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Problems setting up a client account? Here's what to do

Over the last few months, The Letting Partnership has seen an increase in calls from agents who are struggling to open a client account or have been given 60 days’ notice that their bank will be closing their existing client account.

Why is this such a problem?

Since April 2019, it has been mandatory for all property agents in the private rented sector in England handling clients’ money to join a government-approved Client Money Protection (CMP) scheme. (The rules for CMP are different in Scotland, Wales and Northern Ireland). Without a ring-fenced client account, agents will not be able to join any of the CMP schemes.


To trade legally agents are also required to join an authorised redress scheme (run by The Property Ombudsman (TPO) and the Property Redress Scheme (PRS) ). However, each scheme’s entry requirements are intertwined with CMP which in turn leads back to the client account.

What could happen if I don’t have an account?

Without a designated client account and the ability to obtain CMP or join a redress scheme an agent will be trading illegally. Trading Standards carries out spot checks and can impose a fine of up to £30,000!

How do I set up client account?

Any business can open a bank account and call it a ‘client account’ but that doesn’t make it one in the eyes of the law!

A formal request will need to be made to the bank for a designated client account to be created, with a clearly defined account name.

Ask the bank for a ‘Set-Off Letter’. This is written confirmation that funds cannot be taken or moved from the designated client account to pay either business or personal debts.

Why are agents experiencing problems with their client account?

If a bank rejects an application for a client account it could just be a case of ‘computer says no’, as applying for an account is usually an automates process. Contacting the bank’s regional Relationship Manager for an explanation.

Problems with the client accounts began back in January 2020 with the tightening of Anti Money Laundering (AML) regulations. Money laundering is a major problem for all banks, so as far as they are concerned if an agent is not registered for AML they are considered a risk - even if the guidance suggests that this is not a legal requirement

Other factors that could affect a bank’s decision are a lack of adequate Professional Indemnity (PI) Insurance, CMP and membership of an industry trade body.

Mitigate the risk

As we have seen; not being registered with HMRC for AML supervision is one of the primary reasons for being deemed unsuitable for a client account.

To ensure the best chance of opening a client account with a bank, agents should consider registering with HMRC for Anti-Money Laundering supervision. Whilst not necessarily a legal requirement for lettings in most cases, it will strengthen the application.

Agents can further increase their chances by ensuring that they have adequate PI insurance, that their policy specifically covers lettings activity and ideally membership of an industry trade body, however there are still no guarantees.

What to do if I am refused

We would recommend shopping around at other high street banks, or you may want to look at outsourcing your client accounting.

If you are still unable to set up a client account then consider getting in touch with The Letting Partnership who can provide a full client accounting service which includes opening a designated client account. To learn more about The Letting Partnership, call 01903 477 900 or visit our website.


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