The Conveyancing Association (CA), the leading representative body for the conveyancing industry, has today (5th February 2026) responded to the Ministry of Justice (MoJ) consultation on its proposed Interest on Lawyers’ Client Accounts (ILCA) scheme, setting out strong concerns about the potential impact on both conveyancing firms and home purchasers and sellers.
The consultation proposes a new scheme under which interest earned on client money held by law firms would be taken and paid into a central fund to support the justice system, including legal aid and court services.
Under the proposals, banks would continue to pay interest on client accounts, but law firms would be required to transfer a large share of that interest to the ILCA scheme on a regular basis.
For pooled client accounts, the MoJ suggests between 75% and 100% of interest would be taken. For individual client accounts, around 50% of interest would be transferred to the scheme.
The proposals would apply to most client accounts, including those used for residential conveyancing transactions. Interest would be collected monthly or quarterly and managed by a central scheme administrator. The CA has outlined in its consultation response how it does not support this approach and has pushed back on these proposals in the strongest terms.
In its response, the CA makes it clear interest on client accounts is not spare income or a windfall for conveyancing firms. For many practices, it helps cover the real and rising costs of running compliant client accounts, including banking charges, audits, AML controls, systems, and fraud prevention measures that exist to protect consumers.
The CA warns that removing this income will not be cost free. Conveyancing firms operating on tight margins will not be able to absorb the loss. Instead, costs will be passed on to buyers and seller clients through higher fees. First-time buyers and those transacting at lower price points, it says, are likely to be hit hardest. A stealth tax on the most vulnerable.
The response also highlights the risk to existing conveyancing business models, including fixed-fee, high-volume and high-street firms. The CA outlines how some models rely on retaining client account interest, with client consent, to remain viable.
The CA warns the introduction of the MoJ’s proposals, on top of the FCA duplicated regulation of AML and requirements to register as Tax Advisers to submit SDLT returns, could lead to firms leaving the market, reducing capacity at a time when the number of conveyancing firms active continues to fall, but activity levels remain high.
The CA also raises serious concerns about access to banking. Many firms already face difficulties opening and maintaining client accounts due to bank de-risking and AML requirements. Adding further complexity and risk could make this problem worse.
The CA challenges the evidence used in the consultation, which suggests law firms do not rely on interest income. The Association points to data showing that, for many firms carrying out property work, interest can represent a meaningful share of overall profit. It also rejects comparisons with overseas schemes, noting legal fees in countries such as France and the US are far higher than those charged in the UK.
The CA has also criticised the short consultation period, warning firms have not been given enough time to assess the full impact on their businesses or on consumers. It has urged the MoJ to reconsider the proposals and engage with the conveyancing sector before pursuing any reform that risks higher costs for home purchasers and sellers, and reduced capacity in the market.
To read the CA’s full Consultation response please visit the CA website at: www.conveyancingassociation.org.uk
Beth Rudolf, Director of Delivery at The Conveyancing Association, commented:
“Client account interest is not a spare pot of money that can be simply taken away from firms without consequences. For conveyancing firms, it plays a real role in funding the systems, controls and checks that protect consumers and allow transactions to proceed safely. Removing it does not make those costs disappear, it simply shifts them elsewhere and adds in additional administration costs.
“In practice, that means higher fees for all those requiring conveyancing services and advice, and real pressure on the firms delivering conveyancing services. At a time when access to banking is already difficult and capacity in the market is stretched, these proposals risk making the situation worse.
“This whole consultation and proposal feels ill-thought and rushed through. The consultation paper was only sent by MoJ to nine entities and not to any practicing conveyancers. Any reform needs to be based on proper evidence and a clear understanding of how conveyancing actually works, otherwise the impact on consumers and the housing market will be significant and undoubtedly negative in the extreme. We would urge the MoJ to reconsider these set of proposals and to consult with us on how to move forward.”
