1.0 Introduction

1.1    White & Sons (the Firm) are a private partnership and manage client money in accordance with the RICS Client Money Handling Rules of Conduct and Guidelines.  The Firm are also members of the RICS Client Money Protection Scheme. Click here to see our Client Money Protection Certificate.

1.2    This document sets out the Firm’s Policy and Procedure for handling client money.  All staff must read and understand the Firm’s Policy in order to help us comply with RICS rules.  The Firm’s Policy is to be included within the induction procedures for new staff.

1.3    Client money is defined by the RICS as: 

Money of any currency (whether in the form of cash, cheque, draft or electronic transfer) that:-

an RICS-regulated Firm holds for or receives on behalf of another person, including money held by a regulated firm as stakeholder and
is not immediately due and payable on demand to the RICS-regulated firm for its own account

excluding fees paid in advance for professional work agreed to be performed, and clearly identifiable as such, unless the fees are for work undertaken as a property agent as defined by the Rules of the RICS Client Money Protection Scheme for Property Agents. 

1.4    The Firm holds three client money bank accounts.  These are known as “general accounts” because multiple client’s money is paid into them, with an internal ledger to manage and monitor which clients funds are on the account.  This is distinct from a “discrete account” which would be an individual bank account for a specific client.  The Firm does not currently operate these.

1.5    A list of definitions of terms used in this Policy is attached at Appendix A and is taken from the RICS Professional  Standards.
 

2.0    Requirements for RICS Firms

2.1    Holding client money

In relation to holding client money, all RICS-regulated Firms must:

• hold all client money in a client money account over which the RICS-regulated Firm has exclusive control at a bank or building society 
• ensure that a client money account does not contain any sums other than the whole or any part of client money paid into it, or any sums needed to replace money that has been withdrawn from the account by error, with accrued interest on such amounts
• not hold office money in a client money account unless it is a receipt of mixed monies where the office money is awaiting transfer
• ensure that all client money accounts include the word ‘client’ (written in full) and the name of the Firm in the title of the account 
• ensure that money held in a client account is immediately available even at the sacrifice of interest, unless other arrangements are in the best interest of the client and the client has given express instructions in writing
• ensure that where the client has given instructions to hold monies in a high interest account with penalties for instant access, penalties are only paid out of the client account if the client has provided specific informed consent and this will not result in an overdrawn balance – otherwise the bank must be instructed that penalties are to be applied to the office account
• confirm the bank operating conditions in writing with the bank that holds the client money account, including acknowledgement from the bank that monies in the client money account will not be combined with or transferred to any other account maintained by the Firm – the bank is not entitled to exercise any set-off or counterclaim against money in that client money account for any sum owed to it or any other account of the Firm
• It is Firm’s policy not to have client accounts to which the Firm and clients have access 

2.2    Information to others

RICS-regulated Firms must provide the following information to clients in writing:

• confirmation that client money will be held in a client money account that the RICS-regulated firm has exclusive control over and that the account is in the name of the regulated firm 
• disclosure of all commission earned by the Firm while managing their property
• how unidentified funds are dealt with
• a copy of the Firm’s written procedures for handling client money

 

2.3    Receipts of client money 

In relation to receipts of client money, all RICS-regulated Firms must:

• ensure all client money received is paid into a client money account promptly
• ensure that when mixed monies are received the receipt is paid into a client money account and the office money is transferred into the office account promptly
• ensure that where client instructions are to hold only part of a payment the whole payment is placed into a client money account before transferring the relevant part out promptly
• account for interest or other benefits accruing from client money to the client, unless otherwise agreed with the client in writing
• take prompt action to attempt to identify the owner of any unidentified client money received and pay this from a client money account to a registered charity where the owner cannot be identified after three years from receipt and all avenues of investigation have been exhausted.
• Obtain a receipt and an indemnity for all client money paid to a registered charity that would reimburse the Firm for payment of the monies if a beneficiary is subsequently identified

 

2.4    Payments from client account

In relation to payments from the client account, the Firm must:

• use each client’s money only for that client’s matters
• all payments from a client are authorised by a Partner of the Firm.  This authorisation process is done daily.
• client money must be returned to the client immediately as soon as there is no longer any reason to retain those funds, and any further payments received (e.g. by refund) are paid to the client immediately
• all payments from client money accounts are made to or on behalf of a client and on that client’s written instructions or as agreed in our Terms of Engagement with the client
• when fees are due and payable, unless the client has given written authorisation for deduction of agreed fees without prior notification, send an invoice or other written notification of the costs incurred to the client before withdrawing money from a client money account for payment of the Firm’s fees, and then transfer those monies out of the client account promptly
• check that sufficient funds are held for the relevant client before making any payments on their behalf
• It is not the Firm’s policy to make any direct debits or standing orders from client bank accounts
• obtain written agreement from the client before bank costs are recharged to client bank accounts

 

2.5    Accounting records and controls

In relation to accounting records and controls, the Firm must:

• keep records and accounts that show all dealings with the client money and demonstrate that all client money held by the Firm is held in a client money account
• follow Firm’s procedures to ensure payments into and transfers or withdrawals from a client account are in accordance with instructions agreed with the client
• the Firm undertakes client bank account reconciliations daily.  These are reviewed by the Head of Accounts and overseen by a Partner 
• it is the Firm’s policy not to allow client account balances to be overdrawn but should this ever occur it will be investigated immediately by a Partner and rectified 
• all accounting systems and client data are protected by the Firm’s computer systems for access, firewalls, back-ups and disaster recovery protocols.

 

2.6    Regulatory Compliance

In relation to compliance, the Firm must:

• ensure compliance with all anti-money laundering legislation, rules and regulations for all receipts of client money
• ensure compliance with the mandatory requirements of the latest edition of RICS’ countering bribery and corruption, money laundering and terrorist financing
• obtain any certification required under legislation currently in force and follow any requirements in the legislation for display or publication
• ensure that any breach of these requirements is investigated and remedied promptly on discovery, including the replacement of any money improperly withheld or withdrawn from a client account
• record any breach of the Firm’s Client Money Policy in writing in sufficient detail including any consideration of whether to inform RICS and any client affected by the breach
• inform RICS, the client and the insurers of the Firm immediately if client money is misappropriated by any person

All staff must:

• follow all procedures for handling client money as set out in this Policy
• not override any controls in place to protect client money
• make appropriate disclosures to a senior member of the Firm or a regulator immediately if they become aware of any risk of or actual misappropriation of client money and to keep a written record of that disclosure

 

3.0    Specific Practice and Procedures

3.1    Information to clients

3.1.1    Where a Firm takes commission on payments made to contractors, the commission or charges should be clearly identifiable on statements to clients to ensure they are fully aware of the total commissions transferred from the client bank accounts.


3.2    Receipts of client money

3.2.1    The Firm should immediately identify whether any receipt is client or office money and pay it into the appropriate account.  

3.2.2    Where the Firm places office money into a client money account to fund a payment on behalf of a client, the advance sum becomes client money on payment into the client account.  It can only be repaid to the Firm when funds are received from or on behalf of the client to enable the repayment.

3.2.3    If the Firm conducts a personal transaction for a Partner, money held or received on behalf of the Partner is office money.  However, other circumstances may mean that the money is client money, such as where the transaction is on behalf of a Partner and a third party.  For example, if the Firm acts for a Partner and their spouse, who is not jointly a Partner in the practice, any money received on their joint behalf is client money.
If the Firm acts for an employee, that person is a client of the Firm, even if conducting the matter personally, and money received for that person will be client money.

3.2.4    Interest due to a client should be paid into a client account to enable payment from the client account of all money owed to the client.

3.2.5    The Firm maintains a detailed listing of unidentified funds that include: the date the monies were received; how they were received, i.e. cash, cheque, direct banking; the reference on the bank statement regarding the payer and the amount.

3.2.6    The Firm will carry out an investigation into the unidentified funds, which will include:

• checking the accounting records to see whether they have outstanding rental income/service charges/ground rents and checking to see whether any of the unidentified funds tie up with outstanding debts and target those tenants/leaseholders
• writing to the last known address of the client/tenants or engaging a firm to follow-up the addresses to find the clients/tenants and 
• trying to repay the funds through the banking system wherever possible

3.2.7    The Firm will keep a record of their investigation including evidence of the steps above and, if relevant, evidence that the funds were banked directly into the client account without any details.  The Firm will take all responsible steps to identify the owner or payee of the funds as soon as possible.  If identification or repayment has not been possible within three years of receipt and the Firm has paid the money to a charity, the Firm will remain responsible for ensuring that client money is repaid but can use the indemnity to seek reimbursement from the charity.

3.2.8    The Firm discourages payment by cash or cheque but will ensure that cash and cheques received are kept safe until they are banked.  All cash and cheques should be banked promptly.  Cheques older than six months that have not been banked should be cancelled, written back and reissued.

3.2.9    Where the Firm accepts payment into the client money account by direct debits, the Firm should ensure compliance with the requirements of the Direct Debit Guarantee scheme.
 

3.3    Payments from client account 

3.3.1    Money that has been paid into the client account in error (e.g. money paid into the wrong client account or interest wrongly credited to a general client account) should be withdrawn or transferred from the client account promptly on discovery.

3.3.2    The Terms and Conditions agreed with the client should state what should happen to client funds at all points including the completion of the instruction.  If the purpose for which particular funds were held falls away and the agreement with the client is not clear about that situation, then the Firm should take instructions on whether the money should be returned to the client or retained to cover any aspects of the further work.
 

3.4    Payment controls

3.4.1    All payment requests are processed by the Accounts team.  This process is as follows:

1. Statements, demands and other written communications for payment of client money to clearly state the relevant client account bank details and further encourage appropriate referencing of payments to enable easy identification of funds being received.
2. Import payment to corresponding account/s.
3. Supporting paperwork given to a Partner for verification, approval and signature.
4. Payment only released by a Partner, in accordance with bank mandate.
5. All records retained.

3.4.2    The Firm holds details of client, contractor and third-party payee bank details.  This information is held by the Firm in different systems for different departments (for example Residential Lettings use Reapit, whilst Block Management and Commercial Management use Blockman and Re-leased respectively).  

3.4.3    Any change in bank details retained on the Firm’s systems or records must be completed on the Form at Appendix B and signed by the member of staff seeking to make the change and then counter-signed by the Head of Department or a Partner, before such bank account details can be actioned with a copy of the form saved in the appropriate computer system.

3.4.4    The Firm will have appropriate cover for holiday and long-term absence of signatories and other staff with responsibility for client money accounting.
 

3.5    Reconciliations

3.5.1    The Firm’s reconciliations show the cashbook, ledger and bank statement balances with any reconciling items clearly explained.  Any errors identified should be rectified immediately.

Client money account reconciliations will include a full list of:

• dated unpresented cheques
• dated outstanding deposits
• details of any other reconciling items and
• client ledger balances and the total of the balances

3.5.2    Reconciliations should not include regularly occurring adjustments or reconciling items more than three months old, except for unpresented cheques that should be no more than six months old.  

3.5.3    The Partner who reviews the reconciliation should sign and date the reconciliation report to show compliance.  This will be retained by the Firm. 
 

4.0     Misappropriation and Reporting

4.1    Staff must report any concerns about client money security or a breach of this Policy to a Partner.  The Firm has a Whistleblowing Policy which is located via the staff handbook.

4.2    Where a report of a potential breach of this Policy has been made, the investigating Partner will seek to maintain appropriate levels of confidentiality.  Staff are asked to refrain from commenting on an investigation including on social media, so as not to hinder the investigation and to protect the identity of those involved and in particular the client.

4.3    Department Heads must check that all departments apply the same level of controls to handling client money, and that Partners and Managers must not override client money controls.

4.4    All Partners should report any client money misappropriation to the RICS immediately.

4.5    The Firm should usually report any client money misappropriation to the police and should keep records of reports made and any subsequent police advice or action.  If the Firm decides not to report the matter to the police, a record of that decision and the reasons for it should also be kept.

4.6    Any breach of the Firm’s Client Money Policy will be thoroughly investigated by a Partner and may result in additional training.  A deliberate breach of this Policy or misappropriation of client money will result in disciplinary action in accordance with the staff hand book and it may result in immediate dismissal.


Stuart Walker BSc MRICS FAAV
Partner and Head of RICS Compliance
December 2024