The Conveyancing Association (CA) has set out its opposition to the Ministry of Justice’s (MoJ’s) proposed Interest on Lawyers’ Client Accounts (ILCA) scheme, warning it could increase costs for homebuyers and sellers and place further pressure on conveyancing firms.
In its response to the MoJ consultation, published on 5th February 2026, the CA raised concerns about plans to introduce a central scheme under which interest earned on client money held by law firms would be redirected to support the justice system, including legal aid and court services.
Under the proposals, banks would continue to pay interest on client accounts, but firms would be required to pass a significant proportion of that interest to the ILCA scheme.
For pooled client accounts, the MoJ suggested that between 75% and 100% of interest would be taken, while around 50% would be transferred from individual client accounts.
The proposals would apply to most client accounts, including those used for residential conveyancing transactions, with interest collected monthly or quarterly and managed by a central administrator.
The CA said it does not support the approach and has raised strong objections to the proposals in its consultation response.
It argued that interest on client accounts is not excess income for conveyancing firms, but helps to offset the costs of operating compliant client accounts, including banking charges, audits, anti-money laundering controls, systems and fraud prevention measures.
The association warned that removing this income would be likely to result in higher fees for clients, particularly affecting first-time buyers and those transacting at lower price points.
It also highlighted potential risks to existing conveyancing business models, including fixed-fee and high-volume practices, some of which rely on retaining client account interest with client consent.
The response further noted that the proposals come at a time when firms are already facing additional regulatory pressures, including duplicated AML regulation and requirements linked to submitting stamp duty land tax returns.
The CA said this could contribute to firms leaving the market, reducing capacity while transaction volumes remain high.
Concerns were also raised about access to banking, with the CA noting that many firms already struggle to open and maintain client accounts due to de-risking and AML requirements.
The association said the proposed scheme could add further complexity and risk.
The CA also challenged the evidence used in the consultation, which suggests law firms do not rely on interest income. It said data shows interest can represent a meaningful share of profit for firms undertaking property work and rejected comparisons with overseas schemes, arguing that legal fees in countries such as France and the US are significantly higher than in the UK.
In addition, the CA criticised the length of the consultation period, stating that firms had insufficient time to assess the potential impact on their businesses and on consumers.
It has urged the MoJ to reconsider the proposals and engage more closely with the conveyancing sector.
Beth Rudolf, director of delivery at The Conveyancing Association, said: “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.”
She added: “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.”
