The confusion comes after some brokers and packagers were concerned that if they had not got authorisation to hold client money they would not be able to hold cheques from customers for valuation fees.
John Mawdsley, director of packager The Mortgage Partnership, explained: “A lot of intermediaries and packagers have been under the impression that they would have to seek authorisation to hold client money if they wanted to hold client cheques that are paying for valuation fees, and have separate client accounts for valuation and application fees. But the FSA has finally clarified that these fees are not deemed to be client money, and we welcome this.”
But Mark Dede Ste Croix, head of compliance at Mortgage Intelligence, said if a valuation fee cheque is made payable to the packager to then be passed onto the valuer, this is a clear case of holding client money. “I would disagree that this is not holding client money. At a recent FSA forum this issue was raised and a senior employee admitted that this would be classified as holding client money.”
Robin Gordon-Walker, spokesman at the FSA, said: “Technically, it could be seen as holding client money. But it does not fall under the category of an investment, which is what holding client money is about.”
Simon Chalk, principal at Mortgage Portfolio Services, said: “When a packager is involved, the client will make the cheque out to the packager. So what if the packager goes bust or runs off? This must be taken into consideration in this new regulatory climate where packagers are suffering losses and the danger of them going under is greater. I am not convinced that the valuation fee should not be deemed client money in this circumstance.”
Mike Fitzgerald, sales director at Brentchase Financial Services, agreed:
"Many fees are paid by credit card straight into the packager’s bank account. So how long is this money staying in there? Some valuations can take up to three to four weeks.”
