An agent trying to open a separate client account was gobsmacked to be told by his bank that he needed to open up separate accounts for each and every one of his landlords.
The agent is trying to meet the April 1 deadline for compulsory Client Money Protection.
A basic requirement for CMP schemes is that the agent must hold client money separately.
However, the agent was told by Lloyds that he could not open one pooled account, but would need to open one for each landlord – in his case, that would mean some 90 accounts.
The agent, a single-office business in Warrington, told EYE: “We manage about 100 properties for landlords, who mostly have just one property each.
“To open and run 90 different client accounts would mean that I would have to employ a full-time accountant.
“We are a small business, and what the bank is asking is impossible.
“Talking to their call centre, it appears that this is Lloyds’ own internal policy.
“However, the one account per client rule is completely unworkable.”
The agent said that he has been told by his CMP scheme, Client Money Protect, that he and others in the same position can get cover but on the basis that they move from Lloyds to another bank within a year.
Lloyds confirmed to EYE yesterday that it does require agents to open and manage multiple accounts, and that agents would have to check each client at the point of opening every account.
It appears that this is because agents are not regulated by the FCA.
A Lloyds spokesperson told EYE: “We offer a range of different account types to best meet the needs of our small business customers.
“To ensure compliance with the new money laundering regulations, we’re no longer able to offer Undesignated Client Accounts to property managers and letting agents.
“However, these customers can continue to open Designated Client Accounts, and our business relationship teams are on hand to guide them through this process.
“We apologise for any inconvenience that this may cause, however our priority is to ensure that our customers remain compliant once the new regulations come into effect.”
Eddie Hooker, CEO of Client Money Protect, told EYE: “It has been brought to the Government’s attention that some banks are not in a position to open a client account for letting agents.
“The Government has requested that authorised schemes give letting agents a grace period of 12 months starting from April 1 to open a client account if it can be shown that they are trying to obtain one from a UK regulated bank.
“The position of Client Money Protect is that we want to assist agents with complying with the law so we will adhere to the grace period, but we expect evidence from the letting agent that they are in process of obtaining a client account.”