Following reports that the Ministry of Justice is actively recruiting officials to deliver its interest on lawyers’ client accounts (ILCA)scheme, the Society of Licensed Conveyancers (SLC) has stressed its “unequivocal opposition” to any implementation of the policy before the outcome of the consultation undertaken earlier this year is published.
The publication of recruitment materials referring to the development and delivery of a scheme to capture funding from interest generated on legal client accounts will be deeply concerning to conveyancers, lawyers and the clients whose money would ultimately be affected, the SLC warned.
“The SLC’s position remains clear”, the membership body said in a statement. “The proposal is fundamentally flawed, unfair in principle and should not proceed.”
The SLC said it is particularly concerned by indications that work may be progressing on implementation, despite the consultation having generated “widespread opposition” across the legal profession, with concerns from regulators and criticism from the banking sector.
“Meaningful consultation requires stakeholders to have confidence that their views will be genuinely considered before decisions are taken”, it said.
“The SLC fully supports the need for a properly funded justice system and improved access to justice. However, these important objectives should be achieved through transparent public funding decisions rather than through the creation of a sector-specific mechanism that effectively targets the clients of legal service providers.”
A scheme that appropriates client account interest would create an unwelcome and damaging precedent, the SLC warned, placing legal professionals in the position of facilitating the transfer of value derived from client funds to the state.
“The conveyancing profession already faces significant regulatory, operational and consumer service challenges”, the SLC pointed out.
“Introducing a complex and controversial client account interest regime risks creating additional administrative burdens, increased compliance costs and further uncertainty for firms and consumers at a time when government policy should be focused on supporting growth, housing transactions and access to legal services.”
Client monies are held by legal professionals in trust and are not an appropriate source of government revenue, the SLC stressed, and diverting the money to fund to public services risks undermining public confidence in the legal sector.
Simon Law, chairperson of the Society of Licensed Conveyancers, said: “The Society of Licensed Conveyancers remains firmly opposed to any proposal that seeks to divert interest generated on client monies to the state.
“Client funds are held for the benefit of clients, and the legal profession should not be used as a vehicle for raising government revenue.
“The apparent progression of this policy before the publication of the consultation outcome raises serious concerns. The profession, regulators and other stakeholders engaged with the consultation process in good faith and deserve transparency regarding the government’s intentions.
“We urge the Ministry of Justice to publish the consultation response without further delay and to abandon a proposal that is fundamentally unfair, operationally burdensome and contrary to the interests of consumers and legal service providers alike.”
The SLC said it will continue to work with representative bodies, regulators, policymakers and stakeholders across the legal sector to oppose the implementation of the ILCA scheme and to promote sustainable and equitable alternatives for funding access to justice.
