Enough Is Enough: Death by a Thousand Cuts for Conveyancers

We have all seen the latest move from lenders/UK Finance.  Conveyancers are being told they must register individual users to access the Lenders’ Handbook, with an annual per-user fee of £50 + VAT from 1 June, and generic logins ending by 31 May. For busy conveyancing teams, that’s not a minor tweak, it’s another direct hit on the day-to-day cost of simply doing the job lenders require us to do.

Now comes the next “solution” that lands squarely on our desks. The government’s consultation on an Interest on Lawyers’ Client Accounts (ILCA) scheme. The stated aim is to remit a proportion of client account interest to government “to strengthen our justice system” and provide additional funding, by capturing a share of the interest generated on client funds. The consultation even describes this interest as “unearned income” to be “remitted to government.” 

For firms like ours, a 30-employee, conveyancing-led practice, client account interest is not incidental or “spare” income. It is one of the very few mechanisms that offsets the unavoidable and rising cost of safeguarding client money properly. Those costs include secure banking arrangements, daily and weekly reconciliations, audit and reporting requirements, segregation controls, professional indemnity and cyber insurance, fraud prevention measures, AML compliance, specialist systems, staff training, and the senior management time required to oversee every completion.

Remove that income stream and nothing is saved, the cost does not disappear. It is simply forced back into the system reappearing as higher fees to clients, additional transaction charges, reduced staffing and investment, or firms exiting parts of the conveyancing market altogether.

Even the consultation’s own evidence acknowledges this reality. It refers to research showing that a significant proportion of firms rely on client account interest to support the ordinary operating costs of their business, including core compliance and infrastructure. In a fixed-fee, price-compressed conveyancing market, that reliance is not a sign of excess, it is a sign of how finely balanced the economics already are.

Removing that income does not target “fat cat lawyers”. It hits ordinary conveyancing firms first, and the cost is then inevitably passed on to clients and the housing market through higher fees, reduced capacity, or both.

The proposals themselves are far from marginal. The consultation discusses remitting 75–100% of interest on pooled client accounts, with a “lower” rate of 50% on interest from individual client accounts. In conveyancing, pooled client accounts are the norm and are used for high volumes of short-term client money moving through routine residential transactions. In practice, this is not a technical adjustment, it is a levy on everyday home moves.

Crucially, the consultation acknowledges the obvious and unavoidable consequence.  If interest is diverted away from firms, legal service providers may be forced to recover the cost of holding client accounts directly from clients, increasing the overall cost of legal services. It also recognises equality impacts, warning that those on lower incomes and certain protected groups may be more sensitive to increased legal costs. In plain English, this policy risks making moving home more expensive for the people least able to absorb it.

What is also underestimated is the compliance and operational burden the scheme would introduce. The consultation anticipates minimum account standards, monitoring, reporting requirements, and potentially changes to banking arrangements. That means new processes, new systems, more oversight, and more cost layered on top of an already over-regulated environment. Yet clients, lenders, and regulators will still expect faster turnaround, lower fees, and zero tolerance for error.

There is also a fundamental fairness problem at the heart of the proposal. Client money is held because the transaction requires it. Interest arises because firms are required to safeguard that money properly. Clients already have protections around entitlement to interest or a fair sum, and firms already explain and agree how interest is treated. Reframing that interest as government-collectable “unearned income” is a category error,  it ignores the economic reality that this income currently helps fund the very infrastructure that protects client money.

So yes,  enough is enough. If lenders can charge conveyancers to access the very instructions they insist we follow, and government then seeks to siphon off the interest that helps keep conveyancing businesses viable, the direction of travel is obvious,  fewer sustainable firms, higher fees, slower transactions, and greater systemic risk.

The consultation is open now and closes on 9 February 2026. Responses can be sent to Additionalfundingconsultation@justice.gov.uk. If you are a practitioner, respond even briefly. Make three points clearly,  this is a hidden tax on conveyancing, it will be passed on to consumers, and it will reduce investment in the controls that protect client money.