Client Money Handling

Question 1

What are the 6 mandatory requirement for RICS firms as set out in the Client money handling professional standard 2019?

Answer 1

6 main requirements

1. holding client money
2. receipts of client money
3. information to clients
4. payments from client accounts
5. accounting records and controls
6. compliance

Question 2

In relation to holding client money what must RICS Regulated firms do?

Answer 2

• client money must be kept in separate client account (including the word client - discrete accounts must have an identifier)
• client money account does not contain any sums other than the whole or any part of client money paid into it
• client money is immediately available
• not hold office money in client account
• where client has instructed money to be held in a high interest account with penalties for instant access, penalties only paid out of client account if client given informed consent
• where client requests money to be held in an account with access themselves they must set up the account

Question 3

In relation to information to clients what must RICS Regulated firms do?

Answer 3

They must provide in writing

• confirmation client money will be held in a client money account including bank
• account details and that the firm has exclusive control
• whether name of account is in name of registered firm or third party provider
• firms written policy and procedure
• how unidentified funds are dealt with
• disclosure of all commissions earned by firm while managing the property

Question 4

In relation to receipts of client money what must RICS Regulated firms do?

Answer 4

• ensure all client money received is paid into a client money account promptly
• when mixed monies are received the receipt is paid into a client money account and office money transferred to office account promptly
• where client instructions are to hold only part of the payment - whole payment is to be placed in before transferring relevant part out
• account for interest or other benefits accruing from client money to client
• take prompt action to identify owner of any unidentified client money received and pay this from a client money account to registered charity if owner not identified after 3 years
  (Obtain a receipt and indemnity incase owner identified)

Question 5

In relation to payments from client accounts what must RICS Regulated firms do?

Answer 5

• use each clients money only for client matters
• return client money to the client immediately if no reason to hold funds any longer
• ensure all payments from client money accounts are made to or on behalf of client (on written instruction)
• when fees are due / payable - send invoice (don’t deduct fee from client account unless received written agreement)
• check sufficient funds are held for relevant client before making payments
• obtain written permission from clients on any direct debits or standing orders

Question 6

In relation to accounting records and controls what must RICS Regulated firms do?

Answer 6

• keep records and accounts showing all dealings and show client money held in client money account
• appropriate systems and controls to ensure payments in accordance with instruction
• complete regular bank account reconciliation (demonstrate reviewed by senior staff)
• written client money handling procedure
• overdrawn balances are prevented
• control and protect accounting systems and client data (firewall etc)

Question 7

In relation to
Compliance with the RICS client money handling procedure what must RICS Regulated members do?

Answer 7

• comply with anti money laundering legislation (and RICS PS) on client money
• follow firms client money handling procedure
• not to override any controls to protect client money handling
• disclose to a senior member of risk or actual misappropriation of client money + keep written record