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Managing trust accounts
The Legal Profession Uniform General Rules 2015 set out the operation of trust accounts, including the requirements for the keeping of trust records. Every law practice or approved clerk maintaining a trust account should be familiar with Part 4.2 of the Rules which cover trust accounts.
Where can trust accounts be opened?
The Victorian Legal Services Board has made arrangements with the following approved deposit-taking institutions. Trust accounts may be opened at any branch of:
- ANZ Bank
- Bank of Melbourne/St George Bank
- Commonwealth Bank
- Macquarie Bank
- National Australia Bank
A trust account opened by a law firm must include within its name:
- the name of the law practice or the business name under which the law practice engages in legal practice; and
- either the expression ‘Law practice trust account‘ or ‘Law practice trust a/c‘.
A trust account opened by an approved clerk must include within its name:
- the name of the approved clerk or the business name under which the law practice engages in legal practice; and
- either the expression ‘Approved clerk trust account‘ or ‘Approved clerk trust a/c‘.
Banks must report daily to the Board on the total deposits, withdrawals and the balance of all trust accounts. The interest earned on trust accounts is paid into the Public Purpose Fund, which is administered by the Board. If a law practice or approved clerk becomes aware that interest is being paid to a different recipient, the bank must be contacted immediately.
Opening a trust account
To facilitate the correct opening of trust accounts, please download the instructions for your chosen bank and take to the branch.
|Bank||Instructions for opening new trust accounts|
|ANZ Bank||Information about opening a Statutory Trust Account with ANZ|
|BankWest||To open a General Trust Account, please contact your local branch or refer to the BankWest website|
|Commonwealth Bank||Contact the Commonwealth Bank for information on how to open a Victorian Solicitor Trust Account. Tel: 132 221.Applicants will need to complete an Authority for Non Personal Accounts.|
|Macquarie Bank||Email email@example.com for details on how to open a trust account or visit the Macquarie Bank website|
|National Australia Bank||Contact the National Australia Bank to obtain a NAB Statutory Trust Account Opening Form.|
|St George Bank / Bank of Melbourne||Information about opening a Statutory Trust Account with Bank of Melbourne|
|Westpac||Refer to the Westpac website for general procedures to open a Statutory Trust Account – Solicitors. Practitioners are also required to take the Intention to Open Statutory Trust Account(s) form to the branch when opening a Trust Account.|
Notifying the Board of changes
A law practice or an approved clerk must notify the Board when a new trust account is opened, when any details of an account are changed, and when a trust account is closed. Notifications must be made to the Board using FORM TRUST 8: Notification of Trust Account details.
Deficiencies and irregularities in trust accounts
An Australian legal practitioner or an approved clerk or any other person is guilty of an offence if he or she without reasonable excuse, causes:
- a deficiency in any trust account or trust ledger account; or
- a failure to pay or deliver any trust money.
These are serious offences carrying a maximum penalty of 500 penalty units or 5 years imprisonment or both.
Reporting irregularities and suspected irregularities
If a legal practitioner associate of a law practice, approved clerk, external examiner or approved deposit-taking institution identifies a potential trust irregularity in a trust account or trust ledger account, as soon as practicable written notice of the irregularity must be given to the Board and a corresponding authority (if a corresponding authority is responsible for the regulation of the account concerned).
There are heavy penalties for failing to comply with these provisions.
Fees charged on trust accounts
Each approved deposit-taking institution may charge fees for regular transactions (deposits, cheques written, cheques deposited etc), or for ad hoc services (overseas transactions, dishonours, stopped cheques, voucher retrieval or tracing etc), unless otherwise negotiated with the account holder. The only exception to this is the National Australia Bank who will not charge for regular transactions.
Further information on fees is available from each bank (see contact details below):
|ANZ Bank||Please contact your ANZ Business Banking Manager or visit the ANZ website|
|BankWest||Please contact your local Branch Manager or visit the BankWest website|
|Commonwealth Bank||Premium Service Centre Institutional Banking Government and Financial Institutions Client Service, Tel: 132 221.|
|Macquarie Bank||Visit the Macquarie Bank website for further information on how our services may benefit your law firm|
|National Australia Bank||For more information about fees and charges, please visit the NAB website|
|St George Bank / Bank of Melbourne||Visit the Bank of Melbourne website|
|Westpac||For more information about fees and charges, please visit the Westpac website or call 132 142|
Opening a trust account in a foreign currency
Although the Act does not prohibit the opening of a trust account in a foreign currency, the policy of the Board is that law practices and approved clerks may only operate a trust account in Australian dollars.
Generally the banks will be unable to operate trust accounts in a foreign currency for the following reasons:
- interest on trust accounts is calculated on a daily basis and paid to the Board in Australian dollars; and
- the banks report to the Board daily on the details of trust accounts in Australian dollars.
Exemptions from trust regulations
The Board may exempt a law practice or an approved clerk from complying with any of the provisions in Division 1 (Statutory deposits into Public Purpose Fund) of Part 5 of the Legal Profession Uniform Law Application Act 2014 (Vic) relating to trust money and trust accounts. Download the Trust Account Regulations Exemptions Policy (see below) for further information.
You should apply in writing to the Board if you wish to apply for an exemption from specific trust regulations on behalf of a law practice or approved clerk. Please note that in considering an application for exemption, the Board will take into account any adverse material known about the applicant’s practice and/or its principals after consultation with the relevant professional association and the Victorian Legal Services Commissioner. An application should include consent to disclosure to the Board of information held by the Commissioner, the professional associations and any former or current supervisor, receiver or manager of the practice.
What happens to the interest earned on a trust account?
Banks who manage solicitors’ trust accounts are required to report daily to the Board on the total deposits, withdrawals and the balance of all trust accounts.
Any interest earned on trust accounts is paid into the Public Purpose Fund managed by the Board. If you become aware that interest is being paid directly into your trust account you need to contact the Board or your bank immediately. Further information on the role of the Public Purpose Fund can be found in the Public Purpose Fund fact sheet.