Appendix iii: Clients’ Money Protection for Members insured by Hiscox Insurance Company Limited
UKALA have a Client Money Protection scheme for its Members and the following shall only apply to Members who are registered under the UKALA Client Money Protection Scheme. Members should refer to Appendix ii before reading this appendix.
1. Purpose
The main purpose of Client Money protection is to:
a. allow agents and property professionals to be covered by Client Money protection; and
b. compensate the losses of the clients of a Member who suffer from the theft or misappropriation of Client Money by the Member.
2. Criteria
Members must meet all the following qualifying criteria:
a. have a shared client bank account covering all offices;
b. not have been refused or excluded membership of any other Client Money protection scheme including ARLA, NALS/Safe Agent, NAEA, UKALA, CMP and RICS; and
c. not have directors, owners or principal shareholders that have been associated with a business that has been removed from a Client Money protection scheme or been convicted of any finance related criminal offence or have any criminal prosecutions pending.
3. Conditions
Members must:
a. agree to co-operate fully with any investigation by UKALA, The Insurers or their appointed representative;
b. agree to onsite visits to the addresses at which accounting records are held;
c. produce if necessary records and documents for inspection and allow UKALA or the Insurers or its representatives to review these documents;
d. have a working telephone;
e. have a working email address;
f. respond to communications when requested to do so;
g. make every reasonable effort to minimise any loss and take appropriate measures immediately if they are required to in order to reduce any claim; and
h. give The Insurers all assistance which may reasonably be required to pursue recovery of amounts that may become liable to pay under this policy.
Failure of the above conditions may result in the Member being liable for an amount equal to the detriment suffered by The Insurers as a result of the Member’s failure to comply with these conditions.
4. Clients’ Money Handling
The Insurer bases their Clients’ Money criteria on the industry’s best practice for holding and accounting of Clients’ Money. Please refer to the UKALA Accounting Standard for further information.
Members must:
a. have set up a separate bank account for Clients’ Money;
b. have the title of their Clients’ Money bank account easily distinguished from other accounts of their Business;
c. if requested obtain in writing from their bank confirmation that all Client Money is held by the Business as an agent;
d. if requested obtain the banks written confirmation that the bank is not entitled to combine the Client Money account(s) with any other account or to exercise any right of set-off or counterclaim against money in that accounting respect of any sum owed to it on any other account of the Business;
e. have and maintain systems and controls which enable you to monitor and manage Clients’ Money transactions and any risk arising;
f. have accounting systems and client data securely controlled and protected;
g. obtain client’s written approval to make payments from their accounts;
h. bank all Clients’ Money at the earliest reasonable opportunity;
i. nominate authorised staff to handle money;
j. ensure that records show any and all cash transactions;
k. reconcile client accounts together with bank and cash balances at regular intervals in order to demonstrate control over the accuracy and completeness of accounting records;
l. ensure there are always sufficient funds in the account to pay all amounts owing to clients; and
m. to pay amounts owing to clients as they fall due without delay.
5. Voluntary disclosure by the Principal, a Partner, Director or Company Secretary of a Member
If you are the Principal, a Partner, Director or Company Secretary of a Member and have recognised that there is a shortfall or potential misappropriation of Client Money it is imperative that you disclose the issue to UKALA as soon as is reasonably possible. Disclosure may allow UKALA to provide guidance on steps the Business can take to resolve the issue. Failure to notify UKALA regarding a shortfall or potential misappropriation of Clients’ Money may result in cancellation of Membership in accordance with these Terms and Conditions.
6. Voluntary disclosure by others
If you are an employee of a Member or a ‘Person with Significant Control’ (but not the Principal, a Partner, Director or Company Secretary) and have recognised that there is a shortfall or potential misappropriation of Clients’ Money you may request to speak to UKALA in confidence. If you are contacting UKALA on behalf of the Principal, a Partner, Director or Company Secretary of a Member you are strongly advised to seek their authority to speak to UKALA in writing, before contacting UKALA. If you are unable to seek the authority of the Principal, a Partner, Director or Company Secretary for whatever reason you are strongly advised to seek appropriate independent advice, before contacting UKALA.
7. Confidentiality
a. The Insurer may use any information freely provided by a complainant or a Member in its consideration of a potential claim provided it is for the express purpose of dealing with that claim.
b. The Insurer may refuse to disclose information to either the complainant or the Member if in its reasonable opinion; it is not relevant to the consideration of the claim.
c. The Insurer will always consider any specific request for disclosure of information received from third parties such as the police or trading standards.
8. Exclusions
a. UKALA will only investigate complaints relating to the theft of Client Money and reserves the right to pass all other complaints to the relevant redress scheme or advise the complainant to go to court.
b. UKALA will only accept claims for Client Money which has been stolen or misappropriated by a UKALA Member who has become insolvent.
c. UKALA will decline complaints relating to a Client Money dispute where such monies continue to be held securely by the Member.
d. UKALA will decline any claim where the insured event occurred after the UKALA member firm ceases to be a member or from the date they join another approved CMP scheme.
e. UKALA will decline any claim where the loss is covered by another insurance policy, for example PI policy.
f. UKALA will decline any claim where the client money is still held in a protected client account.
g. UKALA will decline any claim where the insured event occurred more than 365 days before notification to UKALA.
h. UKALA will decline any claim where client money is subsequent to any insured event returned to the Client by the UKALA member firm.
i. UKALA will decline any claim where the loss between the UKALA member firm and the client started before the UKALA member firm was covered by the scheme.
j. UKALA will decline any claim where the loss has been covered under any deposit protection service.
k. UKALA will decline any claim, including arbitration, brought outside the UK.
l. UKALA will decline any claim arising from any deliberate criminal or fraudulent act or omission by the claimant.
m. UKALA will decline any claim where your or our right of recovery is restricted by any contract. This restriction is generally in place to prevent claimants or Members waiving our rights to pursue others to get a claim repaid.
n. UKALA will decline any claim
i. In excess of £5M In the aggregate in respect of all claims arising out of any financial institution failure (e.g. bank).
ii. In excess of £10M In the aggregate in respect of all claims including all costs and expenses.
iii. In excess of £5M In the aggregate in respect of any one member (i.e. UKALA larger agent CMP member).
o. UKALA will decline any claim arising from war, terrorism, confiscation or nuclear risks.
p. UKALA will decline any claim or part of a claim or loss directly or indirectly due to or contributed to by, resulting from or in connection with any:
i. cyber attack
ii. hacker
iii. social engineering communication
iv. fear or threat of i to iii. above; or
v. action taken in controlling, preventing, suppressing, responding or in any way relating to i. to iv. above.
q. UKALA will decline any claim or part of a claim or loss directly or indirectly due to or contributed to by, resulting from or in connection with any computer or digital technology error.
r. Please check that your agent is a current UKALA member by visiting the agent directory www.ukala.org.uk
9. Subrogation and Recoveries
On payment of a loss, the claimant shall subrogate to The Insurer all rights of recovery against the Member so that The Insurer can pursue the Member and any relevant person or entity. The claimant also agrees to co-operate with any legal process The Insurers engage in, including providing a witness statement and evidence of the loss.
10. Miscellaneous Provisions
The following miscellaneous provisions apply:
a. These requirements may need to be updated from time to time.
b. The Member agrees to abide by the latest version of the requirements notwithstanding any earlier version which were in force when joining UKALA.
c. The Insurer may delay action if The Insurer has any concerns about a Member’s compliance with these requirements, their identity, or any fraud or money laundering.
d. The Insurer and or UKALA cannot be held responsible for intervening events beyond their control which prevent, delay or impede The Insurer’s ability to operate the scheme or these requirements.
e. The Insurer and or UKALA will not be responsible for the Member missing an email from The Insurer and or UKALA when the message was received into the Member’s spam email inbox or suppressed by other security measures. The Member is responsible for adding the scheme email address to their ‘safe sender’ lists if necessary.
11. Questions about Clients’ Money Protection for UKALA members
If you have any questions about the UKALA Clients’ Money Protection Scheme please contact UKALA:
Suite 8 Bourne Gate, 25 Bourne Valley Road, Poole, Dorset. BH12 1DY
Tel: 03300 55 33 22
Email: info@ukala.org.uk