Issued: Friday, 2 September 2016
In July 2015 the Legal Services Council adopted a new approach to the receipting of trust account money that required a law practice to issue a receipt in every instance that money is received into a trust account, either directly from the client or via bank transfer from the client or a third party payer. The Council was informed that Uniform General Rule 36(4) is difficult and, in some instances, impossible to comply with. The Council sought the views of local regulators, law practices, consumer organisations and the public about the practical implications and value of UGR 36(4) and whether it should be changed.
The Council was told that UGR 36(4) created a disproportionate administrative burden without commensurate consumer benefit, due to the need to establish a system for identifying and sending receipts to the payer; the frequent instances where money is received from financial institutions or other third parties (e.g. multiple share dividends); and the common use of electronic funds transfer, which creates a documentary trail of the payment. This view was expressed by a wide cross section of the profession.
In June the Council decided that it should return to the previous position that a receipt is to be provided on request only. It has also removed the requirement that the receipt be an original to take account of modern practices of emailing receipts to a client. The proposal was approved by the Standing Committee in August 2016. The Council subsequently made the amendment, which came into effect on Friday, 2 September 2016.