Professional client account solutions for modern letting agents

05 September 2019 9993 Views

Professional client account solutions for modern letting agents

Letting agents will need to come up with new ways to manage client money as banks crack down on undesignated client accounts. In August, Lloyds Bank contacted several letting agencies, notifying them that any undesignated client accounts will be closed with 60 days’ notice.

The bank gave letting agents an ultimatum – close undesignated client accounts and replace them with designated accounts for each client, or make 'alternative banking arrangements'.

The move could be a response to existing anti-money laundering legislation, set to be tightened in 2020. It also acts as an extension of the legal requirement for agents to separate client money and business accounts, in force since April.

 If a reaction to banking regulations, other banks may well follow suit, with potentially devastating effects on the private rented sector.

While some agents have reportedly been able to keep their undesignated accounts with Lloyds by demonstrating their compliance with anti-money laundering laws, this can be a massive task in itself.

Agencies in this scenario could potentially also be saddled with additional banking fees, at a time when the new tenant fees ban is already hitting agencies’ bottom lines hard.

How can agents adapt?

PropTech could provide a way out for agents finding themselves in this bind.

PayProp offers the security of compliant client money accounts through its banking relationship with NatWest.

While separate client money accounts through another banking arrangement would increase administrative workloads if it was done manually, PayProp automates incoming and outgoing payments, allowing agents to focus on the parts of the job that require a personal touch.

Tracking and auditing transactions is also easier with PayProp. All incoming and outgoing transactions are visible in real time and statements are generated automatically, so letting agents can account for every penny of their clients’ money at any time in just a few clicks.

For a closer look at how PayProp can streamline client account management, get in touch to book a free demo.