Kennedys fined £18k over client account misuse

The SRA has fined Kennedys £18,000 after finding the firm failed to prevent its client account from being used as a banking facility during a commercial property transaction.

What happened

The SRA found that while acting on a commercial property transaction between November 2016 and February 2018, the firm allowed payments to be made from its client account that were not linked to an underlying legal transaction.

As a result, the regulator concluded that the account had effectively been used as a banking facility.

The SRA rules prohibit law firms from using client accounts in this way as funds held in client accounts must relate directly to legal services or transactions carried out by the firm.

Misuse of client accounts as banking facilities has been a recurring regulatory issue for the profession. In 2025, a partner at fee-share firm Gunnercooke was fined £14,000 after arranging for nearly £1 million to pass through the firm’s client account without a meaningful connection to legal work.

Sanction

In a January decision that was made public today (6 March), the SRA said that Kennedys misconduct was serious because it “involved the potential misuse of client money” and “created a risk of substantial harm”, including the possible loss of funds entrusted to the firm by third parties.

However, the regulator concluded that a higher penalty would not be proportionate because the firm’s conduct was not “deliberate or reckless”.

Kennedys accepted that its client account had been used as a banking facility and expressed “remorse and regret”.

The decision comes months after Kennedys mistakenly revealed the email addresses of 194 individuals and law firms registered for updates on the Church of England’s abuse redress scheme, an incident the firm reported to the SRA. Kennedys later said it had contacted those affected individually and offered compensation in relation to the breach.