sum calculated over the whole period for which any money is held

Responsibility for payment of interest

The partners of Borlase & Co are responsible for agreeing the interest rates stated in this policy.

The Compliance Officer for Finance and Administration (“COFA”) is responsible for:

devising and implementing this interest policy, in consultation with the partners.

providing assistance to individuals and/or teams who have responsibility for calculating or paying interest

reviewing periodically the interest rates we receive and pay

monitoring compliance with this policy

reporting to the other partners on the firm’s interest arrangements

When do we pay interest?

We do not pay interest:

on money held to pay a professional disbursement, once the intended recipient has requested that we delay in paying them

on money held for the Legal Services Commission

on money that we have paid into a 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

if we have agreed with the recipient to contract out of our obligation to pay interest

on monies that we are instructed to hold outside a client account in a manner that does not attract interest, eg cash held in our safe

the amount of interest, calculated in accordance with this policy, is less than £50 for each beneficiary payee.

We will pay interest on all other monies held on client account, including any monies we should have held on client account but failed to do so.

Interest will be calculated and paid in accordance with this policy. The amount of interest paid to each recipient will take into account:

the amount held

how long we held cleared funds

the requirement to provide instant access to funds held in client account

the rate of interest payable on the amount held in an instant access account at the bank or building society where we have our client account

the practice of the bank/building society where we have our client account on how often interest is compounded

Types of client account

Client account monies can be held in two different ways:

in a separate designated client account (SDCA)—in some cases we open a separate bank or building society account for a specific client or trust, etc

in our general client account—this is where we hold monies for clients or trusts that are not held in an SDCA

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.

Interest on monies held in separate designated client account

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 separate designated client account with Barclays Bank Plc.

Amount of money held for client/third party

Period money expected to be held

£50,000

16 weeks

£100,000

8 weeks

£300,000

4 weeks

£600,000

2 weeks

£1,000,000

1 week

This is not a rigid rule and we will give our clients the opportunity to request that we make different arrangements.

We will also use a SDCA:

Unless we are instructed to the contrary, we will pay 100% of the interest received on monies deposited in an SDCA to 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, (subject to a maximum number of five beneficiary/payees).

Interest will be paid net of tax unless the recipient has signed a declaration that they are entitled to receive gross interest.

Interest on monies held in our general client account

Any money not held in a SDCA will be held in our general client account.

We will pay interest (payment in lieu of interest earned) at 1%.

The interest rate is likely to change from time to time.

Interest will be paid before deduction of tax. It will be the recipient’s responsibility to declare interest received to HMRC.

Best available rate

We are required by the Solicitors Regulation Authority (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.

Interest period

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.

Unless we are notified by our bank to the contrary, we will treat monies as cleared funds in accordance with the table shown below:

Method of payment

When are monies treated as cleared funds

cheque

4 working days after the money has been paid into our client account

debit or credit card

date of actual receipt into the account

direct transfer

the following working day

We will apply the same time periods when calculating the date that monies are received by the recipient.

Monies held on more than one matter

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.

Payment dates

Interest will be paid at the conclusion of the retainer or on an annual basis if monies are held for longer than 12 months.

Special cases

This policy does not apply when we act as liquidator, trustee in bankruptcy, Court of Protection deputy or the trustee of occupational pension scheme. We will comply with the appropriate statutory rules and any other relevant provisions of the SRA Accounts Rules 2011 regarding payment of interest.

If we hold money jointly with a client, the interest earned will belong to the client, unless we agree otherwise.

If we hold money jointly with another firm, we will agree with the other firm how interest will be allocated.

Unpresented cheques

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.

Where we do recalculate interest and/or issue a further cheque, we reserve the right to charge for the additional work involved.

Informing clients of our interest policy

We will notify clients of our interest policy in our terms of business.

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 and/or Legal Ombudsman.

Contracting out

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.

We may, by written agreement with the client and/or recipient, contract out of the terms of this interest policy.

We will only contract out where doing so provides a fair outcome. This will depend on all the circumstances, eg:

the amounts involved—the larger the sum of interest, the greater the onus on us to show that the client has been treated fairly

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

whether there are specific reasons for contracting out, eg tax reasons or religious belief

When agreeing to contract out, we will:

act fairly towards our client

provide sufficient information to enable the client to give informed consent

Failure to comply with this policy

We are required to notify the SRA if we breach the SRA Accounts Rules 2011, including the rules relating to payment of interest. If you suspect that we have breached this policy, please report your concerns to our COFA or COLP using the process described in our separate Compliance failure policy.

Training

All staff will receive training, as necessary, on our interest policy including:

regular training for existing staff

training for new staff at induction

updates following any changes to the policy that affect staff

focused training for individual staff or teams responsible for specific interest actions

Monitoring and review

The COFA is responsible for this policy.

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.

The COFA will monitor compliance with this policy by peer reviews on file and a regular review of interest calculations.

We will review this policy regularly – at least annually. We will provide information and/or training on any changes we make.

Last Review: August 2023

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Residential Property

Department Contacts

Peter Fitzmaurice

Solicitor & Partner

Kirsty Sjoholm

Solicitor & Partner

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