27 October 2022

Solicitors setting up trust accounts: How to overcome common challenges

Written by Lisa Simpson, Trustee Accounts Specialist

Here at trustee bank accounts we work with a great number of solicitors who are often faced with the same handful of challenges. Therefore, we have decided to put together this blog sharing the advice our clients seek when they come to us. Hopefully, you will find it useful. Happy reading…

Let’s start with the difficulties you face as a solicitor:

1. You frequently talk to frontline banking staff who have a lack of knowledge on the subject. This is time consuming, and you’re never 100% confident they can tell you what you need to know

2. Where investments are held in trust and dividend income or sale proceeds from this investment are being paid out, the money has to go into an account in the name of the trust, not an individual trustee

3. You have to deal with individual trustees trying to circumvent the difficulty by opening up a bank account in individual names, potentially putting the trust money at risk with personal wealth

4. You can end up having to manage trust cash to ensure that there is no more than £85k with any one financial institution/bank to ensure all the money is covered by the Financial Services Compensation Scheme (FSCS)

5. You are required to keep up to date (and in line with) compliance with regards to the Solicitor Regulatory Authority (SRA) rules on Client Money and Client Accounts. For example, under the SRA rules, solicitors are not allowed to use their client accounts as ‘bank accounts’ and should not hold client funds unless there is an underlying transaction. Unless the solicitors are themselves trustees, they should not be using client account and even then, only for the short term.

 

Now, I’m going to break down the steps you can take to help you set up a trustee bank account:

Step 1 - You can make telephone calls to numerous banks to see what their trust account offerings are, as well as consider the FSCS limit - spreading the trust funds across several providers up to the current limit of £85,000 in each account.

Step 2 – To discuss what the trust funds are to be used for and therefore should the trustees be seeking investment advice? If so, refer the trustees to a suitably qualified Independent Financial Adviser.

Step 3 – When considering trust account providers remember that accounts held in banks or building societies that operate under a shared FCA licence will only be covered once by the FSCS scheme.

Step 4 - Always consider the best interest rates on offer when discussing options with trustees

Step 5 - Find out the full list of documents that the bank will require in order to open the account and collate all of these documents

Step 6 - Upon approval of the trustee account/accounts from the trustees, complete all of the paperwork and obtain all signatures on the application form/forms

Need some help?

I welcome any solicitors who want to have a chat about these steps above to call me directly and seek some free advice. If you want to book a 20-minute chat with me I’d happily go through the process with you and point you in the right direction.

Simply email me directly at This email address is being protected from spambots. You need JavaScript enabled to view it. or call me on 0800 6342 111.

Here at Trustee Accounts, a lot of solicitors outsource this work to us and we can complete the whole process for you from start to finish with our 4 step journey, so if that’s something you’d be interested in exploring we can discuss that at the same time. You can read some of our customers reviews here.