A government minister has pledged to act on the threat to lettings agents posed by banks acting against pooled client accounts.
Many such accounts have been closed - or deterred from even being opened - because banks claim they contravene anti-money laundering rules introduced and tightened in recent years. Many letting agents have suggested that banks have discretion to reduce the scale of AML vetting in such a way as to allow pooled accounts, but several banks have contradicted this.
Indeed, it was raised by Parliament by Conservative MP and former Levelling Up Minister Kelly Tolhurst that Propertymark claimed Lloyds threatened one of its members with account closure if they continued to use pooled accounts. Tolhurst told MPs in a debate: “That forced the property agent to open and hold individual client accounts for the rents and deposits of every landlord they worked for, and this particular agent was working with over 100 landlords.”
Now - in response to lobbying by Tolhurst and various industry bodies including Propertymark - Andrew Griffith, the Economic Secretary to the Treasury, has told the Commons: “Banks can apply simplified due diligence to pooled client accounts where they assess the risk of money laundering and terrorist finance to be low … It is wrong to say that pooled client accounts are not eligible for simplified due diligence … We intend to look at how we can improve and reform the anti-money laundering procedures … We are dealing here with the law of unintended consequences. I believe that we can reconcile both objectives through better guidance and greater clarity and, where necessary, adjusting the regulations.”
Meanwhile Propertymark wants agents’ views and experiences to pass on to government.
The trade body says: “Propertymark has intervened with bank branches on behalf of members to explain the situation and outline that they are not complying with current industry guidance and best practices, and that letting agents cannot function without a pooled client account.
“We have also offered alternative solutions for members who cannot find a high-street bank willing to open a pooled client account for their business, such as the use of a Client Accounting Service Provider (CASP), which is a third-party organisation that manages client money on behalf of the agent.
“Agents who have had challenges opening or retaining a pooled client account are encouraged to get in touch with our Policy and Campaigns team to share their experience via firstname.lastname@example.org. We will use insight gathered from our members to shape our approach to future lobbying, input, and consultation work.”