24 SEP 2018
RICS Regulation is launching a mandatory data request for all UK firms that hold client money. This request is still mandatory even if you do not undertake residential lettings agency work or residential property management work in England.
The request has been prompted by the incoming statutory requirements for residential property agents (lettings and property management with the exclusion of block management) active in England (or with English business) to become members of an approved client money protection scheme (CMPS). These requirements will come into force on 1 April 2019.
As it stands, RICS’ current CMPS does not meet the new statutory requirements. This is because our existing scheme has caps in place to limit the amount of cover provided, which ensures the cost of the scheme is proportionate to the risk posed. However, this is not consistent with the new legislation, which removes the ability to place a cap on claims and requires firms to procure for cover at least equal to the total amount of client money held.
The existing RICS CMPS will continue operating unaltered for areas of business outside of the incoming legislation.
While we were supportive of making client money protection mandatory, we have robustly challenged the government on these aspects of the regulations. There is no clear evidence base for the need to remove the current caps used by existing scheme providers, and we do not believe there has been any real consideration of the impacts of this introduction – both to firms and consumers. The information you provide will help us give a clearer impact assessment to challenge government with, in addition to allowing us to consider our options.
RICS will be undertaking every effort to ensure that regulated firms have a clear route to compliance with the statutory requirements when they come into force on 1 April 2019. We understand that this will increase the costs of holding client money for many firms, and we will keep the profession updated as our work in this area progresses.
Although all RICS regulated firms holding client money will need to complete this mandatory return, if you do not undertake residential lettings agency work or residential property management work (excluding block management) in England this legislation will not affect you.
Firms will have until close of business on Friday 19 October 2018 to comply with this mandatory data request.