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Which bank charges in an attorney’s trust account are recoverable from the

Attorney Fidelity Fund?

Monthly basic fee

Some banks charge a minimal monthly fee, sometimes described as an administrative fee.

This fee is recoverable from the Attorney Fidelity Fund (AFF).

Cheque processing fee

Banks charge a fee for processing each cheque issued. The fee is a banded structure

dependant upon the quantum of each cheque. This fee is recoverable from the AFF.

Electronic payment fee

The banks charge a fee for processing each electronic payment. The fee is a banded

structure dependant upon the quantum of each payment. This fee is recoverable from the

AFF.

Cheque books issued by banks

The cost of cheque books supplied by the banks is recoverable from the AFF.

Electronic payments systems – monthly subscriptions

The four large banks offer sophisticated electronic banking systems. In addition to the

normal per item processing fee, clients are charged a monthly subscription. In many

instances the banks levy a single subscription to cover services provided on both the trust

and business banking accounts. To date, practitioners have been advised to do their own

apportionment of the subscription based upon the respective volumes of trust and

business transactions; the trust portion being recoverable from the AFF.

Unidentifiable deposits – tracing fees

Practitioners often experience a problem identifying deposits made over the counter into

their trust accounts by unknown entities. The banks charge a fee when assisting

practitioners to establish the source of these funds. Some banks offer a system which

requires depositors to complete the reference section on the deposit slip correctly, for a

monthly additional fee (payable by the recipient). This fee is recoverable from the AFF.

Drawer cheques

Dishonored cheques deposited in a trust account give rise to an R80 service fee charge to

the recipient’s trust account in each instance. This fee is recoverable from the AFF.

Bank guarentees

The banks charge for each guarantee issued. The established practice by business

development staff is to advise practitioners that the cost of guarantees should be

recovered from clients. This fee is NOT recoverable from the AFF.

Special clearance of cheques deposited

Practitioners wishing to pay out against the proceeds of cheques deposited to their trust

accounts often instruct their bankers to “specially clear” certain deposits. This process

enables practitioners to pay out against a deposit within a few days instead of having to

wait for the normal period of 10 days. This fee is NOT recoverable from the AFF.

Bank charges specifically related to handling cash

During the past 3 years the banks have significantly increased their charges for

transactions involving the handling of cash. This has had a significant impact upon

certain practitioners who are obliged, because of the nature of their practices, to pay out

and receive large amounts of cash.

The reason advanced by the banks for these increased charges is that the cost of

providing security arrangements has escalated dramatically. The banks’ stated intention

with regard to their charging structure is to match their charges as closely as possible

with their expense structures. This fee is recoverable from the AFF.

Cash deposit fees

Cash deposits are expensive. For example, R10 000 cash deposited in certain banks’ trust

accounts will incur a fee of R59. There are reported instances of clients in conveyancing

matters arriving with suitcases of money. It is arguable whether the cash deposit fee is

incurred at the special instance of the client – cash is regarded as legal tender. On the

other hand, the introduction of FICA money laundering legislation would support a view

that cash should no longer be regarded as an acceptable payment medium for high value

transactions.

A further factor to consider is that certain banks charge a “penalty” cash deposit fee if

large volumes of cash are deposited without advance warning to the branch concerned.

Some practitioners have adopted a policy to advise clients that the firm does not carry a

sufficient level of insurance cover to be able to receipt large amounts of cash. Clients are

instructed to deposit the cash directly into the firm’s trust account; the cash deposit fee to

be paid separately over the counter by the client. Cash deposits are generally recoverable

from the AFF.

Cheques cashed

Over the counter cash withdrawals incur a fee in addition to the normal cheque

processing fee. A cheque cashed for R10 000 will incur a fee in the region of R90, as well

as a cheque processing fee of R12.

Practitioners often need to cash cheques in situations where the client has no banking

account. MVA matters are a good example. This fee is recoverable from the AFF.

However, note that all Law Societies Rules prohibit the issue of trust cheques payable to

cash.

Foreign Exchange Transactions

Commission on foreign exchange transactions

Banks charge a commission for converting currency to another denomination. This fee is

NOT recoverable from the AFF.

Fees payable for foreign exchange applications

The Reserve Bank and the commercial banks may charge fees for processing applications

for foreign exchange, in situations where funds are being remitted to a foreign payee.

This fee is NOT recoverable from the AFF.