Two Regimes at Once: the SRA and the OPG

When a firm, or an individual within it, acts as an attorney under a power of attorney or as a Court of Protection deputy, or assists an attorney or deputy with the financial management of someone who lacks capacity, it handles money that is governed by two separate regimes at the same time. For the Solicitors Regulation Authority (SRA) the money is client money, so the full SRA Accounts Rules apply. For the Office of the Public Guardian (OPG) the same money is the funds of a vulnerable person ("P") whose affairs are supervised under the Mental Capacity Act 2005.

This page covers the accounting and compliance interface, not Court of Protection litigation or questions of capacity and best interests, which are legal-practice matters for the fee earner. The aim is to be precise about where the money sits, how it is ledgered and reconciled, the OPG layer that wraps around it (supervision levels, the security bond, the annual report), and the VAT treatment of the firm's own fees. We deal with status first, then the account, then the OPG regime, then the bond and the report, and finally fees and closing.

The Rule 2.1 Status: Attorney and Deputy Money Is Client Money

The anchor is SRA Accounts Rule 2.1(c). Client money is defined to include money held or received "as a trustee or as the holder of a specified office or appointment, such as donee of a power of attorney, Court of Protection deputy or trustee of an occupational pension scheme". Attorneys and deputies are named on the face of the rule, so there is no doubt about the status: money held in that fiduciary capacity is client money.

It helps to separate two common scenarios:

  • The firm (or its member) is appointed as the attorney or deputy. Here the firm holds the office and any of P's money it controls in that capacity falls squarely within Rule 2.1(c).
  • The firm acts for an attorney or deputy client who is managing P's affairs. Here money the firm holds relating to that regulated work is client money under the general limbs of Rule 2.1 (money received in relation to regulated services or on behalf of a third party).

Either way the money is client money and must be handled with full client-account discipline. For the wider definition and the other limbs, see our guide on what counts as client money for UK solicitors.

LPA, EPA and Deputyship: What the Firm Is Handling

A short, factual framing of the instruments helps the reader see what money flows where.

  • A lasting power of attorney (LPA) for property and financial affairs appoints a donee (attorney) to manage P's finances. It can be used while P still has capacity (if P permits) and continues after P loses capacity.
  • An older enduring power of attorney (EPA), made before October 2007, can still be in force and operates similarly for property and affairs once registered.
  • A Court of Protection deputy is appointed by the court where there is no valid LPA or EPA and P lacks capacity to make the relevant decisions. A property-and-affairs deputy manages P's money under a deputy order.

The money that flows includes P's income (pension and benefits), proceeds from realising assets, property-sale proceeds, and bills paid for P. The firm's job is to manage that money for P's benefit, not to bank it. Keep the framing factual; questions of whether P has capacity, or what is in P's best interests, are decisions for the attorney, deputy or court.

Two practical variations are worth noting because they affect the records, not the client-money status. First, attorneys can be appointed to act jointly (all must act together) or jointly and severally (any one can act alone), and a deputy order may name more than one deputy. The appointment terms govern who can authorise a payment, so the firm should hold a copy of the registered LPA, EPA or deputy order and follow its restrictions. Second, the firm may be acting itself as the appointed fiduciary, or it may be assisting a lay attorney or deputy (a family member, say) with the financial management. In both cases the money the firm handles is client money; what changes is who holds the office and therefore who answers to the OPG.

The Mental Capacity Act 2005 Context

The whole regime sits under the Mental Capacity Act 2005. Attorneys and deputies must act in P's best interests and within the authority granted to them, and the OPG is the body that supervises that conduct. The firm's accounting role does not extend to giving advice on capacity or best interests; those are legal-practice and clinical questions. But the firm's records do feed the accountability: the cleaner the ledger, the easier it is for the attorney or deputy to demonstrate that P's money has been managed properly and for P's benefit.

The Client Account and Rule 3.3 in a Deputyship or Attorney Matter

The same client-account discipline applies as for any other client money. Under Rule 3 the money goes into a separate client account at a bank or building society branch in England and Wales, named to include the firm's name and the word "client", and kept apart from the firm's own money.

The live trap is the Rule 3.3 banking-facility prohibition: a firm must not use a client account to provide banking facilities, and every payment in, transfer or withdrawal must relate to the firm's delivery of regulated services. A deputy or attorney matter tempts the firm to treat its client account as P's general bank account, routing pension, benefits and standing household bills through it. That is exactly what Rule 3.3 forbids. P's routine finances should run through P's own bank account, operated by the attorney or deputy; the firm's client account should hold only money tied to the regulated services it delivers (for example, proceeds it realises on a sale it conducts, or a reserve for legal work it is doing). For the underlying discipline, see our solicitor trust accounting guide and the sibling page on the probate and estate administration client account.

Ledgering and Reconciliation for P's Money

Open a dedicated client ledger for the matter, in P's name or the deputyship reference, and record every receipt and payment with its purpose. The ledger feeds the firm's Rule 8.3 reconciliation, which must be carried out at least every five weeks (ledger totals to cash book to bank statement) and signed off by the COFA or a manager. Never allow the matter ledger to go overdrawn: there must always be enough of P's money in the account to cover what the ledger says is held.

There is a useful overlap here. The OPG expects a deputy to account for P's money in an annual report (covered below). The firm's contemporaneous client-ledger records are the natural source for that report, so a single, clean record-keeping discipline serves both regulators. Tagging each entry with its purpose at the time of the transaction is far easier than reconstructing it months later for either the OPG report or the SRA accountant's report.

Remember too that the firm's own client-money exposure feeds the Rule 12 accountant's-report position. A firm that holds client money in the period must obtain an accountant's report within six months of the period end unless it falls within the Rule 12.2 exemption, which applies only where all the client money held stayed within an average not exceeding £10,000 and a maximum not exceeding £250,000 across the period. Attorney and deputy matters can carry sizeable balances (a property sale realised for P, for instance), so they can take a firm out of the exemption. The point to hold is that the £250,000 figure is the maximum limb of the exemption test, not a per-matter cap on what the firm may hold for P.

The OPG Supervision Layer

The OPG supervises deputies under the Mental Capacity Act 2005. Supervision is the OPG's oversight of how P's money and affairs are being managed, layered on top of the SRA's oversight of how the firm runs its client account.

  • General supervision applies to all new deputies in their first year.
  • Minimal supervision is available to a property-and-affairs deputy after the first year where they manage less than £21,000 and no longer need general oversight (figure at June 2026). It carries reduced fees and a shorter annual report.
  • The OPG may arrange visits by Court of Protection visitors as part of its supervision.

The OPG sets the level, and it can change as P's circumstances change, so check the current supervision level rather than assuming. Supervision is a wholly separate layer from the SRA: passing the firm's five-weekly client-account reconciliation does not discharge the OPG annual report, and vice versa.

The Deputy's Security Bond

A distinctive feature of property-and-affairs deputyship is the security bond. A deputy of this kind usually has to put a bond in place before they can act. The Court of Protection does not release the deputy order until appropriate security is in place, and in gov.uk's words, if you need to pay a security bond you cannot start acting for the person until you have paid it.

The bond is a form of insurance, but it is important to be clear about who it protects. The security it provides is solely for the protection of P: it protects P's estate against loss caused by the deputy failing to perform their duties. It does not protect the deputy. The court and the OPG recommend an approved bond provider, and the bond level is set in the deputy order. For the firm's accounting, the premium is a cost of acting as deputy, paid for P's benefit; it is not the firm's client money and it is not the firm's fee.

The Annual Report and Accounting to the OPG

When you become a deputy you must send the OPG an annual deputy report each year, explaining the decisions you have made and accounting for P's money. A deputy on minimal supervision submits a shorter report. The report sits alongside, and is informed by, the firm's own client-ledger records.

The practical point is the discipline. Clean, contemporaneous records make both the OPG annual report and the SRA reconciliation straightforward. If the matter ledger is reconciled every five weeks and each entry carries its purpose, the annual report largely writes itself from the same data. A firm that lets the ledger drift will struggle on both fronts at once, because the same gaps will surface in the OPG report and in the SRA accountant's review.

It also helps to keep the two reporting cycles in mind together when planning the firm's compliance calendar. The OPG annual report runs on the anniversary of the deputy order; the SRA accountant's report runs on the firm's accounting period. They will rarely coincide, so a firm acting on several deputyships should track each report due date per matter rather than treating them as a single annual task. The COFA is well placed to hold that calendar, since the COFA already owns the Rule 8.3 sign-off and the Rule 12 report decision.

Fees and VAT on Acting as Attorney or Deputy

The firm's professional fees for acting as attorney or deputy, or for assisting one, are a standard-rated supply of services for VAT at 20% (rate at June 2026). There is no exemption for this work, just as there is none for other legal services. A firm with taxable turnover below the £90,000 registration threshold (from 1 April 2024) does not charge VAT.

For a court-appointed deputy, the firm's costs are commonly subject to assessment: fixed costs under the relevant practice direction, or detailed assessment by the Senior Courts Costs Office where fixed costs are not taken. Assessment governs how much the firm may charge and recover from P's estate, but it does not change the VAT character of the supply, which remains standard-rated.

Disbursements within the matter follow the eight-condition test in VAT Notice 700 section 25.1.1: court fees, the OPG application and supervision fees the deputy pays, and the bond premium are each costs paid for P rather than part of the firm's own supply, and each is treated on its facts. For the disbursement mechanics see disbursements and VAT treatment for UK law firms, and for the wider VAT position see VAT on legal services and the sibling page on VAT on probate and estate administration fees. Crucially, the firm's fee is the firm's own income and is entirely distinct from P's money, which remains client money throughout.

Interest, Residual Balances and Closing the Matter

The Rule 7 fair-interest duty applies to P's money held by the firm: the firm must account for a fair sum of interest, judged by the amount and the period it is held. This is a client-account duty and is separate from the deputy's wider best-interests obligation to manage P's funds prudently.

A deputyship or attorneyship ends automatically on P's death. The deputy's or attorney's authority stops, and money the firm holds for P then forms part of P's estate, to be administered by the personal representatives. At that point the analysis shifts to estate client money, covered in the sibling page on the probate and estate administration client account. Account for P's money cleanly, file the final report to the OPG, and transmit the funds into the estate. A genuinely unreturnable small remnant can follow the residual-balance route described in clearing residual client balances and unclaimed money.

Worked Example: a Firm Appointed as Property-and-Affairs Deputy

This example is illustrative only and is not advice; the figures are not a fee quote.

A firm is appointed as property-and-affairs deputy for P, who lacks capacity to manage their finances. The setup runs in a clear order:

  1. The bond comes first. The deputy order requires a security bond. The firm arranges the bond through an approved provider and confirms it is live. Until the bond is in place the firm does not start acting for P or handle P's money.
  2. P's routine finances stay in P's account. P's pension and benefits arrive in P's own bank account, and the firm (as deputy) operates that account to meet P's household bills. None of this routine banking runs through the firm's client account, so Rule 3.3 is respected.
  3. Matter money is client money. When the firm realises an asset for P, or holds a reserve for legal work it is conducting, that money goes into the firm's client account. It is ledgered in P's name under Rule 2.1(c), and it feeds the five-weekly Rule 8.3 reconciliation. The firm accounts for fair interest under Rule 7.
  4. One record set serves both regulators. The firm keeps a clean, purpose-tagged ledger. At the year end it files the OPG annual deputy report from the same records, and the SRA accountant's report (if triggered) draws on the same data.
  5. Fees are billed and taxed. The firm bills its assessed fees, adds VAT at 20% (rate at June 2026) if registered, and recognises the fee as its own trading income. P's money is never treated as the firm's money.

The caption holds the whole page together: deputy money is client money, but you cannot act until the bond is in place, and the OPG supervises how you manage it.

Common Pitfalls

  • Treating attorney or deputy money as office money. It is client money under Rule 2.1(c), not the firm's money, and never the firm's fee until properly billed and transferred.
  • Running P's bank account through the client account. Routing P's pension, benefits and household bills through the firm's client account risks a Rule 3.3 banking-facility breach. You manage P's affairs; you do not bank for P.
  • Acting before the security bond is in place. Where a bond is required, the firm cannot start acting until it is paid and the deputy order is released.
  • Missing the OPG annual report. The annual deputy report is a separate obligation from the SRA reconciliation, and both must be met.
  • Forgetting the fee is standard-rated. Attorney and deputy fees carry VAT at 20% (rate at June 2026) if the firm is registered; the work is not exempt.
  • Confusing the regimes. Passing the SRA reconciliation does not satisfy the OPG, and vice versa. Both apply at once.

Speak to a Specialist

If your firm acts as attorney or Court of Protection deputy, or assists clients who do, the client-account status of the money, the OPG supervision layer and the VAT on your fees all need to line up. The mechanics here are settled, but they reward clean, dual-purpose records and a clear separation between P's money and the firm's fee. Speak to a legal-sector-specialist accountant who can review your client-account handling, your fee VAT and the records that feed both the SRA accountant's report and the OPG annual deputy report.