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
The rate of interest the firm pays on such funds fluctuates depending upon the rate of interest that the firm can secure from its principal bankers from time to time.
There are two types of client account:
1). Designated deposit account – This account is set up specifically for an individual client. These are sometimes set up when there are specific contractual requirements to do so. Interest is usually paid net of tax.
2). A general client account – Where the majority of client money is held interest is paid without any deduction from income tax. As such it is you’re responsibly to inform HMRC of amounts of interest received from us. We currently follow the following principles and practises as detailed below.
We aim to account to you for interest at a reasonable rate of interest however 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. In most cases we need to ensure that money is held on client account and is immediately available and so the need for instant access is taken into account when setting the rate of interest payable by us.
Interest will be calculated over the whole period that we hold the funds from the time the funds become cleared for interest purposes. On cheques this will be 5 working days after the cheque 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 is calculated on a daily compounded basis.
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.
In the event that the calculated total interest accruing to a client for the duration of a matter is less than £50 then no interest will be paid to the client on the basis that it is a de-minimis amount. The firm takes the view that any amount below £50 is reasonably retained by the firm to cover the administrative cost dealing with client funds.
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 the interest will not be credited.
Unless otherwise agreed, where we are conducting more then 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.
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 which is a standard rate of 0.03% on all client balances held.
This policy will be reviewed from time to time to ensure that it continues to deliver a fair outcome to clients.
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 amounts are held outside of a general client account or separate designated deposit account, the rate of interest and date the interest is calculated will depend on the relevant institution where the funds are held, and as such fall outside the requirements of this policy.
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.