Has anyone else spoken to the SRA about this and had some rather odd advice? I spoke to them initially to establish whether or not we were right to refuse to pay a client’s money into their bank account when we were put on notice that they were in breach of the terms of their bank account (they lived abroad and had not told their bank as they knew they would be de-banked due to the bank’s Ts and Cs). They confirmed unequivocally that we were right not to pay the finds into that account until they had notified the bank that they lived abroad, as we would be complicit in the beneficiary mis-leading the bank, which in turn breaches the Code of Conduct.
However, in the same breath they advised that they had no issues with us paying estate money or trust money into a client’s personal bank account when they were receiving the money as an executor or trustee, despite this being a clear breach of the bank’s Ts and Cs which required the account to be utilised for personal use only.
The SRA’s rationale for this was that “it’s hard to open up an executor / trustee account”, and the fact that we are effectively complicit in the beneficiary avoiding all of the extra AML compliance which the banks need to do when it comes to trusts and estates, the risks which we would be subjecting the funds to (the right of offset against the client’s own debts, mixing funds with their own money, reduced FSCS protection etc) and simply knowing that the client is in breach of their account terms apparently doesn’t matter.
We had an AML consultant in who completely disagreed with their view, and given the SRA’s knack for giving the wrong advice we are not minded to change our procedures which require funds to be paid to people in the capacity in which they are acting (i.e. trust money into trust accounts etc).
I’m just wondering what stance other firms are taking? Its going to become more of an issue as I understand that the FCA are working through banks bit by bit requiring them to review all of the bank accounts they hold and this is why banks are one by one deciding to cease providing trust accounts even where the account has been with them for years due to the increased compliance requirements.