As an accountant, understanding your responsibilities when handling client funds is essential to ensuring compliance with regulations and maintaining your clients' trust. Recently, an accountant raised a valuable question regarding client money regulations and how Telleroo fits into this framework.
The question was: "How does the responsibility for client money work when using Telleroo?”
Referencing the ICAEW’s guidance on client money, we’ll explain how Telleroo can assist without falling under the traditional scope of client money regulations.
The ICAEW’s Client Money Regulations aim to safeguard client funds and ensure that any handling of client money is done with the necessary care and diligence. Typically, these regulations apply when an accountant or firm has control over a client's money, whether through holding, managing, or transferring funds.
However, the key point in this scenario is that the e-money account set up with Telleroo is in the client’s business name and is owned by the client, not you as the accountant. Therefore, the use of Telleroo does not fall under the scope of client money regulations. The only time it does, is when you are an approver of pay runs for the client - something we typically recommend against. This distinction is crucial in understanding how the responsibility for client money is defined.
With Telleroo, your firm can set up an e-money account for each of your clients. These accounts are owned by the clients themselves, and any funds within these accounts are controlled by the clients. In most cases, the accountant’s role involves recommending payments for the client to approve, rather than directly initiating or managing the movement of funds.
Telleroo's system is designed to allow for secure and efficient payments to be made, where the client can top up their account and approve payments directly.
This setup means that the responsibility for the funds remains with the client and not the accountant. As such, this situation generally falls outside the scope of the ICAEW’s Client Money Regulations.
The ICAEW’s guidance on payments from a client’s own account clarifies that if an accountant is facilitating payments from a client’s bank account, the key factor is that payments should be made on the specific instructions of the client, and the accountant must not take management decisions or initiate transactions independently.
According to ICAEW:
As an accountant using Telleroo, you’re suggesting payments for the client to approve, but not controlling the funds or making decisions about their movement.
Given that Telleroo accounts are client-owned, and the responsibility for funds lies with the client, the funds moving through Telleroo are not classified as “client money.” This setup eliminates the need for accountants to worry about the additional regulatory burden typically associated with client money.
The process of using Telleroo is fundamentally different from traditional client money handling because the client is always in control of their funds, and the accountant is only advising on the transfer process.
In conclusion, the responsibility for funds in Telleroo’s client accounts lies with the client, not the accountant. As long as the client approves the payments, this arrangement generally falls outside the scope of client money regulations.
If you’re still unsure or if your firm’s specific circumstances require additional clarification, we recommend consulting with your professional indemnity insurer or seeking advice from ICAEW’s Technical Advisory Service.
Telleroo is designed to streamline the payment process for accountants and their clients without creating additional regulatory complexities. It’s an efficient and secure way to manage client payments while ensuring compliance with the rules.
