CLIENTS' MONEY (ACCOUNTS) (Hansard, 28 April 1970)

§ Mr. Anthony Grant (Harrow, Central)

I beg to move, That leave be given to bring in a Bill to make special provision for safeguarding clients' money or deposits; and for purposes connected therewith. This is a modest, non-controversial, but, nevertheless, important Measure. First, I want to pay tribute to the work which has been done on it by a former Member of the House, Mr. William Clark, who, I confidently expect, will be back with us after the next General Election.

The Bill has already had a short Second Reading. About three years ago, it was, unfortunately, talked out by hon. Members opposite on a technical detail. However, its principle was not basically opposed, and that principle is best described in the Short Title, which is …to make special provision for safeguarding clients' money or deposits; and for purposes connected therewith. The best way to describe the need for the Bill is to say that, for the vast majority, the biggest financial transaction that a person undertakes in his life is the purchase of a house. Most people achieve that through the sweat of their brows, by saving sufficient money for the deposit, and they borrow the rest from a building society. With soaring house prices in recent years, such a deposit can involve several hundred pounds. Almost invariably, the deposit is paid to the estate agent concerned with the transaction. If, as has happened on too many occasions in recent years, the estate agent in question goes bankrupt, or absconds, the unfortunate client has no redress, and no means of getting back his money.

The purpose of my Bill, therefore, is to compel such deposits to be kept in separate accounts, in the same way as is already compulsory for solicitors who hold money on behalf of clients. Incidentally, the Bill also provides for interest to be paid on such deposits in much the same way, though not so stringently, as that provided in the Solicitors Act.

Another and lesser example of the need for the Bill can be illustrated by citing the misfortunes that people sometimes suffer at the hands of travel agents, 1052 happily in a minority of cases. It sometimes happens that a person saves for an exciting and well-earned holiday and deposits his money with a travel agent to disburse on his behalf. If that travel agent happens to go broke, as has happened in a number of well-publicised cases in recent years, both the money and the holiday of the unfortunate client are lost. In my Bill, I include other professions and activities holding money on behalf of clients.

I accept that the Bill will not prevent deliberate fraud. Legislation cannot do that. But most of the tragedies which have occurred in this connection have been caused not so much by fraud as by incompetence and muddle resulting from putting all clients' money into one account. This would be prevented if it were made compulsory to keep such money separate, as my Bill proposes.

I accept, too, that it would be best if the profesional bodies concerned imposed this rule themselves. But, so far, although there has been an abortive attempt to form a united estate agents' body, there is not much sign of progress in this direction.

My Bill is not only intended to protect the public. It is hoped, also, that it will enhance the status of the majority of agents and professional men in the eyes of the public, who will be given increasing confidence to deposit their money with these professional people. It would prevent honourable occupations being given a bad name by what is undoubtedly a minority of black sheep in their ranks.

For those reasons, and because I believe that this small Bill is a necessary and worthy Measure, I commend it to the House.