The Office of the Public Guardian in England and Wales published a practice note on 15 February 2016 (below) clarifying how solicitor deputies should manage deputyship funds. Whilst the information is widely understood as best practice, it is a helpful reminder regarding the administration and management of deputyship accounts.

The law states that all deputies should keep their clients’ money and property entirely separate from anyone else’s, and that includes solicitors’ client accounts. The Solicitors Regulation Authority and Mental Capacity Act Code of Practice also uphold that funds should not be combined with other people’s. This is to circumvent client funds being used fraudulently or for money laundering purposes.

The direct advice from the OPG is stated at Standard 1a(9), ‘Open a deputyship account in the client’s name with the deputy named as such on the account. Ensure that all funds held for the client are held in accounts and/or investments in their name and kept separate from the funds of the deputy or other parties.’

The exception to this rule is during the initial period, when you are setting up a client’s separate deputyship account, and in this provisional period you may hold their funds in a general client account as a temporary measure. The MCA Code of Practice advises that there would have to be a very good reason for mixing the funds with other clients other than during the initial administration stage. The funds should be segregated at all other times.

The OPG offers comprehensive guidance in its guide SD3 How to be a deputy; the basic message being that you should get to know your client as well as you can, so that you can act in their best interests. If your client is seriously incapacitated you should find out more about them through their friends and family. The decisions that you make about their finances should be in line with the nature of their existing investments and the size of their estate.

The OPG advises deputies, ‘There will be cases where large balances in a client account will not represent the best investment strategy for a client. In these cases the OPG will question the appropriateness of keeping significant excess funds in this way.’

STEP recommends that if the client no longer has mental capacity, you need to take into consideration the financial decisions that they made when they did have capacity, and if they have lucid moments, discuss their financial wishes at that time.

The practice note reinforces the principle that solicitors acting as deputies should be managing their clients’ funds ’with the best interests of their client in mind,’ at all times.

• Public Guardian practice note Number: 02/2016 OPG’s approach to solicitor client accounts

Emily Deane TEP is Technical Counsel at STEP