Home buyers and sellers could face higher conveyancing fees under government proposals to redirect some of the interest earned on money held in solicitors’ client accounts, the Conveyancing Association (CA) has warned.
The warning comes amid concerns that the Ministry of Justice (MoJ) may be moving towards implementing its proposed Interest on Lawyers’ Client Accounts (ILCA) scheme despite having yet to publish the outcome of a consultation that closed six months ago.
Under the proposals, a proportion of the interest generated by money held in legal client accounts would be redirected into a central fund to support access to justice, including legal aid and court services.
The CA argues that this interest is not simply additional profit for conveyancing firms, but helps cover the cost of operating secure client accounts, including banking, auditing, anti-money laundering controls, fraud prevention and systems designed to protect client funds.
IMPLEMENTATION CONCERNS
The association has renewed its opposition after reports that the MoJ advertised for a Head of Additional Funding Policy whose responsibilities would include supporting the “design, legislation and implementation” of a scheme raising money from interest on legal client accounts.
The CA says the recruitment raises questions about whether a decision has effectively been taken before the Government has formally responded to its consultation.
Beth Rudolf (main picture, inset), Director of Delivery at the Conveyancing Association, says: “What is particularly disappointing now is that the consultation closed six months ago and we are still waiting for the MoJ’s formal response, yet it appears to be recruiting someone to work on the design, legislation and implementation of the scheme.
“That inevitably raises questions about the process. If the Government has not yet reached a decision, then we would like to understand why it is recruiting for a role framed in these terms before it has responded to the very serious concerns raised during its own consultation.”
COST FOR HOME MOVERS
The CA’s central concern is that removing interest income would not remove the costs associated with operating client accounts.
It argues that conveyancing businesses would therefore have to absorb the additional expense or recover it elsewhere, potentially through higher fees charged to buyers and sellers.
Rudolf says: “Taking away that income does not take away the costs, and ultimately somebody will have to pay for them.
“For conveyancing firms that means either absorbing another significant cost, which many simply cannot do, or passing it on through higher fees to home buyers and sellers.”
HOMEBUYING REFORM
The association also argues that ILCA sits uneasily alongside government efforts to make buying and selling homes quicker and less costly.
Both the Law Society and Society of Licensed Conveyancers have also renewed their opposition to the proposals following reports of the MoJ recruitment.
Rudolf adds: “We fully support the need for a properly-funded justice system and access to justice, but that is a responsibility which should be met through fair and transparent public funding.
“It should not be achieved by imposing what amounts to a new charge on one part of the legal profession and, ultimately, its clients.”
The CA is calling on the MoJ to publish its consultation response before taking any further steps towards introducing ILCA.
