This week, I was going to write about moving house and the weather. As I always say to my clients, the only thing completely out of my control on the day of completion (and the control of everyone else involved in the move) is the weather.
Other things that can happen on completion days tend to revolve around money not being sent early enough, items being left in the property, late handover of keys – we can work around all those things to make completion happen. But the weather is an unknown force and even if we can move money around and complete all of the relevant paperwork, removal companies may not be able to get to the property due to snow.
But even though that was what I was planning to write about, I was thrown a curve ball earlier this week which has sent me in another direction: interest on client account.
Now I know that many of you reading this will not know how much money your firm earns in interest on the client account each year, so you may not see this as of any importance to you. However, think about the things that we conveyancers do and don’t directly charge for – payment of SDLT is one of them.
We may charge for preparing and lodging the SDLT return but we do not charge for the payment of monies due (although some may say that is included in the lodging fee). But there are many things we do that we do not charge for. And perhaps it is client account interest which covers those charges.
The interest on client account comes from the monies we hold temporarily for clients and it is tightly regulated. Any interest that is generated reflects the scale and responsibility of the funds being safeguarded and is not used to make a profit. If we lose the interest, many firms will need to consider how their charges and costs are calculated and this in turn can affect access to legal services – and you know how much I go on about putting up fees.
We will find ourselves in the position where the fees will need to increase substantially. This will affect all firms. It could potentially lead to the number of firms available to carry out conveyancing work reducing even further, at a time when older conveyancers are leaving the profession. There will not be enough conveyancers to go around.
Our profession is under scrutiny for being slow. Those making these policies should be wary of reforms which will increase fees and potentially reduce choice for the public.
And for me, the irony of this is that we hold vast sums of money, we have enormous responsibility and we operate on very thin margins. Do we sit on untapped riches? For many, the interest on client account may only cover the charges for keeping the client account open.
The consultation period is short but please respond. This could have a devastating effect on the high street.
This column is written by a real high street conveyancer who wishes to remain anonymous. Read more in Today’s Conveyancer every week.
3 responses
If the interest ‘only just covers the costs of the account’. Then why would fees have to go up substantially?
Same logic for ‘not used to make a profit’.
If the funds don’t benefit beyond merely covering the costs of running the bank account they’re held in.
The increase in fees to the client won’t be bad at all.
Unless that’s not the case, and those funds earn considerable sums of money.
The writer’s fees would probably need to increase substantially because of the substantial cost of maintaining a client account in terms of staffing and bank charges, not to mention the additional administrative burden involved in accounting to the MoJ for the interest they want.
Would you care to set out here, for public consumption exactly what those fees are?
So we can make judgement against published interest rates and reasonable assumption of average account balances.