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Guidelines on code of conduct requirements for managing client funds

Purpose

1. These are guidelines for adhering to the Licensed Immigration Advisers Code of Conduct 2008 (code of conduct) requirements regarding managing client funds and recording transactions relating to client funds.
2. These guidelines do not take the place of the code of conduct. All licensed advisers must continue to ensure that they comply with the code of conduct. These guidelines are designed to assist licensed immigration advisers to better understand their responsibilities in this area.

Code of conduct requirements for managing client funds

3. Under the code of conduct at clause 4 Client Funds, a licensed immigration adviser must:
   
   4 (a) establish and maintain a separate clients’ bank account for holding all clients’ funds paid in advance for fees and/or disbursements; and
   4 (b) withdraw funds held on behalf of clients only when payments for fees and/or disbursements fall due; and
   4 (c) use funds held on behalf of clients only for the purpose for which they were paid to the adviser.
4. Under the code of conduct at clause 3 Business Management, a licensed immigration adviser must maintain professional business practices relating to finances, records, documents, contracts and staff management, including:
   
   3 (e) maintaining complete client records that track all transactions for a period of 7 years and making those records available for inspection on request by the Authority.
5. Under the code of conduct at clause 3 (d) a licensed immigration adviser must provide any refunds payable upon completing or ceasing a contract for services.
6. Under the code of conduct at clause 8 Fees, a licensed immigration adviser must:
   
   8 (b) before commencing work incurring costs, set out the fees and disbursements (including Immigration New Zealand fees and charges) to be charged, including the hourly rate and the estimate of the time it will take to perform the services, or the fixed cost for the services; and
   8 (c) set out payment terms and conditions; and
   8 (d) ensure that fees, disbursements and payment terms and conditions are provided to clients in writing prior to the signing of any written agreement; and
   8 (e) each time a fee is payable, provide clients with an invoice containing a full description of the services that the invoice relates to.

What is a separate client account?

7. A separate client account is a bank account established solely for the purpose of holding client funds paid in advance. It must be separate from any other business account run by the licensed immigration adviser’s business.
8. Your separate client account may be a separate account or a separate suffix under your main business account.
9. This account must be clearly identifiable as a client account. If your bank allows it, the Authority recommends that you include the words ‘client account’ in the account name. For example the main business account may be ABC Immigration Consultants, with the suffix 00. The client account may then be ABC Immigration Consultants – Client Account, with the suffix 01.
10. Only some New Zealand banks allow you to name each suffix with a separate name. If your client account does not have a separate name, it must be clearly identifiable in your records (see paragraphs 23-29 below) as your client account.

How many client accounts do I need to have?

11. The easiest way to meet the code’s requirement is to have one single client account that is set aside for the purpose of holding fees and disbursements paid in advance. You are not required to have separate accounts for each client.
12. The separate client account does not have to be a trust account.
13. A licensed immigration adviser may choose to operate more than one client account (for example, if a company has offices in different locations).  However, each client account must be established and maintained only for the purpose of holding client funds and must meet all of the other requirements of a client account.  It must be separate from any other business account and must be clearly identifiable.

What are client funds paid in advance for fees and/or disbursements?

14. Fees or disbursements are considered to be paid in advance if the payment is received before the business day the service is supplied or the disbursement is paid. Any payments received on or after the business day the service is supplied or the disbursement is paid are not considered to be paid in advance.
15. Licensed immigration advisers must be very clear in their invoices what the fee relates to, and whether or not it is being paid in advance or for services already supplied.
16. For example, if you invoice a client on signing a contract, your invoice should be clear if you are invoicing either for a sign-on fee, or a fee for services to be supplied in the future.  If the fee is a sign-on fee, it does not have to be held in the client account. If the fee is for services to be supplied in the future, the fee must be held in the client account until those services are supplied.
17. Any fee or disbursements that are received in advance of either the supply of a service, or the payment of a fee to a third party such as Immigration New Zealand, must be held in the separate client account.

When do fees and/or disbursements fall due?

18. A fee paid in advance must only be withdrawn from the client account when the service is supplied or the fee is paid to a third party. When this occurs will depend on what has been agreed between the adviser and their client.

I don’t receive payments in advance, do I need a separate client account?

19. If you do not ever receive payments or disbursements in advance, you are not required to have a separate client account.
20. For example, if you receive payments from your clients for the services you supply after you supply them and you receive payments for Immigration New Zealand or other third party fees after you have paid for them you are not required to have a separate client account.

Can I use my client account for all client fees paid to me?

21. Your client account should be used for holding payments and disbursements received in advance only. If you both receive payments from your clients in advance and for services already supplied you should transfer to your client account only those funds which are to be held in advance.
22. The purpose of the client account is to be a transparent tool for protecting client funds pay in advance. If your client account is used for all of your client transactions this tool will be less transparent and a less effective mechanism for client protection.

What are complete client records that track all transactions for a period of 7 years?

23. In addition to maintaining a client account, licensed immigration advisers must maintain complete client records that track all transactions for a period of 7 years.  This means that licensed immigration advisers must have a system for tracking the payments made by a client, where the money is deposited, when it is transferred to any other account, Immigration New Zealand or any other party, and for what reason.
24. This requirement is not limited to the client account. Advisers must keep transaction records for each client regardless of whether the transactions are in and/or out of the client account or another account such as your main operating account.
25. The Authority expects to see the following details in your transaction records:
    • Date of transaction
    • Specific type of transaction e.g. cash deposit, transfer from operating account to client account, transfer to credit card
    • Amount of transaction
    • Name of client
    • Purpose of transaction
    • Related invoice number or reference
26. You can choose the method you use to record this information. You may use an accounting system (for example, your accountant’s system or a small business accounting system such as MYOB), an electronic spreadsheet, or a hard copy ledger to record these details.
27. Remember, in all cases you must record:
    1. The date of the transaction
    2. The type of transaction
    3. The amount of the transaction
    4. The client name
    5. The purpose of the transaction
    6. The related invoice number or reference.
28. There must be a direct correlation between all work done and all transactions undertaken. Through reconciliation you must ensure that your records match your bank statements.
29. These records must be available for inspection on request by the Authority and will be examined when you renew your licence each year.

Refunds

30. If a licensed immigration adviser has a refund policy, the adviser must at all times be able to meet their refund obligations. If an adviser cannot meet their refund obligations, they will be in breach of the code of conduct.
31. A refund policy does not require you to keep money paid to you by a client in the client account. An adviser may have a refund policy regardless of whether or not they receive payments or disbursements in advance.
32. For example, a client may pay his or her adviser for lodging a residence application after the application is lodged.  This payment has not been paid in advance and is not required to be kept in the client account. The same adviser may have a refund policy that provides for a full refund if the application is declined. Three months later the residence application is declined. The adviser must refund the money paid, but the money was not required to have been kept in the client account.
33. Only payments or disbursements received in advance must be kept in the client account. An adviser may wish to keep all or part of the fees paid by a client in the client account until the immigration application is approved to ensure that they can meet their refund obligations. In this case, the adviser should make it clear that the relevant portion of the fee has been paid in advance of the application’s approval. 

Offshore advisers

34. Licensed immigration advisers operating in any country that does not allow, under its law, the use of a client account as set out in the code of conduct must continue to comply with the code of conduct. If a licensed adviser cannot operate a separate client account, they may not receive payments in advance for disbursements or services supplied.