Client Money Handling Procedure
In accordance with Royal Institution of Chartered Surveyors (RICS) professional standards and guidance we adhere to their Client money handling 1st edition, October 2019 code of practice. The overall aim of those standards is to ensure that Client money is kept safe; to ensure that Client money accounts are used for appropriate purposes only; and to help ensure that we have the appropriate controls and procedures in place to safeguard Client money.
What is Client Money?
Client money relates to money of any currency, whether in the form of cash, cheque, or electronic transfer, which is held or received on behalf of another person, including money held by a regulated firm as stakeholder and is not immediately due and payable on demand.
How and where is Client money held?
Client money held or received by the firm is either banked into a general Clients’ bank account, a designated discrete account or held in a Client controlled bank account. A general Clients’ bank account is a Client Bank Account which holds pooled Client money belonging to more than one Client. A discrete bank account is a Client-named bank account which holds Client money belonging to a single Client. All Landlord and Tenant monies are kept separate. Further details of where funds are held can be found within the Tenancy Agreement or specific Terms of Business, or Terms of Engagement. Client monies are held separately from our own monies, are easily identifiable and immediately available. Within the general Clients’ bank account, each Client’s money is recorded in individual Client ledgers to maintain segregation of funds. Client money is held in an appropriate banking institution authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Who within the company has access to those accounts?
Book-keepers can view accounts to download transactions for reconciling and set up payments. Signatories are at a level of Associate Director and above, or senior member of staff employed by the firm for at least 3 years. Only a principal of the firm can authorise new signatories to Client money accounts.
How is Client money spent?
What expenditure and fees can be paid from Client monies is set out in the appropriate tenancy agreement, Terms of Business and Terms of Engagement. We use each Client's money only for that Client’s matters and check that sufficient funds are held before making any payments on behalf of the Client from their Client account.
Money paid into the Client account in error (e.g. money paid into the wrong discrete Client account or interest wrongly credited to a general Client account) is withdrawn or transferred from the Client account promptly on discovery.
We return Client money and any further payments received as soon as it is practically and appropriately possible when we no longer have any reason to retain those funds.
What are the timescales for payment of cash and cheques into a Client accounts?
We endeavour to ensure all Client money received is paid into a Client money account promptly. We do not accept cash payments and received cheques are paid into the Client accounts regularly and can take up to 5 days to clear the bank processes. All unidentified funds are reviewed as soon as possible and no later than 1 month from receipt at which time they will be allocated or returned if the identify the owner is established. Any unidentified Client money received will be paid from a Client money account to a registered charity where the owner cannot be identified after at least three years from receipt and all avenues of investigation have been exhausted.
What controls are in place for authorising payments from a Client account?
A withdrawal from a Client account is made upon approval by a signatory in accordance with the bank mandate and the firm’s procedures and systems. We operate a dual approval process. Where appropriate works orders are matched to suppliers’ invoice and approved for payment by the property manager payments are loaded to the bank by the designated book-keeper (for block and estate management services), and Head of Lettings or above for Lettings. A signatory will check the payment before authorising the release of funds.
How is interest and bank charges handled?
We are entitled to retain any interest earned through the aggregation of various Client accounts i.e. the lettings general account, if this is agreed in writing usually via our Terms of Business. Any interest accrued on discrete Client accounts e.g. individual block and estate accounts, is paid into the same account and / or as agreed in writing. There is no requirement however to set up interest bearing accounts unless otherwise agreed as most accounts are current accounts. Bank charges are charged back to the Client in accordance with the specific agreement.
How often do we reconcile Client accounts and what is the typical process?
We keep records and accounts that show all dealings with the money held in a Client money account. Bank accounts are reconciled on a monthly basis, and usually no later than six weeks after the date of the previous reconciliation. Where there are only one or two transactions per month the reconciliation will be quarterly. We utilise a three way reconciliation between the bank, general ledger, and individual Client ledgers, as appropriate.
What information is available to Clients about funds held in their Client account and the frequency of any reports?
Reporting and frequency requirements are agreed and documented with the Client and provided in line with the written agreement.
Block & Estate Management Directors can log into Resident to download financial reports including bank balance (confirming date of last reconciliation), arrears, creditors, budget v. expenditure and copies of end of year accounts.
We provide the appropriate statements, documents, and information in a durable medium form.
