FCA-Regulated Payment Accounts (UK)

Third-Party Managed Accounts

Our Third-Party Managed Accounts enable you to provide white-labelled payment accounts to your clients so that you can 'hold' client money without regulatory approval.

What is a Third Party Managed Account (TPMA)?

In essence, a TPMA is a client money account operated by a third party. Whether you are a law firm, an estate agent, an interior designer or a party planner, you may prefer to outsource your client account requirements to reduce your risk and your regulatory overhead.

They are often known as 'escrow accounts' or 'designated client accounts' and are frequently encountered in construction, property and corporate transactions.

How does a TPMA reduce risk?

Holding client money comes with serious responsibility. It also entails compliance burdens, ongoing PEP/sanctions screening requirements and can involve healthy administration costs for the firm concerned. In our experience, banks are increasingly reluctant to open client accounts, especially to unregulated firms like interior designers or architectural practices.

By outsourcing your client accounts function to a third party, you can concentrate on your main job, safe in the knowledge that their funds are well looked after and protected.

Checks any business should do before engaging a TPMA provider

You should make sure that your TPMA provider is regulated by the Financial Conduct Authority at least to the level of Small Payment Institution. You can check the FCA Register here.

Engaging with the TPMA provider and your client

You should take reasonable steps to ensure that your client is informed of, and understands, the TPMA's involvement, what their rights and obligations are, and what the use of a TPMA means in their case, including whether they are required to authorise payments and any charges or fees they might be liable to pay.

What you need to tell your clients

You should explain to your clients why you are using the account, before you open it, and ensure that they have particular understanding of:

  • how the transaction/arrangement will work;
  • their right to dispute (or not approve) payment requests made by you;
  • where the client money will be held;
  • who will be responsible for the costs; and
  • that the TPMA provider is regulated by the FCA and that complaints about the TPMA should be made to them in accordance with their complaints procedure.

Your systems and procedures

You should ensure that you are able to get regular statements and that these reflect the transactions on the client account properly.

How much does a Third-Party Managed Account cost?

Costs vary according to a number of factors. Our fees are calculated based on the jurisdiction and type of the sender (individual, company or trust), the period of time we will be holding the funds, the complexity of the arrangements and the volume of funds that will be passing through the accounts.

How law firms use Third-Party Managed Accounts (TPMAs)

The Solicitors Regulation Authority (SRA) first published guidance on 6th December 2017 about the use of third-party managed accounts by authorised firms of solicitors.

  • Money held in a TPMA does not fall under the definition of 'client money' in the SRA Accounts Rules and is not held or received by the firm in question.
  • You still have to act in the best interests of your client and to protect their money and assets, so you need to be comfortable that the decision to use a TPMA is appropriate, and that the actual TPMA you are using is also appropriate.

The SRA expects all TPMA's to be regulated by the Financial Conduct Authority as one of the following:

  • an authorised payment institution;
  • a small payment institution which has adopted voluntary safeguarding arrangements to the same level as an authorised payment institution (this is us); or
  • an EEA authorised payment institution.

How Alternative Dispute Resolution (ADR) Providers use Third-Party Managed Accounts (TPMAs)

ADR organisations, such as arbitral institutions, adjudication nominating bodies and their international equivalents may sometimes request that money be paid into escrow (the equivalent of 'being paid into court') and held as security for the institution's fees, for the Defendant's costs, or as a gesture of goodwill from the defending party as evidence of their intention to honour any award against them.

TPMA's can be used as a managed account by these parties to effect a contractual setup that deals with the money as envisaged by them and in accordance with the ADR provider's requirements.

Would you like further information?

Request a no-obligation quote for your account. We generally reply within 24 hours and can open accounts in as little as 48 hours.

dospay is a trading name of DOS & Co. Ltd, a company registered in England and Wales with company number 08294966.

DOS & Co. Ltd. is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (FRN: 833374) for the provision of payment services.  

You can read about the difference between escrow and payment services here

DOS & Co. is a Certified B Corporation