The Society has recently received a number of queries and expressions of concern as a result of SRO changes to TRO agency conditions to include a new mandatory method of payment under an EPA.
The Society has been in regular communication with the SRO to ensure its new EPA system enables practices to remain compliant with trust accounting rules. As a result of those communications, changes have been and will be made by TRO developers.
The SRO now requires that we pay pooled stamp duty invoices via our TRO account under an Electronic Payment Authority (EPA) that will direct debit from our trust account. Is direct debiting from our trust account permitted under the rules?
Ordinarily no, however in the circumstances of this case, yes.
This direct debit system is not the same as the direct debit authority you may have set up, for example, to pay your home phone bills.
SRO’s system has been approved by the Society because under the EPA arrangement all debits must first be authorised by the legal practice and authorisations must occur for each and every invoice. You will have received further information from TRO regarding how this will work.
Essentially it involves setting up an EPA in TRO and clicking a Pay button in the TRO account once payment has been authorised by the practice. It is for your practice to determine how this should be done in order to remain compliant with regulation 32 and your firms, existing payment protocols. Some adjustment to internal practices may be required.
The SRO now also requires pooled payment of land tax searches via the TRO EPA system. The SRO has advised, however that in TRO we can only set up account details for one bank account under the EPA (a functional limitation of the payment system within TRO). We pay our duty invoices from our trust account and our land tax search fee invoices from our office account.
Can we choose to link the trust account to the EPA and then move monies from the office account to the trust account so that the search fees invoices can be paid?
Alternatively, can I move trust monies to the office account and then pay the duty out of there?
No. In both cases, section s251 of the Legal Profession Act is relevant. That section makes it an offence for a law practice unless otherwise permitted, to mix trust money with other money.
The SRO has now agreed to instruct its developers to modify the payment system in TRO so that two (2) different bank accounts can be linked. The Society has been advised this will take approximately one (1) week to build and another to test. We will hopefully have further detail for you in the near future.
The SRO has also notified the Society that during the development time TRO Agents, will be advised the following.
Where a TRO Agent has functionality for both duty and land tax searches:
- Sign up to the EPA for Duty:
- Pay Land Tax Searches either using EFT or BPAY: and
- When development is completed and deployed TRO Agents will be advised to sign up both bank accounts to an EPA’s
If you have any further concerns or queries, please email the Society at firstname.lastname@example.org.