CLIENT MONEY HANDLING PROCEDURE

Charterhouse Property Management Ltd

January 2024 

Charterhouse Property Management will preserve the security of clients’ money entrusted to its care in the course of its practice or business.

Clients’ money is defined 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; but - excluding fees paid in advance for professional work agreed to be performed, and clearly identifiable as such, unless the fees are for works undertaken as a property agent as defined by the rules of the RICS client money protection scheme for property agents.

[RICS Client Money Handling 1st edition, October 2019)

Our aim is to ensure that clients’ money can be clearly linked to the clients to whom it belongs and is protected on their behalf at all times and in particular, in the following circumstances:

 ·      Insolvency

·      Misappropriation by any party

·      Transfer of client money to another organisation

 Should clients’ money be misappropriated, the firm will inform our governing body, the RICS and, where appropriate, the police and our insurers.

How and where client money is held:

 All client money held or received by Charterhouse PM is banked into either: (A) a general client bank account; (B) a designated discrete account or (C) a client controlled bank account. a. A general client bank account is a client bank account which holds pooled client money for multiple clients; b. A designated discrete bank account is a bank account set up to hold client money for a single client. The name of the client will be incorporated into the account name. c. A client may request that tenants pay monies directly to a bank account controlled by themselves and Charterhouse will have no control over these accounts. These accounts are not covered by the RICS client money protection scheme. In the cases of both A & B the client money is under the exclusive control of Charterhouse PM and the bank accounts are held by a UK banking institution, with a minimum rating of BBB+ which is regulated by the Prudential Regulation Authority, the Bank of England and the Financial Conduct Authority

How interest and bank charges are handled:

 The Client Bank Account is an interest bearing, instant access account and Charterhouse PM will cover transactional banking and account maintenance charges associated with the operation of such an account. Charterhouse PM is entitled to retain any interest earned through the aggregation of various Client accounts to offset general bank charges and administrative costs associated with operating the Client Bank Account, as per the terms of a signed Property Management Agreement, Tenancy Agreement or specific Terms of Business.

General controls

We ensure:

·      Employees have clear segregation of duties and responsibilities and that a Principal or appropriately qualified individual oversees the client accounting function.

·      That we employ competent and knowledgeable staff who are responsible for processing clients’ money and who are familiar with RICS Rules.

·      That our accounting systems and client data are securely controlled and protected.

·      That our computer systems are adequately protected for access, firewalls, backups and disaster recovery.

·      There is adequate cover for holiday and long term absence.

·      Principals cannot and do not override controls surrounding the accounting systems.

·      All departments and branches apply the same level of controls in relation to the client accounting function.

·      Reporting and frequency requirements are agreed and documented with the Client via a Property Management Agreement.

Client bank accounts

We ensure:

·      That our clients’ money is held in one or more client bank accounts separate from all other monies and that client money is available on demand.

·      Any client bank accounts are correctly titled to distinguish the accounts from an office or any other account.

·      We have obtained written confirmation from the bank of the client account conditions.

·      We advise clients in writing of the bank account details and agree the terms of the account handling, including arrangements for interest and charges.

·      We have obtained written consent from our clients regarding retention of interest.

Client accounting systems and controls:

We ensure that:

·  Accounting records and systems are appropriate to the nature and volumes of client account transactions.  We use a suitable software package to manage client money effectively.

·  Our systems provide details of all money received into and paid from all client accounts and show a running balance of all client money held in that account.

·  Our systems identify all receipts and payments to the client to which they relate; for example by means of client ledgers showing cash balances held on behalf of clients at all times.

·  accounting records are completed chronologically and promptly.

·  The current balances at the total and client levels are always available.

·  all ledgers have the client name and an appropriate description, e.g. the property address.

·  Overdrawn balances on client ledgers are prevented by the systems or controls in place and where they do occur are investigated and rectified immediately.

·  Adequate controls are in place over unidentified client money to ensure that such funds are kept securely.  The clients are located and reimbursed as soon as possible.  Such funds held for more than six years are donated to a registered charity.

·  A central list of client bank accounts is maintained including dates of opening and closing accounts.

·  We complete a ‘three way’ reconciliation (between the Bank, general ledger and individual client ledgers) at least once every month where clients’ money is held in a general client account.

·  Reconciliations are reviewed and signed off by a Principal or an appropriate independent senior member of staff.

·  Client accounting records, including copies of reconciliations, are securely kept for at least six years plus the current year.

·  All payment requests to be accompanied by supporting evidence that has been checked and authorised. Segregation of duties in the client accounting function is in place to prevent data tampering within the payment process.

Controls over the receipt of client money

We ensure that:

·      Only a Principal or appropriate staff independent of accounting staff open incoming post.

·      Procedures exist to ensure all clients’ money is banked within three working days.

·      All cash and cheques received by post or by hand are promptly recorded.

·      A reconciliation is performed between money received by post and that day’s banking.

·      Procedures exist to identify and distinguish between clients’ and office money.

·      Mixed monies are initially paid into the client account and the office element paid in the office account when the receipt has cleared the bank.

·      Fees received in advance for professional work not yet billed are paid into a client account pending completion of the work.

·      Duplicate receipts are issued for cash received and controls over the physical security of cash are effective.

·      Unbanked client money receipts are kept secure.

·      Any unidentified payments are investigated as soon as possible and if they cannot be identified within 1 month, they are returned to the sender.

Controls over the payment of client money

We ensure that:

·      Checks are made to ensure that sufficient funds are held on behalf of the relevant client before payments are made.

·      A copy of the bank mandate is held and is up to date.

·      Adequate authorisation and supervision procedures are in place for payments made by cheque, bank transfer and electronic methods.

·      Insurance and adequate Principal supervision is in place where payments are made by non-principals.

·      All payment requests have supporting evidence, and that documentation has been authorised in advance by a Principal or other appropriate person.

·      Blank cheques are not signed, and unused cheques are kept securely in a safe or locked box.

·      Effective controls are in place over the setting up of new supplier accounts on the system.

·      Cash payments are avoided across the entire business.