If you are running a law firm, the Solicitors Regulation Authority (SRA) Accounts Rules are not just another compliance box to tick. They are at the heart of how client money is safeguarded, how trust is maintained, and how your practice demonstrates integrity. Every year brings small but important shifts, and 2025 is no exception.
The latest updates are more than technical changes. They reflect a push toward greater transparency, accountability, and efficiency in how firms manage client funds. Whether you are a sole practitioner or part of a large practice, knowing these changes inside out is essential.
Key Changes in the 2025 SRA Accounts Rules
1. Greater clarity on residual balances
Law firms are now expected to take more proactive steps to return residual client balances promptly. The SRA is tightening its stance on firms holding on to client money unnecessarily, and firms must show clear evidence of attempts to trace and repay clients.
2. Expanded reporting obligations
There is a stronger emphasis on accurate reporting and quicker disclosure of breaches. Firms will need systems that can flag issues earlier, as failure to report promptly can trigger regulatory scrutiny.
3. Tighter control over third party managed accounts
The rules now demand clearer justification when firms use third party managed accounts. This is to ensure such arrangements are genuinely in the client’s best interest and not simply a way to reduce admin.
4. More accountability for COFAs
Compliance Officers for Finance and Administration (COFAs) are under sharper focus. The SRA expects them to have demonstrable oversight, meaning COFAs should not just sign off reports but actively monitor and evidence compliance.
5. Technology and digital records
With many firms moving to digital-first systems, the SRA has updated guidance on how records should be maintained. Cloud-based solutions are acceptable, but firms must ensure data security, proper backups, and accessibility for audit purposes.
Why These Updates Matter
They reinforce client trust, showing that money is handled with transparency and care
They reduce the risk of fines or reputational damage by making sure small issues are caught early
They place responsibility squarely on leadership roles, ensuring firms take compliance culture seriously
They highlight how technology is shaping compliance, pushing firms to modernise their systems
Practical Steps for Law Firms
Audit your processes now to make sure residual balances are actively managed
Review reporting lines so breaches are flagged and reported without delay
Train your COFA to go beyond a tick box approach and demonstrate real oversight
Upgrade your systems if your digital records do not yet meet SRA expectations
Communicate with clients clearly about how their money is managed under the new rules
Final Thoughts
The SRA Accounts Rules are not just about staying compliant. They are about showing professionalism, building client confidence, and protecting your firm’s reputation. The 2025 updates are a reminder that compliance is not static; it evolves with the profession and with client expectations.
Law firms that take these changes seriously will not only stay on the right side of regulation but also stand out as trustworthy and forward-thinking practices.
Need expert guidance on preparing your firm for these updates? Get in touch today and let us help you put the right systems in place before the SRA comes calling.
