Question 1
Where we hold cleared funds in excess of £500 for clients, it is our practice to transfer these funds to an interest bearing account, which account will be held with The Royal Bank of Scotland (unless we are given specific instructions that that bank is not to be used). We then account for the interest received.
The rate of interest that is paid by us is the rate that we receive from the bank, details of which can be given on request (normally 0.25% below the bank’s base rate), less a margin that we retain to cover our administration costs. The margins are normally as follows:-
| Deposits Of | Margin |
|---|---|
| Less than £50,000 | 1% |
| Between £50,000 and £100,000 | 0.5% |
| Over £100,000 | 0.25% |
Taking account of the current unprecedented low rates of interest available on client deposits, we have agreed with the Royal Bank of Scotland that they shall restrict their margin from their normal 0.25% and instead pay 0.13% below base on the funds that are held on deposit. This firm will also restrict its margin to 0.18% on all levels of deposit until interest rates return to more normal levels.
