Pooled Client Accounts - Government admits problem with banks

It looks as if the government is accepting that there is a problem with how banks treat Pooled Client Accounts - a long-term problem for letting agents.

For several years banks have been withdrawing access to pooled client accounts, sometimes called undesignated client accounts, because they perceive them as a risk to their compliance with Anti-Money Laundering Regulations. Propertymark recently wrote to Chancellor Jeremy Hunt to bring the problem to the attention of the government. 

This appears to have worked, with the government now calling on agents for assistance. 

Treasury Lords Minister Baroness Penn, responding on Hunt’s behalf, says in a letter to Propertymark chief executive Nathan Emerson: “The Government recognises the importance of pooled client accounts as an important part of business banking infrastructure for several industries, including property agents. 

“… The ability to apply simplified due diligence to a customer can be a key factor in the commercial decision of banks to offer PCAs to letting agents for the purposes of holding client money. SDD allows banks to offer PCAs without the need to verify the identities of each individual who would have their money held in the account. 

“[Official] guidance is clear that, even if a firm is not registered for supervision under the Money Laundering Regulations, banks can still apply SDD to PCAs for these businesses if they assess their risk of money laundering and terrorist financing to be low. The Government has worked closely with UK Finance in recent months to reiterate this to banks following reports of a number of letting agents having their PCAs closed.”

And Baroness Penn concludes: “While the Government has taken action through guidance and engagement with industry to address this issue, we recognise that difficulties persist. In last year’s review of the MLRs the Government committed to consult on options aiming to address the difficulties in accessing PCAs, including the option of amending the regulations to widen the range of low-risk circumstances in which PCAs may be provided while applying SDD. Work on this consultation will begin later this year, and my officials will be in touch to seek Propertymark’s constructive engagement with our proposals in advance of and through the consultation.”

Now - ahead of that consultation - Propertymark wants agents’ views and experiences.

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 policy@propertymark.co.uk. We will use insight gathered from our members to shape our approach to future lobbying, input, and consultation work.