Client Account Interest Rates
Nalders Interest Policy
Payments in lieu of interest on client funds
Nalders LLP (the firm) have a policy of paying an amount in lieu of interest (“interest”) to clients where the firm holds money in a general client account on their behalf in the course of providing legal services.
Rate and calculation of interest paid
As part of carrying out your instructions to us, we may need to hold your money in our client account. In holding client money, we have an obligation to pay interest on that money at a fair and reasonable rate and are required to put in place an interest policy; this policy sets out guidelines for when interest will be paid and is summarised below.
We aim to account to you for interest at a reasonable rate of interest, but as the holding of your funds is incidental to the carrying out of your legal instructions, the rate is unlikely to be as high as the rate you may be able to obtain when depositing the money, we hold on your behalf yourself. In most cases, we must ensure that money is held on client account is immediately available, and therefore may require an instant access or a notice account that allows us to make an immediate withdrawal at the sacrifice of interest. All of this is taken into consideration when we set our interest rate.
We align our interest rates paid on both monies held on general client account and on separate designated deposit account. This rate is likely to change from time to time. The amount of interest will be up to 1% depending on the amount and duration held.
Where amounts are held outside of a general client account or separate designated deposit account, the rate of interest and date the interest is credited will depend on the relevant institution where the funds are held, and as such fall outside the requirements of this policy.
Where your money is held on our general client account, or in a separate designated deposit account, any interest paid to you is paid without any deduction for income tax. As such it is your responsibility to inform HMRC of amounts of interest received from us, and the implications of this will depend upon your own financial circumstances. The same rate of interest will be paid on money held in general client account as will be paid on money held in a separate designated deposit account (assuming that this will offer a fair and reasonable outcome for the client and the firm).
Interest will be calculated from the time the funds become cleared for interest purposes. On cheques or banker’s drafts this will be 3 working days after the cheque or draft has been deposited with our bank. For amounts received by debit or credit card, interest will start to accrue from the date of the actual receipt, usually 3 days after the transaction has been authorised. For direct transfer or same day payments the funds become clear on the day of receipt. Interest will be calculated on a daily basis and calculated on amounts held overnight from the day the funds become cleared for interest purposes.
Where we pay monies to clients by cheque, some clients will delay in paying the cheque into their bank. We will pay additional interest only where it is reasonable in all the circumstances to do so.
Interest will not be paid if the total amount calculated for the period that cleared for are held is less than £100 on the basis that it is a de-minimis amount. The firm takes the view that any amount below £100 is reasonably retained by the firm to cover the administrative cost dealing with client funds. We reserve the right to charge negative interest if the bank of England base rate were to fall below 0.01%. We would absorb any loss less than £100, however any charge above this would be re-charged onto you.
We will normally calculate and pay interest once your matter has concluded, however there maybe instances where it may be appropriate to account for interest at intervals throughout the matter. If interest is credited throughout the conduct of the matter rather than on conclusion of the matter, any remaining interest payable which amounts to less the £3.00 will not be credited.
Unless otherwise agreed, where we are conducting more than one matter for you, balances will not be aggregated for calculation purposes.
We will retain interest paid to us by the bank on the aggregate of all client money held in the general client account.
This policy will be reviewed from time to time to ensure that it continues to deliver a fair outcome to clients.
Alternative arrangements
Contracting out usually takes the form of agreeing that we will pay no interest or a reduced amount of interest. It can also include agreeing to pay 100% of the interest received on monies held on general client account, where this exceeds the amount that would normally be paid under this policy.
We may, by written agreement with the client and/or recipient, contract out of the terms of this interest policy. We will only contract out where doing so provides a fair outcome. This will depend on all the circumstances
Where a client organises such special arrangements the firm reserves a right to charge, at usual fee earner rates, for any reasonable additional time costs or third party costs that it incurs in implementing a client’s request in respect of their funds.