The banks gave 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 anti-money laundering legislation, that will be tightened this year. It also acts as an extension of the legal requirement for agents to separate client money and business accounts, in force since April.
Banks are likely to keep driving compliance this year
If a reaction to banking regulations, more banks may well follow suit this year, with potentially devastating effects on the private rented sector.
While some agencies have reportedly been able to keep their undesignated accounts 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 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.
