Banks Closing Pooled Client Accounts - agents urge government action

Propertymark is urging the government to tackle the problem of banks closing down undesignated or pooled client accounts of letting agents.

HM Treasury has published a consultation on improving the effectiveness of the Money Laundering Regulations 2017, which place requirements onto businesses including the property sector, to identify and prevent money laundering and terrorist financing.

The consultation covers four core themes including making customer due diligence more proportionate/effective, and providing clarity on the scope of Money Laundering Regulations.

In August last year, Propertymark wrote to the Chancellor highlighting concerns from agent members relating to banks closing undesignated or pooled client accounts of letting agents. 

And in October Kelly Tolhurst MP outlined issues from agents and other sectors in Parliament at a Westminster Hall debate on business banking and Pooled Client Accounts. 

Then in November, Propertymark met with officials at HM Treasury at the request of Baroness Penn, Treasury Lords Minister, to raise ongoing concerns. Case studies and examples from Propertymark members were put to officials as well as solutions to resolve the situation.

Now Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “After months of lobbying the UK Government, we are pleased to see this consultation and the potential for improved access to Pooled Client Accounts for letting agents who are not fully supervised by HMRC for anti-money laundering. 

“Propertymark members across the country have been impacted by banks closing undesignated client accounts as a result of financial institutions not fully understanding the legal requirements for letting agents to adhere to the Client Money Protection rules. 

“Clarifying Simplified Due Diligence processes, as well as reducing the threshold requirements for letting agents to comply with the anti-money regulations and register with HMRC for anti-money laundering supervision, will help reduce a barrier that can make it hard for estate agents and letting agents to operate. We urge the UK Government to listen to the concerns of the sector and make changes that support letting agents and allow them to meet their legal responsibilities.”

Earlier this week we reported that Tory MP Harriett Baldwin - chair of the all-party House of Commons Treasury Committee - had written to major banks’ chief executives, asking for the specific number of SME business accounts held by their organisations, and if possible, a break-down by business sector including property businesses; the number of accounts closed at the instigation of their organisation for the year to date, and the proportion of those that were SME business accounts; and the reason for the closure of the accounts.

In the UK, letting agencies are required to hold rent money in a client account, where the money is protected. Without a valid client account operated by an FCA-regulated bank or business society, a letting agency cannot legally operate or take out a client money protection policy, which is a legal requirement in England, Scotland and Wales.