Money Matters

All applicants for CILEx membership and existing members are required to declare any adverse conduct which may impact on their membership or registration; this is referred to as “prior conduct” and includes certain financial matters. This article explains why declarations of financial matters are important, the types of financial matters CILEx Regulation needs to know about, and its approach when considering such matters.

It is important for legal services providers to demonstrate their ability to manage finances properly as they often come into contact with client money. As such, all applicants for CILEx membership and existing members are required to declare in writing to CILEx Regulation whether they have at any time been adjudged bankrupt, made a composition with creditors and/or been the subject of a civil judgment (CCJ), as these may indicate an inability to act in accordance with sound financial and risk management principles – one of the key Principles of the CILEx Code of Conduct. A failure to declare these matters may result in the refusal of an application for membership and, in some cases, disciplinary action.

For most, bankruptcy orders and CCJs will be relatively straightforward to identify. However, with so many debt solutions around, it can be difficult to distinguish a composition with creditors from other types of arrangements, and many end up mistakenly declaring informal agreements with their creditors to repay their debts in full at more affordable rates i.e. through reduced monthly instalments. For the purpose of CILEx Regulation’s disclosure requirements, a composition with creditors is a formal debt management plan where one or usually more creditors agree to accept less than they are owed and may include Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs).

That said, the number of people struggling with debt in this challenging economic climate has been well documented, and it is equally important to ensure that those who have undergone, or are currently experiencing, financial hardship are not unfairly penalised. Simply falling behind with payment of bills and other monies owed does not in itself affect a person’s character and fitness to provide legal services and need not always be taken into account when deciding their suitability for CILEx membership.

A fair and balanced approach should always be taken and CILEx Regulation will always consider the circumstances surrounding the debt when assessing declarations, including the declarer’s seniority, their level of responsibility within their practice and the overall risk to consumers. The likelihood is that financial debt will usually only impact a person’s ability to join and remain as a member of CILEx where there has been a persistent failure to meet financial obligations, a deliberate avoidance of responsibility for debts or dishonesty in relation to finance.

Further guidance

Further guidance on the requirement to declare prior conduct is available on the CILEx Regulation website. Free debt advice and guidance is available from the Money Advice Service, Citizen’s Advice, the National Debtline and StepChange debt charity.


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