Handling Client Money Flashcards
What is the main document relating to handling client money?
RICS Professional Standard: Client Money Handling 2019
What are the key principles of the RICS Professional Standard: Client Money Handling 2019?
● Safe - Keeping Money Safe
● Correctly - Making sure client money is used correctly
● Controls - Making sure firms have correct controls in place
What are the 6 main areas of good practice set out in the RICS Professional Standard: Client Money Handling 2019?
1) Holding - Holding client money
2) Information - Providing information to clients
3) Receipts – Receipts of client money
4) Payments – Payments from client accounts
5) Accounting – Accounting controls and records
6) Compliance
Give some examples of client money that may be held or received?
1) Deposits
2) Rent collections
3) Service charges
What are the procedures for handling client money?
Client accounts must:
● Be separate and identifiable
● Have the word ‘client’ in the bank account name and cheque book
● Kept in credit and payment of interest agreed with the client
A client must:
● Be able to have monies on demand
Firms must:
● Keep accurate records and running balance
● Only withdraw money when properly required – two signatures by authorised staff
● RICS Firms handling client money must display procedures on website
● Pay an annual regulatory review fee
What audits and inspections are applicable to handling client money?
● RICS annual audit and reporting obligations by a certified accountant employed by RICS
● RICS Regulatory Review Inspections can be undertaken by RICS employed accountant - usually on a 3 yearly basis
What does the annual regulatory review fee relate to?
All regulated firms who hold clients’ money pay a regulatory review fee on an annual basis. The income generated from these fees covers the operational costs of the client money regulatory review visit programme. The fee is set based on the number of directors/principals in each firm, which includes both RICS members and non-member individuals.
What is the RICS Client Money Protection Scheme 2020?
● Last resort protection for claims where an RICS firm cannot repay clients money
● Schemes for surveying services, property agents, residential agents
● Limit per claim: £50,000
● Cap on liability within a financial year: £10,300,000
What is the difference between client money and office money?
Payments on account of costs are generally client money and must be held in a client account.
A payment from a client for a fixed agreed fee after you have delivered a bill is your firm’s money and should be paid into an office account.
What is the purpose of joint names on a client account?
To allow dual authorisation.
What do the RICS Rules of Conduct say about client money?
1) Firms keep client money safe and have appropriate accounting controls.
2) Members do not misuse client money and comply with controls intended to keep it safe.
Tell me about an instance of when you have handled client’s money.
I have had no experience handling client’s money however I am aware that clients’ money is regulated by Section 14 of the Estates Agents Act 1979 and must be held in a designated client account. With the name ‘client’ also included on the account name.
I have a basic understanding of the RICS Professional Standard: Client Money Handling 2019.
How would you keep client’s money securely and safely held?
I do not handle client money, however I am aware of some requirements under the RICS Professional Standard: Client Money Handling 2019. E.g.:
Client accounts must:
● Be separate and identifiable
● Have the word ‘client’ in the bank account name and cheque book
● Kept in credit and payment of interest agreed with the client
A client must:
● Be able to have monies on demand
Firms must:
● Keep accurate records and running balance
● Only withdraw money when properly required – two signatures by authorised staff
● RICS Firms handling client money must display procedures on website
● Pay an annual regulatory review fee
