MoJ client account interest consultation premise ‘fundamentally flawed’, says conveyancing membership body

The underlying premise to the Ministry of Justice’s (MoJ) consultation on using client account interest to fund access to justice is “fundamentally flawed”, says the Conveyancing Association; a membership body representing the top 200 solicitors and licensed conveyancers by volume in England and Wales. 

Proposals to introduce an Interest on Lawyers’ Client Accounts (ILCA) scheme through which client money held by law firms would be taken and paid into a central fund to support the justice system, including legal aid and court services, are currently being consulted on by the MoJ; the deadline for submissions has been extended by a further four weeks to 9th March 2026. 

Under the scheme, banks would continue to pay interest on client accounts, but law firms would be required to transfer a large share of that interest to the ILCA scheme on a regular basis. For pooled client accounts, the MoJ suggests between 75% and 100% of interest would be taken. For individual client accounts, around 50% of interest would be transferred to the scheme.

But in its response to the consultation, the CA says the proposals “will cause significant and unintended harm to conveyancing firms and consumers.” The premise laid out in the consultation – that law firms do not rely on bank interest – is flawed the CA says. The organisation points to research from NatWest which shows that for 50% of law firms interest profits represented at least 21% of total profits, and for 25% of firms it represented over 35%. For up to 10% of UK law firms, interest income represented over 50% of their profits.

The consultation response notes:

“Client account interest is not a surplus or windfall. For many conveyancing practices, this income contributes directly to meeting the substantial and rising costs of operating a law firm generally, and compliant client accounts in particular, including banking charges, specialist accounting systems, external audits, internal controls, and fraud prevention measures that exist primarily to protect consumers.”

While the CA does not object to a well-funded and effective justice system, its consultation response goes on to suggest the unintended consequences would be to increase the costs of conveyancing for home movers and place current business models, already operating on tight margins, at risk by creating risk that is “disproportionate to the likely net benefit”.

The proposals come at a time of ongoing change for conveyancing regulation. The CA warns any introduction of ILCA, on top of the FCA duplicated regulation of AML and requirements to register as tax advisers to submit SDLT returns, could lead to firms leaving the market and reducing capacity at a time when the number of active conveyancing firms continues to fall, but activity levels remain high.

Beth Rudolf, director of delivery at The Conveyancing Association, said:

“Client account interest is not a spare pot of money that can be simply taken away from firms without consequences. For conveyancing firms, it plays a real role in funding the systems, controls and checks that protect consumers and allow transactions to proceed safely. Removing it does not make those costs disappear, it simply shifts them elsewhere and adds in additional administration costs.

“In practice, that means higher fees for all those requiring conveyancing services and advice, and real pressure on the firms delivering conveyancing services. At a time when access to banking is already difficult and capacity in the market is stretched, these proposals risk making the situation worse.

“This whole consultation and proposal feels ill-thought and rushed through. The consultation paper was only sent by MoJ to nine entities and not to any practicing conveyancers. Any reform needs to be based on proper evidence and a clear understanding of how conveyancing actually works, otherwise the impact on consumers and the housing market will be significant and undoubtedly negative in the extreme. We would urge the MoJ to reconsider these set of proposals and to consult with us on how to move forward.”