ICAEW’s Clients’ Money Regulations define clients' money as money of any currency (whether in the form of cash, cheque, draft or electronic transfer):
-
which a firm holds or receives for or from a client, including money held by a firm as stakeholder, and
-
which is not immediately due and payable on demand to the firm for its own account.
The regulations require clients' money to be held in the currency in which it was received unless the client instructs otherwise in writing.
Fees paid in advance for professional work agreed to be performed and clearly identifiable as such shall not be regarded as clients' money for the purposes of these Regulations. In addition to any requirements of the Money Laundering Regulations 2007 concerning the verification of a new client's identity, the regulations require firms to verify the identity of a client prior to holding money on that client's behalf.
Frequently asked questions
View the answers to questions that members frequently ask QAD's reviewers during Practice Assurance reviews and when they call ICAEW's helplines.
About the regulations
The Clients' Money Regulations apply to all offices of firms in the UK and Ireland and every principal will be responsible for any breach. Where a firm is authorised by the Financial Services Authority, any monies received or held which are Investment Business clients' money, as defined by the Financial Services Authority's Handbook, must be dealt with in accordance with that Handbook, which takes precedence over the requirements of these Regulations.
Sole practitioners who hold clients' money have to notify ICAEW of their alternate arrangements under Regulation 31 of the Clients' Money Regulations. They can do this by using the Notification of arrangements under regulation 31 form (PDF 41KB/1 page).
This helpsheet outlines the regulations governing the handling, banking and return of money held on behalf of clients, and provides a useful summary of the most commonly encountered problems and how to deal with them.
This helpsheet provides a compliance review programme covering the Clients’ Money Regulations.
Clients' money accounts and the FSA compensation scheme
Some firms have asked us about clients' money accounts in the unlikely event that the bank that holds the account were to fail. Some protection is offered by the compensation scheme but it is not straight forward and we have produced a short article to assist firms.