Chambers sign up to escrow account pilot after FSA gives green light
Todd: imaginative and unique solution for clients all over the world
Ten chambers have signed up to the pilot of Barco, the Bar Council's third-party escrow account that will allow barristers to handle client money.
It follows the Financial Services Authority (FSA) granting regulatory approval for the service under the Payment Services Regulations.
Announced in September, Barco will enable funds to be held in a ring-fenced account with Barclays. Interest will be returned to clients; if it were not, Barco would change from a payment institution into a bank, with all the heavy regulation that would ensue.
The FSA's approval paves the way for Barco's pilot phase ahead of a full roll-out in spring 2013.
Chambers from across the country and a range of practice areas will take part: Atkin Chambers, 2 Bedford Row, 33 Chancery Lane, Erskine Chambers, 39 Essex Street and Outer Temple Chambers (all in London), St Johns Buildings (Manchester), St Johns Chambers (Bristol), 37 Park Square (Leeds) and St Philips (Birmingham).
Michael Todd QC, chairman of the Barco committee and immediate past chairman of the Bar, said: "I am delighted that the FSA has granted approval to Barco. We believe that it will offer an imaginative and unique solution for clients all over the world, making it easier than ever before to work with the Bar, whilst maintaining the Bar's high quality and cost-effective services."
Barristers using the scheme will have to incorporate its standard contract in their own terms and conditions; part of this is that all money passing from the client, including legal fees, has to go through the account. The contract has to be sent to Barco and if it is not received within 48 hours of the money being transferred, it will be returned.
When the barrister gives an instruction to pay out money, the client will be notified and, absent their express approval, will have five days to dispute it. One of the goals of the pilot will be to determine a level of funds to be paid out at which express authority will be automatically required.
There will be a percentage charge on the barrister's fees when they are paid, capped at £250 per transaction. In the medium term the Bar Council hopes to raise a surplus off this fee to make a profit and keep practising fees down.
The pilot is being watched closely by the solicitor side of the legal profession while reviews of client account are being conducted by both the Solicitors Regulation Authority and Law Society.
client account