Breaches & shortfalls
Any breach of the rules must be corrected promptly, and any shortfall on the client account must be replaced at once, with serious breaches reported to the SRA.
What "Breaches & shortfalls" covers
- Correct any breach of the rules promptly upon discovery: rule 6.1.
- Replace promptly any money withdrawn from the client account in breach of the rules, so the client account is not left short: rule 6.1.
- Return client money promptly once there is no longer any proper reason to hold it: rule 2.5.
- The COFA must keep a central record of any breaches of the rules.
- Report serious breaches to the SRA promptly, in line with the reporting obligations in the SRA Codes of Conduct.
- Distinguish minor or technical breaches, which are recorded and remedied, from material breaches, which must be reported.
- Replacing the money does not by itself cure the breach; the underlying cause must also be addressed.
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For breaches & shortfalls, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Delaying the correction of a client-account shortfall.
- Failing to record a breach or to report a material one to the SRA.
- Assuming that replacing the money remedies the breach without fixing the cause.
Learn this subtopic in the course
A video lesson, notes and exam-style practice on breaches & shortfalls.
FAQ
Is breaches & shortfalls tested on SQE1?
Yes — breaches & shortfalls is part of the SQE1 Solicitors Accounts syllabus (FLK2) and can appear in single best answer questions.
How is breaches & shortfalls examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (rule 6.1 (correcting breaches), shortfall replacement) helps.