Client Money Handling Flashcards
What is the effective date of this professional standard?
January 2020
What is an overview of Client Money Handling?
1 An introduction explaining the objectives and application of this professional standard and its relation to the rules of the RICS Client Money Protection Scheme.
2 Mandatory requirements for mitigating the inherent risk in holding client money. It is clearly specified where these requirements apply to RICS members or regulated firms only or to both RICS members and regulated firms.
3 Guidance setting out supporting good practice for keeping client money secure.
What are the objectives?
- client money is kept safe
- client money accounts are used for appropriate purposes only and
- RICS-regulated firms have the appropriate controls and procedures to safeguard client
money.
To whom do they apply?
all RICS members and RICS-regulated firms operating in the UK.
What are the RICS Client Money Protection Scheme Rules?
RICS-regulated firms that hold client money must therefore ensure that they are registered
with the appropriate RICS scheme:
- the RICS Client Money Protection Scheme for Surveying Services, which generally applies for
client money held by RICS-regulated firms in the United Kingdom or - the RICS Client Money Protection Scheme for Property Agents, which meets the specific
provisions that apply for property agents from 1 April 2019 for client money held in
connection with letting agency work and property management work in England.
In relation to holding client money, RICS-regulated firms must:
- hold all client money in a client money account
- ensure all client money contain any other sums
- not hold office money in a client account
- ensure all client accounts include the word client and the name of firm
- ensure money is immediately available to clients
RICS-regulated firms must provide the following information to clients in writing:
- confirmation that its held in a client account
- account details
- the account in the name of
- advice to client who pay fees in advance
-disclosure of all commissions - how unidentified funds are dealt with
- copy of firms written procedures
In relation to receipts of client money, RICS-regulated firms must:
- ensure all client money received is paid promptly
- ensure mixed monies received is separated into correct accounts
- client instructions hold part of payment, whole is paid then transfer relevant part
- account for interest accruing from client money to the client
- take action to attempt to identify owner of any unidentified client money
- obtain a receipt and an indemnity for all client money
In relation to payments from the client account, RICS-regulated firms must:
- use clients money only for their matters
- ensure money returned to client immediately
- ensure all payments are made to or on behalf of client
- when fees are payable, send an invoice
- check sufficient funds in account
- obtain written permission
- obtain written agreement
In relation to accounting records and controls, RICS-regulated firms must:
- keep records and accounts
- have appropriate systems
- complete client bank account reconcilliations
- publish written procedures for handling client money on company website
- ensure overdrawn balances are prevented
- control and protect accounting systems
In relation to compliance, RICS-regulated firms must:
- ensure compliance all anti money laundering legislation
- ensure compliance with mandatory requirements for CB&C, ML & TF
- obtain certification required
- ensure breaches are investigated and remedied
- record any breaches of this standard in writing
- inform RICS
RICS members must:
- ensure compliance with all anti money legislation, rules and regs
- ensure compliance with CB&C, ML & TF SEP 19
- follow all procedures for handling client money
- make appropriate disclosures to a senior member
Examples of client money include, but are not limited to, money held or received as:
- a payment on account of costs generally
- rents and service charges
- interest credited to a client account (unless the firm retains interest by agreement)
- arbitration fees
- client money held but due to be paid to contractors
- auction sale proceeds where the firm is acting as an agent not as a principal
- commission received on the placement of insurance for members of the designated
professional body scheme for general insurance distribution activity where the client
has not given the RICS member or RICS-regulated firm informed consent to retain the
commission
Office money includes but is not limited to:
- interest on general client accounts that by agreement with the client does not accrue to
the client – the bank or building society should be instructed to credit such interest to
the office account - payments received for fees due to the RICS member or RICS-regulated firm against a bill
or written notification of costs incurred, which has been given or sent - disbursements already paid or disbursements incurred but not yet paid by the RICS
member or RICS-regulated firm - money paid in advance in respect of an agreed fee for surveying services (but not
property agent work in England).
