Government under pressure to extend banking reforms to protect client accounts
Propertymark and Safeagent have both written to the Government highlighting the issues letting agents face when it comes to pooled client accounts.
The Government is coming under increasing pressure to act on the closure of pooled client accounts following a series of high-profile account closures that saw bosses at NatWest and Coutts both lose their jobs.
Propertymark has written to HM Treasury (main picture) highlighting the ongoing issues and pushing for action from the UK Government to find solutions that reduce barriers for letting agents to operate.
WITHDRAWING ACCESS
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.
However, the trade body says in its letter to Chancellor Jeremy Hunt that this is based on a lack of understanding about how the current regulations for client money protection and anti-money laundering apply to letting agents.
Nathan Emerson, Propertymark chief executive, writes: “What we are seeing is banks taking the stance to de-risk themselves to a point where they are refusing to open new client accounts or maintain existing accounts, some of which have been open for decades without issue.
The removal of undesignated client accounts poses a serious threat to an agent’s business.”
“The decisions behind which agents have been allowed to keep their accounts has often been made at the local branch-level, with some banks being less willing to allow agents to keep their accounts than others.
“This has made it difficult to establish a consistent approach across all bank branches. The removal of undesignated client accounts poses a serious threat to an agent’s business.”
And he adds: “It is not uncommon for letting agents to manage hundreds of properties, yet many banks have now requested the agent hold an individual account per property. Even if banks allow the agent to hold that number of individual accounts (which is not guaranteed), it is infeasible to manage that many accounts.”
Read his full letter HERE.
Elsewhere, Safeagent, the not-for-profit accreditation scheme for lettings and management agents, has called upon the City Minister Andrew Griffith to consider extending reforms to cover business accounts; particularly for accounts held by agents.
It is imperative to address the challenges that agents face.”
Isobel Thomson, Chief Executive of Safeagent, writes: “To ensure the proper functioning of those operating within the PRS (Private Rented Sector), it is imperative to address the challenges that agents face concerning the sudden and unexplained closure of their client accounts by banks.
“These accounts securely hold landlords’ rental income and tenants’ deposits, as is legally required, and we have seen a a number of instances where these accounts have been subjected to unexpected closures, significantly disrupting business operations.”
“If the Government is committed to elevating industry standards within the PRS, swift action must be taken to address this pressing issue.
“The inability of lettings and management agents to access reliable and compliant client accounts hinders their ability to operate effectively and ethically, undermining the Government’s goal of fostering a thriving and secure rental market.”
Read her full letter HERE.