I should know but I don&#39t

Q: I arrange valuations on behalf of my clients. They make the cheques payable to me, not the valuer. Will this still be acceptable after regulation?

A: AMI lobbied vigorously so the FSA&#39s client money regulations would not fall on mortgage intermediaries. These regulations are onerous and should not be taken on lightly. If intermediaries accept payments in their own name for such services as valuations they will be deemed to be handling client money.

Client money is money which, in the course of carrying out mortgage mediation activity, an intermediary receives and holds on behalf of a client either in a bank account or in cash. Client money would include, for example, money received and held in order to pay a valuation or survey fee to a valuer or surveyor. But if an intermediary receives a cheque made payable to a third party valuer or surveyor, that is not client money and nor is money that is payable to an intermediary, for example a brokerage fee.

If an intermediary is holding client money it is subject to the FSA&#39s higher capital requirements. Under these, intermediaries must maintain net assets the greater of £5,000 or 2.5% of annual income if not holding client money or £10,000 or 5% of annual income if holding client money. There are also requirements as to how client money is held.

All in all, think twice about holding client money.