Using Your Own Bank Account

Why is having your own bank account not a good idea

Why is having your own bank account not a good idea

Some clients prefer to have their surplus funds in their own bank accounts. Whilst this is perfectly acceptable and we accommodate this in our service level agreement, careful thought should be given before opening such an account. What is important to realise is that this account is NOT a trust account and funds therein are NOT covered by the Estate Agents Fidelity Fund. Such a bank account is the responsibility of the trustees/directors who are responsible for arranging fidelity insurance to cover funds in this account. All too often we find complexes running their own bank account with signatories who are no longer trustees, and sometimes they are no longer owners in the complex! I kid you not.

We are not proponents of own bank accounts for the following reasons :

  • Later boards of trustees seldom take the responsibility seriously.
  • Fidelity cover on such funds is expensive.
  • You are unlikely to match the interest rate offered by Whitfields.
  • Annual audits are generally delayed while we wait for bank statements as proof of the existence of such funds.
  • Trustees often don't provide us with monthly bank statements to capture interest earned.
  • They can result in unnecessary bank charges.
  • They present an unnecessary risk.
  • They create additional administration work.

The pattern generally is that a board of trustees will open such a bank account and be quite diligent initially. But trustees come and go and very soon you have very few controls and the money can easily "grow legs". It happens!

Up until now, we haven't charged clients for the additional administration associated with these bank accounts. Our service level agreement makes provision for such additional fees as follows: "The trustees/directors shall supply Whitfields with a monthly copy of the bank statement within 21 days of month end, to enable entries to be captured in Pastel. A data capture fee of R 10.00 per line item on the statement will be charged, with a minimum of R 50.00 per account per month."

Effective 1 April 2012, we are unfortunately going to implement the above. If you have money sitting in a bank account which was opened several years back for reasons that nobody can even remember, please consider closing it and transferring the funds into our trust account, for the reasons outlined above.