As GP practice accountants we have always been asked to provide certain confirmation details to banks and lenders. Until recently this has typically involved completing a lender’s Accountant’s Certificate which confirms an individual’s income details, or simply sending copies of the last three years’ ‘SA302’s’ (the tax calculation that accompanies a personal tax return).
These would be for transactions such as a new buy in loan or home mortgages. Over the last year or so we have noticed that we are being asked to confirm a lot more details for a wider range of transactions such as simply opening a new bank account with the current practice bank.
The type of details that we are now being asked to confirm include:
- Partners’ names and contact details.
- Partners’ profit and property sharing percentages.
- Balances on existing practice loans where those loans are with another lender.
- Confirmations that loan repayments are up to date.
- Agreement to notify the bank if partners’ capital/current account balances in the yearend accounts fall below a certain amount.
We have had situations where a practice has sent the partners’ details themselves to their bank and copied us in on the email. This has not been acceptable to the bank and we were asked to provide the same details but included in a letter on our letter-headed paper. In this case we copied and pasted the information from the client’s email, although we did of course make sure that the details agreed to our records. Another example is where the client emailed the bank a copy of the latest loan statements. We were still asked to write and confirm the balances and that the repayments were up to date even though the loan statements confirmed these.
A further change that we are being asked to do relates to who signs these confirmations. These types of letter/confirmations are usually signed in the name of our firm, but we are now being asked for them to be signed by a named person so that the bank can check that they are registered with one of the main accounting professional organisations and/or that they appear on the firm’s website.
We do of course understand that the banks and lenders need to carry out certain checks on businesses and individuals for new accounts and lending. As you will know we have to carry out ID checks ourselves for all new clients that we take on.
What I am not sure about is why the level of detail that the accountants are being asked to confirm has changed so much recently. It is almost like the banks are asking us to share in their risk of taking on new customers and lending. I have questioned this with my regular bank contacts who can only say that it is a requirement of their underwriters in order to approve the new account or lending, and so we are of course complying although it does then mean that there is usually an additional fee for providing these details.
This additional layer of confirmations can often cause a delay in the bank approval process which can be an issue when the transactions that are reliant on these are time critical. It is therefore important to remind clients to ask their bank/lender early on in the process if and what sort of confirmations they will need from their accountant, and that they then give us advance notice where possible of what they will need us to do.