Ministry of Justice research highlights limited public visibility of client interest policies
Most law firms in England and Wales have formal policies governing how interest on general client accounts is handled, but new research suggests these policies are rarely made publicly accessible.
Independent research commissioned by the Ministry of Justice and conducted by Pye Tait Consulting finds that 95 percent of surveyed law firms have an interest policy in place covering the payment of interest on general client accounts. These policies typically set out how interest is calculated, whether a de minimis threshold applies, and what proportion of accrued interest may be returned to clients.
Despite the widespread existence of such policies, the research reveals a significant gap in public visibility. Only 6 percent of firms report publishing their interest policy on their website. The findings indicate that, while formal arrangements are common, they are seldom made openly available online to prospective or existing clients.
Instead, firms rely on alternative methods to communicate interest arrangements. The most frequently cited channels are client care letters, contractual documentation, and direct discussions with clients during the course of a matter. These approaches mean that information about interest handling is usually provided once a client relationship has already been established.
The research also suggests that client engagement on this issue is limited. Many firms report that clients do not routinely ask about interest arrangements, particularly in cases where client funds are held for relatively short periods. As a result, interest policies are often treated as a background issue rather than a point of active discussion.
Importantly, the report does not assess whether the communication methods used by firms are adequate or compliant with regulatory requirements. Nor does it suggest that the low level of online publication reflects any failure to meet existing obligations. Instead, the findings draw a clear distinction between the prevalence of formal policies and the extent to which those policies are publicly visible.
By documenting how firms currently communicate their interest policies, the research provides a factual snapshot of transparency practices across the sector. It highlights that while interest arrangements are well established within firms’ internal processes and client documentation, they are rarely presented as part of publicly accessible information.
The findings offer a baseline understanding of current practice without drawing conclusions about whether greater transparency may be expected in the future. As interest rates remain higher than in recent years and scrutiny of client money handling continues, the research sets out how firms are currently balancing formal policy requirements with their chosen methods of communication.