Countrywide is fined £100,000 after accepting charges over handling of surplus client money

Countrywide accepted both charges made against it at a disciplinary hearing yesterday.

It has been fined £100,000 and also accepted a reprimand on the way it handled surplus client money.

Altogether just over £10m was involved, transferred over a period of years into a business account.

The charges were that Countrywide had failed to preserve the security of client funds, and had acted contrary to the RICS’s rules of conduct.

At yesterday’s hearing, held in Birmingham, the RICS disciplinary panel considered the two charges.

The RICS said in an update on the proceedings: “A RICS disciplinary panel considered two charges against the firm, both of which were accepted by the firm.

“The disciplinary panel received joint submissions from RICS and the firm that the appropriate sanction in light of the firm’s admissions and all of the circumstances of the case was a reprimand and a fine of £100,000.

“The disciplinary panel agreed with the parties that this was an appropriate and proportionate sanction and imposed the agreed sanction.

“Full written reasons for the panel’s decision and the respective submissions of the parties will be published later this week.”

Director of regulation Luay Al-Khatik said late yesterday afternoon: “RICS regulation is key to delivering confidence in property and construction services.

“Consumers need to have trust in professionals, and when property agents do not hold their clients’ money securely it seriously erodes that trust.

“Today’s hearing shows the importance of RICS’ robust and independent regulation within the property sector and sends a clear message to the sector that failing to observe appropriate standards is not acceptable and has consequences.

“I am pleased that Countrywide has engaged constructively with us and committed to improved controls to preserve the security of client money.

“We will work closely with them to ensure these are implemented.”

As EYE reported yesterday afternoon, Countrywide issued the following statement about the case:

“Back in 2008 we started to accumulate many thousands of individual small amounts on client accounts in our lettings businesses, where funds over six years old could not be traced to source.

“Some would have been rightly Countrywide funds and others small amounts of landlord/tenant sums that could not be traced.

“It was agreed at the time to move these untraceable amounts to an office account and put in place an indemnity that, should ever a recipient be identified, the amount would be paid across.

“In reality less than 1% were ever traced after six years. Immediately we paid over the amount due and customers did not suffer any loss.

“After ten years of audits an issue was raised in 2018 that this may not be in accordance with RICS rules.

“Countrywide repaid all of the funds that had been transferred from office to unnamed client accounts.

“Importantly nobody has been disadvantaged but we decided to resolve the RICS matter immediately through a full transfer.”

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8 Comments

  1. Hillofwad71

    Let’s face it this wasn’t a one off -a continuing breach which had been identifed sometime ago .Lame excuses
     
    Also earlier  this year it was revealed that Countrywide had been fined £215,000 by HM Revenue & Customs as part of a swoop cracking down on money laundering in the property sector. 
     
      With property management forming an integral part of their service offer  how can clients be confident that they are being kept compliant when CWD aren’t themselves? Lunatics running the asylum
     
    A set of BODS clearly remote from the  business operations . How many errors or business dealings ,questionable  recruitment,capital raises and destruction of shareholder  value  do Directors have to do before regime change is initiated .
     
    No surprise if they announce  Russell Quirk as the next CEO  with finance under the control of Nick Leeson

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  2. fx-361

    The outcome of this case shows up the historic failings of the RICS  (and ARLA) audit processes. Let’s hope RICS now review every single audited firm all the way back to the 2007 changes in tenant deposit protection and see how their individual suspense accounts have been reconciled and audited. Countrywide have been given a  disproportionate fine compared with non-corporate agent breaches of rule 8 but as it’s likely most of the £10m were fees  rightly due to the agency in the first place. Effectively the mis-management of the client cash account has cost CW very dearly indeed.  

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  3. Realitycheck97

    Ten years to uncover? What happened in previous audits? Why only now has this come to light?

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  4. Hillofwad71

    Fines no more than they deserve after the money laundering  saga  Expect better for a listed company with a commanding presence

    Foxtons trading  update this morning

    “Group revenue for the third quarter was down 7% to £32.5m (Q3 2018: £35.1m). This takes Group revenue for the first nine months of the year to £83.6m, down 5% on the prior year (2018: £88.1m).”

     

    This doesn’ t augur well for CWD with their hefty debt burden

     

    The turnaround strategy  has entered a cul de sac. Regime change required

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  5. WiltsAgent

    I think CW can consider themselves lucky to getaway with a relatively small fine after helping themselves to £10m of other peoples money.

    Equally, how the RICS can claim credit after 11 years is laughable. They have run this as a PR exercise over the last few days to cover their own incompetence. Trying to claim the mantle of ‘Sheriff’ after this fiasco is a joke.

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    1. GeorgeHammond78

      As much as I enjoy slagging CW as the next person, let’s have a bit of perspective here:

      £600 million worth of security deposits for……

      649 individual branch locations and….

      11 years, where……….

      £10 million snaffled but with an indemnity

      That equates to less than 0.15% per annum of the total deposits.

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  6. Mythoughts

    Does anyone know where I can arrange a revolving loan facility of up to £10M at a flat annual fee of £10k. No need to worry about repayment terms.

    Thanks

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  7. Woodentop

    “Today’s hearing shows the importance of RICS’ robust and independent regulation within the property sector and sends a clear message to the sector that failing to observe appropriate standards is not acceptable and has consequences”.

     

    How about RICS’ standing up and confirming that not putting tenants money into an independent custodial service, is not acceptable and has consequences.

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