Over the past couple of years The Letting Partnership has seen an increase of enquiries from start-up agents who have been unable to set up a client account with a bank, and worried existing letting agents who have been given 60 days’ notice that their bank will be closing their client account.
Why is this such a worry?
* The Law states you need a ring-fenced client account ¹ *
Any business can open a bank account and call it a ‘client account’ but that does not make it one in the eyes of the law!
A formal request must be made to the bank for a designated client account to be created, with a clearly defined account name. The bank needs to provide a written confirmation that funds cannot be taken or move funds from the designated client account to pay either business or personal debts. This is known as a ‘Set-Off Letter’.
Problems securing a Client Account
If an application for a client account is rejected it may be just a case of ‘computer says no’, as applying for an account is usually an automated process.
In the first instance contact the bank’s regional Relationship Manager and ask for the reasons why. Before doing this however, it’s worth reading the government advice on money laundering supervision for letting agency businesses. Not being registered with HMRC for Anti Money Laundering (AML) supervision is one of the primary reasons for being deemed unsuitable for a client account.
Money Laundering Registration
Money laundering is a major problem for all banks so as far as they are concerned if an agent is not registered, they are considered a risk, and it’s one the majority are not prepared to take. Even if the guidance suggests that you don’t have to be, get registered anyway!
Being registered for AML supervision combined with gaining certification from one of the government approved Client Money Protection (CMP) schemes should be enough to give a bank the confidence it needs to grant the agency a client account, however there are no guarantees.
If still no luck, it could be worth contacting the other high street banks in your area as they could be more open to discussing individual circumstances as decisions are often made on a branch-by-branch basis.
Need more help?
If you are still experiencing problems opening or keeping your client account open give us a call. We can open designated ring-fenced accounts within 24 hours for agents who use our services.
Contact us today and see how we can help with all your client accounting needs.
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