What are the rules for handling client money in a migration practice?

The Code of Conduct deals with client money in two stages: taking it in, and holding it. Section 51 governs the first stage — no amount may be received from a client before a service agreement covering the immigration assistance is in force. Section 50 governs the second — once client money is received under a service agreement, a closed set of account rules fixes where it is held and what may leave the account.

Section 50 is written as a set of account rules rather than a general prudential standard: where the money sits, what may enter that account, and what may be paid out of it.

1. The account duty attaches to client money received under a service agreement

“A responsible migration agent in relation to a service agreement must ensure that the following requirements are complied with in relation to client money in relation to the agreement that is received by the agent or by a member of the agent’s business:”

Three features of that opening sentence do the work. The duty sits on the responsible migration agent in relation to the agreement. It attaches to money “received by the agent or by a member of the agent’s business”, so amounts taken in by a staff member are amounts the responsible agent must account for. And it is confined to client money in relation to that agreement, which is the money the sections below operate on.

2. Client money goes into a financial institution account that holds nothing else

“(a) client money must be paid into an account with a financial institution;”
“(b) amounts other than client money must not be paid into that account;”
“(c) without limiting paragraph (b), interest on the account must not be paid into the account;”

Paragraph (a) is positive: client money must be paid into an account with a financial institution. Paragraph (b) restricts what the account may hold — it is a client money account, not an operating account, and amounts other than client money must not be paid into it. Paragraph (c) states the interest position expressly: interest on the account must not be paid into the account. Because (c) opens with “without limiting paragraph (b)”, it is a specific application of the general restriction in (b) rather than a rule standing on its own.

3. Only the five listed purposes may be paid out of the account

“(d) an amount must not be paid out of the account other than:”
“(i) to pay the agent or the agent’s business (but not if, under section 313 of the Act, a migration agent is not entitled to be paid the amount); or”
“(ii) to pay amounts required to be paid to the Department or a review authority; or”
“(iii) to pay disbursements in accordance with the agreement; or”
“(iv) to refund client money to a client; or”
“(v) to refund client money by transferring amounts to other registered migration agents, or to members of the businesses of other registered migration agents, at the instruction of a client;”

The provision is exhaustive in form — an amount “must not be paid out of the account other than” those five purposes. In order, they are: payment to the agent or the agent’s business, subject to the section 313 entitlement condition the subparagraph incorporates; payment of amounts required to be paid to the Department or a review authority; disbursements paid in accordance with the agreement; refunds of client money to a client; and refunds of client money by transfer to other registered migration agents, or to members of their businesses, at the client’s instruction.

Two further limits close the account. The first bars the account’s own running costs from being paid out:

“(e) without limiting paragraph (d), an amount must not be paid out of the account to pay fees or costs associated with opening or maintaining the account;”

The second is a ceiling measured purpose by purpose:

“(f) the total amount paid out of the account for a particular purpose must not exceed the total amount paid into the account for that purpose.”

The amount paid out for a particular purpose cannot exceed the amount paid into the account for that purpose. Funding one purpose out of money received for another is not something the provision allows.

4. The Authority can require the agent to demonstrate compliance

“(2) A migration agent must, if requested by the Authority, demonstrate to the Authority that this section is being complied with.”

Section 50 does not only set standards. It places the evidential burden on the agent: on request, the agent must demonstrate to the Authority that the section is being complied with. That puts the account records, the reconciliation of receipts against outflows, and the purpose-by-purpose accounting within the scope of what a practice has to be able to produce.

5. Nothing may be received from a client before a service agreement is in force

“(1) A migration agent must not receive amounts (including fees or amounts for disbursements) from a client if:”
“(a) the amounts relate to the agent, or another registered migration agent in the agent’s business, giving immigration assistance to the client; and”
“(b) a service agreement that covers the immigration assistance is not in force.”

Both conditions must be met for the prohibition to bite: the amounts relate to immigration assistance given by the agent, or by another registered migration agent in the agent’s business, to the client — and a service agreement covering that immigration assistance is not in force. The prohibition is not confined to fees. The provision says “amounts (including fees or amounts for disbursements)”, so a payment taken on account of a disbursement before the agreement exists is caught on the same footing as a fee.

Nor is it confined to money the agent receives personally. Section 51(2) extends the duty outward in these terms:

“(2) A migration agent must take all reasonable steps to ensure that a member of the agent’s business, other than another registered migration agent, does not receive amounts (including fees or amounts for disbursements) from a client if:”

The two subsections operate on different people. Section 51(1) binds the migration agent directly. Section 51(2) imposes a duty to take “all reasonable steps” in relation to members of the agent’s business who are not registered migration agents — the staff who may answer the phone, take a card payment, or open the mail.

6. The carve-out for initial consultations, and how that money is treated

“(3) This section does not apply to a fee charged for an initial consultation conducted other than under a service agreement in accordance with section 43.”

The exception is narrow and is defined by reference to section 43, not by any general practice of taking payment up front. The money from such a consultation does not then sit outside the instrument’s client money treatment. Section 43(3)(c) provides that the rest of the instrument applies to those amounts as it applies to client money:

“this instrument (other than section 51) applies to those amounts in the same way as it applies to client money in relation to a service agreement in relation to which the migration agent is a responsible migration agent;”

The same paragraph also requires the agent to ensure that sufficient funds are available to cover any refunds of those amounts that become payable, and that any such refunds are paid promptly and, in any case, no later than 14 days after they become payable.

What this requires in practice

• One account with a financial institution for client money, with nothing else paid into it — interest on the account included.
• Purpose-level accounting, so the practice can show that the total paid out for each purpose never exceeded the total paid into the account for that purpose.
• Running the account without drawing its opening or maintenance fees from it, which means those costs are carried elsewhere.
• A record of each amount of client money received, each amount paid out under s 50(1)(d), and the amount remaining — the same three figures s 57(5) requires a terminating agent who holds client money to set out to a client.
• No amount received from a client, including an amount for a disbursement, before a service agreement covering the immigration assistance is in force — and staff, not only the registered agent, held to that line.
• Initial consultation fees routed into the same client money treatment, since s 51 is the only provision switched off for those amounts.

Practice takeaway. Section 51 decides whether money may be taken at all: not before a service agreement covering the immigration assistance is in force, with an initial consultation fee under section 43 the sole exception. Section 50 decides what happens to client money once taken: it goes into an account with a financial institution, that account receives nothing else, interest is not paid into it, its own fees and costs are not paid out of it, and outflows are limited to five listed purposes with no purpose over-drawn against what was received for it. The agent must be able to demonstrate all of that to the Authority on request.