What document relates to Handling Client Money?
RICS Client Money Handling, Professional Standard, 1st edition, Oct 2019 (Effective from 1 Jan 2020)
What is client money?
Any money that an RICS-regulated firm holds for or receives on behalf of a client and is not immediately due and payable on demand to the RICS-regulated firm.
What is excluded in client money?
Fees paid in advance for professional work agreed to be performed.
What are the six main areas of good practice as set out in Client Money Handling, 1st Edition?
- Holding client money – ensuring the word ‘client’ is in the client account name
- Providing information to clients - clearly identifiable on statements to clients
- Receipts of client money - should immediately identify whether any receipt is client or office money and pay it into the appropriate account
- Payments from client accounts - must be used only for the client’s matters (internal approval and client approval process)
- Accounting records and controls - all receipts are logged
- Compliance - comply with anti-money laundering standards
What are recommended procedures for keeping client money safe?
- Client accounts must be kept separate and clearly identifiable
- The word ‘client’ is on the bank account and cheque book
- Controls in place to keep funds secure
- Client must be able to have their monies on demand
- Payment of interest agreed in principle, and accounts must be kept in credit
- Regular bank reconciliation checking that payments received are transferred to the bank account and expenditure records are checked at least monthly
- Accurate records are kept of the running balance available
- Annual audit and reporting obligations
- Cash receipts to settle transactions
- Signatories must be agreed, need 2 signatures
- A discrete account is for a single named client account only
- RICS Regulatory Review visits every 3 years
- Firms handling client money procedures need to be displayed on the website
What is the RICS client money protection (CMP) scheme?
This scheme provides protection, as a last resort, in instances where an RICS Regulated firm is unable to repay a client’s money, up to the limits and exceptions set out in the scheme rules.
How many parts of the client money protection scheme?
Two parts:
1. Client Money Protection for Surveying Services: general client money protection, covering money held by firms undertaking any surveying activities; and
2. Client Money Protection for Residential Agents: residential agency activity in England protection, covering areas under the Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018
What is the claim limit?
£50,000 - per claim limit
£10.3 million Aggregate annual claim limits
Requirements and limits for all surveying services firms holding client money in the UK - 25 June 2020
What should you do with surplus money in your client account?
- ensure that all efforts are made to trace the clients or owners of the money
- hold the surplus money in a client suspense account
- hold surplus money for at least 3 years
- must be donated to charity after 3 years
The receiving charity should offer the donating firm an agreement to enable the firm to recover a donation in the event of a claim.
