RICS clarifies its Client Money Protection rules

RICS members who want to leave the organisation are not able to do so if the RICS suspects there could be any problem with client money.

The organisation has clarified its Client Money Protection policy in the wake of the collapses of a number of residential letting firms.

Diane Telford, RICS director of regulatory operations, said: “There is currently a lack of regulation in the lettings market, leaving consumers unprotected against the actions of agents who are not chartered, and sadly, instances where client money is lost at the hands of an agent makes this void all the more apparent.
 
“RICS Regulation is responsible for ensuring that our members and firms meet the requirements of RICS Rules of Conduct which define expected professional, ethical and business standards to mitigate risk in the profession and thereby protect consumers and the general public.

“RICS members or firms who do not meet our standards will be subject to investigation by our independent regulatory arm.
 
“RICS rules say that firms regulated by RICS shall preserve the security of clients’ money entrusted to them. Client money held by an RICS regulated firm will be held separately from the firm’s own money in a bank or building society account which is clearly marked as a ‘client’ account.

“As such, client money is ring-fenced from any funds belonging to the firm or the firm’s owners, and will always be available for repayment to the firm’s clients, including tenants for whom the firm holds deposits.
 
“Clients’ funds cannot be offset against any debts of the firm or its owners by a liquidator or an administrator. Additionally, RICS regulated firms are required to be members of a tenants’ deposit protection scheme which also protects tenants’ deposits.

“RICS also states that any client money can only be used for purposes which have been agreed between clients and the firm. Furthermore, any money entrusted to a firm that is regulated by RICS will be covered by the Clients’ Money Protection Scheme, which provides limited long-stop compensation.
 
“A member can’t resign from RICS if they are subject to regulatory investigation, and if we thought there was an outstanding problem with a firm that wants to de-register, a customer would still be covered by the Client Money Protection Scheme.

“RICS Regulation makes sure that firms are handling client money properly to ensure that all funds are well-managed and kept safe.
 
“In the unfortunate event that client money does go missing, this could be considered as theft and is therefore a criminal offence. In these circumstances, RICS Regulation work in conjunction with the police and the matter would be reported to the local police authority.
 
“RICS will consider all complaints if they involve allegations of unlawful discrimination or dishonesty. We believe it is in the public and consumer interest to investigate these complaints.
 
“Within our compliance regime, we provide our members and firms with advice and guidance as a core part of the process.

“We regularly conduct regulatory review visits and meet our member firms to offer feedback and advice about how performance and protocols can be improved. We share lessons learned and offer CPD to help all members to comply with their professional duties.

“This approach helps mitigate risk and ensures that client money is being handled correctly.”