Legal Services Board approves CLC’s revised accounts code

A revised accounts code that expressly allows firms regulated by the Council for Licensed Conveyancers (CLC) to use third-party managed accounts (TPMAs), and deal more easily with aged balances up to £50, has been approved by the Legal Services Board (LSB).

The new code, which will come into force on 30 September 2020, will contain simpler, more targeted requirements to make the code easier to understand, improving compliance and consumer protection.

In its application to the LSB, the CLC wrote that “Less prescriptive rules can lead to lower costs and higher efficiency savings… [and] mean that practices will need to properly assess the needs of their clients and how they ensure compliance rather than relying on detailed rules which may become a tick-box exercise.”

It says “explicitly allowing the use of a TPMA will mean that CLC-regulated firms have more choice and flexibility in the operation of their business: Having the option to not use a client account could enable a practice to reallocate resources to focus on the quality and competitiveness of its services.”

CLC firms can only use TPMAs regulated by the Financial Conduct Authority, and firms must also be authorised by the CLC to enter arrangements with a client to use a TPMA.

Firms must ensure that the decision to use a TPMA, and the TPMA provider used, is “appropriate in the circumstances of each case”.

CLC practices will now have greater flexibility in the management of aged balances up to £50 if they are unable to identify the rightful recipient.

Simon Blandy, Director of Regulatory Standards at the CLC, says:

“This is a positive step towards removing unnecessary detail in favour of an emphasis on the most important aspects of the proper management of client money and ensuring protection of the client’s interests.

“We will use the period before implementation on 30 September to communicate details of the changes and work with our regulated community to ensure they are ready to comply.”

The new accounts code will come into force on the 30 September 2020 and all practices must be fully compliant from this date.

The LSB’s full decision can be found here. The revised Code and Guidance can be found here.

Kindly shared by The Council for Licensed Conveyancers (CLC)