SDT hits Peter John Smith with £7,501 penalty over client-account misuse

Retired solicitor also ordered to pay £21,650 costs after admitting rule breaches

The Solicitors Disciplinary Tribunal has fined Peter John Smith £7,501 after he admitted using a client account as a banking facility over many years. The case (No. 12365-2022) was determined on the papers on 30 November 2022 by a three-member panel chaired by Mr M N Millin, with Mr R Nicholas and Dr S Bown. No parties attended; the Tribunal approved an agreed outcome between the Solicitors Regulation Authority Limited (SRA) and the respondent.

Mr Smith, admitted in September 1968, retired from practice on 1 April 2021 and no longer holds a practising certificate. He admitted that, from approximately January 2010 to October 2020, he used a client account as a banking facility. The admitted breaches tracked the evolving regulatory framework: before 6 October 2011, Guidance Note (ix) to Rule 15 of the Solicitors Accounts Rules 1998 and Rule 1.06 of the SRA Code of Conduct 2007; between 6 October 2011 and 24 November 2019, Rule 14.5 of the SRA Accounts Rules 2011 and Principle 6 of the SRA Principles 2011; and from 25 November 2019, Rule 3.3 of the SRA Accounts Rules 2019 and Principle 2 of the SRA Principles 2019.

The papers before the Tribunal comprised the Rule 12 Statement with exhibits (dated 12 August 2022), the Respondent’s Answer with exhibits (29 September 2022), and a Statement of Agreed Facts and Outcome (30 November 2022). The Tribunal recorded that the SRA had to prove the allegations on the balance of probabilities and confirmed it had due regard to Mr Smith’s Article 6 and 8 rights.

Mr Smith accepted that his practice—receiving client funds and paying routine property outgoings over long periods—fell foul of the rules that prohibit firms from operating a pure banking service through client account. He told the regulator he had acted for several long-standing overseas clients for decades, paying items such as service charges, utilities, council tax and similar expenses from money held in client account, and providing periodic cash accounts. He maintained throughout the investigation that he believed he was entitled to make such payments as part of regulated services. However, he ultimately accepted that the approach breached the Accounts Rules.

The SRA’s forensic investigation reviewed ledgers and correspondence. For two sample clients, the records showed funds being received and then applied to recurring outgoings for properties—administrative work that continued long after the original conveyancing had completed. The Tribunal noted that Mr Smith had fully recorded transactions on client ledgers and that he had no previous adverse findings. It also recorded several mitigating features: full and frank admissions, cooperation, and the respondent’s belief at the time that he was permitted to operate in that way.

Assessing culpability, harm, and the balance of aggravating and mitigating factors under its Guidance on Sanctions (10th Edition, June 2022), the Tribunal concluded that a reprimand or no order would not reflect the seriousness of using client account as a banking facility “for a number of clients over an extended period of time.” Equally, it considered the misconduct not so serious as to warrant restrictions on the ability to practise, particularly given the respondent’s retirement.

The panel therefore approved a financial penalty “at the lower end” of Indicative Fine Band 3, fixing the fine at £7,501. It also approved the parties’ agreed costs of £21,650, which the Tribunal described as reasonable and proportionate.

The Full Order directs that PETER JOHN SMITH, solicitor, must pay a £7,501 fine—“forfeit to His Majesty the King”—and £21,650 costs “of and incidental to” the application and enquiry. The judgment was dated 13 December 2022 and recorded as filed with the Law Society the same day.

In reaching this outcome, the Tribunal emphasised the long-standing regulatory prohibition on using client account as a banking facility. Even where a solicitor meticulously records movements and believes payments are part of ongoing services, the rules require that money in client account relates to an underlying transaction or regulated work in progress—not a standing arrangement to manage clients’ finances. Mr Smith’s admissions, retirement, and clean prior record mitigated the sanction; the extended period and repeated use of client account elevated it. The approved fine and costs, the Tribunal concluded, adequately mark the seriousness while avoiding unnecessary interference with a retired practitioner.