RCUK is the only redundancy claims company in the UK which set up a separate client account for every single director we represent and assist to make an application to the Redundancy Payments Service (“RPS”). This means that when the RPS pay out the funds go directly into the director’s client account.
RCUK are allowed to do this because the RPS have confirmed that if RCUK is representing the client and it is the directors’ instruction to pay the funds to the client account they are happy to do it. They are regularly asked to pay funds to third parties by claimants.
The director signs a letter of authority which allows RCUK to deduct any fees due and allows RCUK to pay further funds to named third parties.
Having a client account and signed letter of authority means that IPs can agree with the director that SOA fees can be paid directly from the client account. This provides a level of confidence to the IP that their fees will be paid in situations where there are no assets in a potential job and where the director may not directly have the funds to pay for the liquidation themselves.
Once a director has received a successful claim from the RPS, the funds in the client account are theirs to do with as they please. If they choose to pay funds directly to the IP this is their decision alone.
RCUK has been running client accounts for nearly two years and during that time has paid over to IPs c. £2,000,000 of SOA fees predominantly on jobs which would have never proceeded if they were not funded by the redundancy claim. When combined with the potential WIP in these jobs the benefit to the IPs could easily be doubled.
It has been suggested that if IPs agree with a client to pay the SOA fee from the redundancy they may be conflicted as they are benefitting from supporting the redundancy claim. In reality there is only a risk of conflict if two very distinct things happen:
Both RCUK and IPs cannot operate without regulation and licenses. In addition to the above the RPS will not support a claim unless RCUK supplies with the application all the appropriate evidence they request as standard.
To remain FCA compliant RCUK must adhere to the below CASS FCA handbook rules which are very strict about what RCUK can and can’t do with client accounts. This involves the handling and safeguarding of the client’s money.
In summary, RCUK are trustees and the account and any monies in it belong to the client. RCUK have to endeavour to pay out clients or a confirmed third party within 2 days of receipt.
RCUK must obtain a letter from the bank confirming they can’t use any client account monies in the event of the failure of RCUK for any shortfall to them on any overdrafts or loans. Neither of which RCUK have. RCUK also must report to the FCA annually on client payment statistics amongst other things.
As part of the FCA compliance manual we have a separate internal policy document called Client Money Handling & Reconciliation: Procedures Manual which maps out our internal business processes and the compliance requirements for staff to follow.
Each month our Compliance Manager audits the financial manager and client account procedures and the results are put into a monthly Compliance Report for the directors of RCUK.
RCUK also need to hold £20,000 of funds at any one time to cover any issues which may arise in the client account reconciliations which are done daily as per FCA regulations.
IPs can be assured that taking advantage of client accounts to assist in the payment of SOA fees when done correctly shouldn't have any adverse regulatory issues.
There is no doubt to date that IP firms who work with RCUK have significantly benefitted and grown their businesses.
If you would like to know more about RCUK and our services please contact Gary Addison at rcuk@redundancy‐claims.co.uk or telephone RCUK on 01625 462587.