Monday 9 November 2026
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
Hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. You can view a web version of this newsletter by clicking here.
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This Week’s Question: A government department employs civil servants responsible for protecting critical national infrastructure against cyberattacks. Following a security review, the department introduces a policy prohibiting all employees from belonging to any trade union. The policy applies equally to employees who handle classified intelligence and administrative staff who have no access to sensitive information. The department relies on legislation permitting restrictions on employees’ activities where necessary to protect national security. It argues that union membership could create divided loyalties and increase the risk of confidential information being disclosed. However, there is no evidence that any union has compromised security, and the department has not considered less restrictive measures, such as confidentiality obligations or restrictions applying only to particular sensitive roles. Several employees seek legal advice about challenging the policy under the Human Rights Act 1998. Which of the following best describes their legal position?
A. The prohibition is automatically lawful because national security is expressly recognised as a justification for restricting freedom of association.
B. Article 11 provides an absolute right to trade union membership, so a prohibition affecting civil servants can never be legally justified.
C. The prohibition is necessarily unlawful because any restriction affecting trade union membership requires prior consultation with the employees concerned.
D. Article 11 does not protect civil servants working in national-security departments because members of the administration of the state are excluded from its scope.
E. Article 11 permits lawful restrictions for national-security purposes, but the department must justify the blanket prohibition as necessary and proportionate.
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Last Week’s Question: An SRA-regulated firm conducts a review of client money remaining after completed conveyancing matters. It identifies three balances: £210 belonging to a client whose current bank details have been verified; £500 belonging to a former client who cannot be traced despite extensive, documented enquiries; and £680 belonging to another former client who also cannot be located despite reasonable tracing efforts. All three matters concluded more than three years ago, and there is no continuing reason to retain the funds. A partner proposes donating the unclaimed balances to charity, deducting £40 in tracing expenses from the £500 balance, and splitting the £680 balance into two smaller charitable payments to avoid seeking SRA approval. Which of the following best describes how the firm should deal with these balances?
A. The firm may donate both unclaimed balances without authorisation because reasonable tracing efforts have failed, but must return the £210 directly to its owner.
B. The firm should return the £210, donate £460 after deducting tracing expenses from the £500 balance, and seek SRA approval before withdrawing the £680.
C. The firm should return the £210 and may donate the £500 and £680 balances without authorisation, provided the latter is divided into two separate payments.
D. The firm should return the £210 promptly, may donate the full £500 subject to prescribed conditions, and must obtain prior written SRA authorisation for the £680.
E. The firm should return the £210 but must obtain prior written SRA authorisation before donating either residual balance, regardless of the amounts involved.
Correct answer: D. The firm should return the £210 promptly, may donate the full £500 subject to prescribed conditions, and must obtain prior written SRA authorisation for the £680. Feedback: The principal rules are found in the SRA Accounts Rules: Rule 2.5: Client money must be returned promptly when there is no longer a proper reason to hold it. Rule 5.1(c): Withdrawals from client account may be made with the SRA’s prior written authorisation or in prescribed circumstances. SRA Statement of Prescribed Circumstances: Residual balances of £500 or less on an individual client matter may be paid to charity without prior authorisation, subject to conditions concerning tracing, record-keeping and the destination of the funds.
For balances exceeding £500, prior written authorisation must be obtained from the SRA. Before making the permitted charitable payment, the firm must satisfy the SRA’s prescribed conditions. In particular, it must demonstrate reasonable steps to trace the owner, retain the relevant documentation for at least six years, maintain a central register recording the payment and recipient charity, and retain the charity’s receipt and details of any indemnity provided. It must not deduct tracing costs from the balance.
A is wrong because reasonable tracing efforts do not, by themselves, permit the withdrawal of any amount. The exemption applies only to residual balances of £500 or less per client matter. The £680 balance exceeds that threshold and therefore requires prior written SRA authorisation, even where reasonable attempts to find the client have failed.
B is wrong because the firm cannot deduct tracing expenses from the residual client balance. The SRA’s prescribed circumstances expressly prohibit deducting the costs of attempting to trace or communicate with the rightful owner. The whole £500 remains client money and must be accounted for accordingly. Tracing costs must be borne separately by the firm.
C is wrong because the £500 threshold applies to the residual balance on any one client matter, not to the size of individual withdrawals. Dividing the £680 into payments of £500 and £180 would not bring the balance within the exemption. The firm must consider the total amount held for the particular matter.
D is correct because it correctly distinguishes the three situations. The £210 must be returned promptly because the client can be located. The £500 may be paid to charity without prior SRA permission because it falls within the prescribed threshold, provided the firm satisfies all relevant conditions. The £680 exceeds the threshold, meaning the firm must obtain prior written authorisation before making a withdrawal under rule 5.1(c). No tracing expenses may be deducted from the £500 balance.
E is wrong because the SRA expressly permits firms to withdraw residual client balances of £500 or less without prior written authorisation where the prescribed conditions are satisfied. Requiring authorisation for every charitable payment incorrectly ignores that exemption.
The critical distinction is between the amount of money held on an individual client matter and the amount of an individual withdrawal. Candidates should also recognise that satisfying the £500 threshold does not automatically authorise the withdrawal: the prescribed tracing and record-keeping conditions must still be met.
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Dr Ioannis (Yannis) Glinavos
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