Ethics - Client Money

Question 1

What document relates to Handling Client Money?

Answer 1

RICS Client Money Handling, Professional Standard, 1st edition, Oct 2019 (Effective from 1 Jan 2020)

Question 2

What is client money?

Answer 2

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.

Question 3

What is excluded in client money?

Answer 3

Fees paid in advance for professional work agreed to be performed.

Question 4

What are the six main areas of good practice as set out in Client Money Handling, 1st Edition?

Answer 4

1. Holding client money – ensuring the word ‘client’ is in the client account name
2. Providing information to clients - clearly identifiable on statements to clients
3. Receipts of client money - should immediately identify whether any receipt is client or office money and pay it into the appropriate account
4. Payments from client accounts - must be used only for the client’s matters (internal approval and client approval process)
5. Accounting records and controls - all receipts are logged
6. Compliance - comply with anti-money laundering standards

Question 5

What are recommended procedures for keeping client money safe?

Answer 5

• 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

Question 6

What is the RICS client money protection (CMP) scheme?

Answer 6

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.

Question 7

How many parts of the client money protection scheme?

Answer 7

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

Question 8

What is the claim limit?

Answer 8

£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

Question 9

What should you do with surplus money in your client account?

Answer 9

• 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.