Glossary:

Segregation

Learn what segregation means in client money handling, and why keeping estate or client funds separate is essential under UK regulations.

TL;DR - Segregation

Segregation means keeping client or estate funds separate from personal or business accounts. It’s required for transparency, compliance, and risk protection.

Segregation in financial and legal contexts refers to the strict separation of client funds from a firm’s or individual’s own money. It is a foundational principle in estate administration, client account management, and solicitor regulation.

Why Segregation Matters

Segregating client money:

Reduces risk of misuse or error
Simplifies audit and record-keeping
Protects beneficiaries and clients in case of financial difficulty
Supports regulatory compliance, particularly for solicitors and estate practitioners

How It Works

Solicitors must keep client money in a dedicated client account
Estate funds are placed in executor or third-party managed accounts
Financial firms must reconcile segregated accounts regularly

Example

A law firm holds funds from a deceased client in a separate SRA-compliant client account to avoid confusion with operating capital.

Mini-FAQ

What’s the difference between segregation and safeguarding?
Segregation ensures physical separation of funds. Safeguarding adds regulatory protection and, often, enhanced security structures.

Is segregation legally required?
Yes. Under SRA rules and financial conduct regulations, it is mandatory for handling third-party funds.

Related Words and Terms

Safeguarding

Understand what safeguarding means in the context of UK financial services, especially how client funds are protected under regulatory obligations.

Estate Administration

Find out what estate administration involves in the UK, who is responsible, and the key steps for managing and distributing a deceased person’s assets.

Executor

Discover the legal role of an executor in the UK, their responsibilities in managing a will and estate, and what steps they must follow.

Solicitors Regulation Authority (SRA)

Learn about the Solicitors Regulation Authority (SRA), the body that regulates solicitors in England and Wales, including its role and enforcement powers.

Segregation

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G

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H

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L

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