Trust account certificate FAQs
Who must complete the certificates?
All lawyers running a trust account must submit monthly and quarterly certificates.
Firms not running a trust account must hold an exemption under s317 (1) of the LCA (see below about practising without a trust account).
I don't want to operate a trust account as my area of practice never needs one. What can I do?
You can certify to the Law Society in the form prescribed under Regulation 4, that you do not handle trust money or client assets, invest money for any client, have a trust bank account, or receive fees or disbursements in advance of an invoice being issued. You will be required to certify that you have not done any of those things during the preceding 12 months and do not intend to do any of them in the following 12 months. You will be required to renew this certificate each year.
When is the deadline for filing a certificate?
The certificate must normally be filed by the 10th working day of each month in respect of the preceding month. In January the deadline is the 15th working day, for filing December's certificate. These dates apply for both monthly and quarterly certificates.
What happens if my certificate is late?
You will be reminded shortly after the due date. However you (or your staff) should make a diary note every month if there is any risk of it being forgotten. Late certificates are recorded in the Law Society Registry database and notified to Inspectors. If you are aware in advance that it is going to be late, please email firstname.lastname@example.org with an explanation and an expected filing date.
How can I be sure my certificate will be safely received and recorded?
The Registry certificate system will acknowledge receipt of your certificate within minutes if you click ‘send an email to Trust Administrator when submitted’ before submitting it. You can also check it’s been submitted by clicking on the ‘Certificates’ tab on the left of your screen, which shows your certification history under the heading 'existing certificates'.
What should I do if I forget my password?
If you forget your password, click on ‘I’ve forgotten my password’, enter your six digit lawyer login, and a replacement password will be emailed to your registered email address.
How do I know that my trust account is in order before certifying?
We suggest you check the following before signing:
1. The trust ledger was correctly reconciled with the corresponding trust bank accounts for both the general trust account and interest bearing deposit accounts
- Obtain bank reconciliations and lists of client ledger balances for the trust account and interest bearing deposits.
- Agree opening cash book (control account) balance to previous month’s closing balance.
- Agree totals for receipts and payments, deposits and withdrawals in the reconciliation to the relevant transaction records.
- Agree closing cash book (control account) balance in the reconciliation to the relevant lists of client ledger balances.
- Agree the bank statement balance in the reconciliation to the relevant bank statement and bank schedule for interest bearing deposits.
- Agree a sample of interest bearing deposit balances from the bank’s schedule to your list of ledger balances.
- Ascertain the first and last serial numbers for receipts, payments, deposits and withdrawals for the month and obtain explanations for any gaps in the serial number sequence.
- Obtain a list of unpresented cheques. For each cheque this should show details of the date drawn, cheque number, payee and monetary value.
- Scrutinise the list of unpresented cheques for old/stale cheques and follow these up.
- Scrutinise the list of unpresented cheques for serial numbers after the last one for the period. If such cheques are included the list is probably incorrect.
- Verify details of a sample of unpresented cheques from the list to cheque butt or equivalent.
- Obtain details of any lodgements in transit (unbanked receipts). These should consist only of monies receipted the previous day too late to be banked until the following working day. Follow up any that are not banked for more than one working day.
- Check lodgements in transit (unbanked receipts) details to the bank deposit book and receipt records.
- Obtain documentary support for any other adjusting items in the reconciliation.
- Watch for adjusting items carried forward on successive reconciliations, eg lodgements in transit; such items may indicate problems with accuracy of receipting or missing money.
- Obtain explanations for any unusual adjusting items, eg negative unpresented cheques or unrecorded payments; such items may indicate problems including missing money.
- All adjusting items in the reconciliation should be described, so obtain explanations for any that are not explained and verify them to source.
- Check the arithmetic of the reconciliation.
- Consider the overall logic of the reconciliation, eg if starting from bank statement (which is not overdrawn, ie a credit balance), add lodgements in transit and subtract un-presented cheques to reconcile with cash book (control account) balance. If starting from cash book balance (which is not overdrawn), add un-presented cheques and subtract lodgements in transit.
2. The trust account records were a complete and accurate record of transactions during the month and of each client's position
- Posting of trust ledger up to date?
- No unknown entries in month?
- Trust ledger in balance?
- Have any errors been identified in the month?
- If so, why did they happen and how have they been corrected?
- Have invoices actually been issued in respect of all amounts debited as fees?
3. The trust account transactions during the month have been in accordance with client instructions and where completed, properly accounted for to clients
- Have all journal entries been signed as authorised?
- Have any payments been processed that you think might not be authorised?
- Have statements been sent to clients where appropriate? (Regulation 12(7))
4. During the month the practice has complied with all the trust accounting provisions of the Lawyers and Conveyancers Act 2006 and the LCA (Trust Account) Regulations 2008
- Are you aware of any breaches of the Regulations during the month? If so, have they since been remedied, and have you checked the possibility of other like breaches?
- Scrutinise the firm’s float (advance) account for overdraws and unusual items.
5. During the month the practice has complied with the LCA (Lawyers: Nominee Company) Rules 2008, where applicable
- This applies to all nominee company and contributory advances, but not ‘single lender’ advances.
- Are mortgage records up to date and balanced?
- Have specific authorities been obtained for all new advances?
- Have proper valuations been obtained for all new advances?
- Have securities been registered for all new advances?
- Have investors been notified of any defaults? (Rule 13.1)
The firm float (advance account) in the trust account was overdrawn for one day due to a staff error. How should I report this?
You should report this in the form of a ‘No’ answer under item 4 on the monthly certificate, with a brief explanation – no separate letter is necessary.
The bank failed to credit the funds for settlement on a transaction as had been arranged. As a result the trust account was overdrawn for a few days. Must I report this?
If the overdraw was due to a bank error and has since been remedied, the trust account itself can be regarded as still being in order and you should enter a ‘Yes’ under item 4. However it may still be appropriate to seek a written explanation from the bank and keep it on your file.
Why must I submit a quarterly certificate if I don’t do any lending?
As per regulation 17(2)(a) you need to advise, either in the positive or negative, whether the collection of interest on any loans or other debt securities was undertaken on behalf of lenders by the practice during the relevant quarter. If it was not, you just need to answer ‘no’ to question 6.
I haven’t got a nominee company. Might I still need to answer ‘Yes’ to question 6 on the quarterly certificate?
Yes, if you do other kinds of lending. The Regulations specify that you must report on ‘the collection of interest on any loans or other debt securities…on behalf of lenders by the practice’; this might mean private or single lender mortgages, or contributory mortgages.
I am the TAS and going on leave - who can sign for me?
Regulation 16(4)(c) permits another partner to verify the correctness of the certificate and sign. If you are a sole practitioner, your attorney (appointed pursuant to s 44 and Schedule 1 of the LCA) can sign on your behalf, however s/he will not have your electronic password, so they should use a paper certificate available by emailing the address below.
The TAS role is changing within the firm – what should I do next?
Notify the Law Society via email@example.com. The Registry department need to ensure that the new person taking on the role is properly qualified and that the dates of the changeover are clearly recorded. Only one partner in a firm is the designated TAS at one time. If there is ambiguity about who filled the role and when, the validity of the TAS qualification can be affected. See the next question:
How long is my TAS qualification valid for?
Trust Account Regulation 19 provides that a TAS qualification is valid for three years after being successfully completed, during which time you must take up the role to maintain the validity beyond that time. Completing the qualification does not in itself mean that you are now the designated TAS for the firm; you must still make the Law Society aware that you have chosen to take up the role and undertake the role continuously for a period not less than 12 months.
If, having taken up the role of TAS, you later decide to step down, the life of the qualification is extended to ten years because of your experience. The difference between the three and ten years’ life of the qualification is the reason for the importance of advising the Law Society when the role changes.
What should I do if my TAS unexpectedly leaves my practice and I don't have a suitable short term replacement?
Apply to the Law Society via firstname.lastname@example.org for an exemption under reg 20 of the Trust Account Regulations.
If you have any queries about monthly and quarterly certification, please email email@example.com.
Last updated on the 23rd November 2016