Requirements for Providing Security and Content of Client Account Agreements

Circular
Requirements for Providing Security and
Content of Client Account Agreement etc.
CIRCULAR:
2/2015
DATE:
12.02.2015
THE CIRCULAR APPLIES TO:
Real estate brokerage firms
Lawyers with real estate brokerage activities
THE FINANCIAL SUPERVISORY AUTHORITY
P.O. Box 1187 Sentrum
0107 Oslo

Requirements for Providing Security and Content of Client Account Agreement etc.
2 | Finanstilsynet
1 The Size of the Security
With effect from 1 July 2015, the requirement for real estate brokerage firms to provide security is increased from 30 million NOK to a minimum of 45 million NOK. The liability that can be limited by agreement is increased to 15 million NOK per mediation per injured party. Confirmation from the security provider regarding the increase in insurance coverage ("security provision") must be received by the Financial Supervisory Authority by 1 July 2015. 2 Client Account From the same point in time, certain regulatory amendments intended to prevent unauthorized withdrawals from client accounts will come into force:
Only the responsible manager in the firm may dispose of client funds. In addition, the responsible manager may grant power of attorney to others, but based on the responsible manager's own risk assessment. If the responsible manager is deprived of the right to be the responsible manager, or resigns from the position, all powers of attorney to dispose of client funds lapse. The same applies if the firm's license is revoked. Both the responsible manager and the real estate brokerage firm have a duty to report to the financial institution that the rights to dispose of client funds have lapsed. The regulation sets requirements for the content of the account agreement between the real estate brokerage firm and the financial institution. The real estate brokerage firm must ensure that the financial institution has committed to, among other things, ensuring that no power of attorney relationships are established that are in conflict with the regulations and that the termination of disposal powers is registered. The financial institution's declaration of set-off must also be part of the account agreement. The client account must be opened in the firm's name and must be called "client account". The real estate brokerage firm may deposit client funds in a joint client account or create separate client accounts for individual customers/commissions. Even if a separate client account is created, the real estate brokerage firm must be the account holder. However, it is natural to label the account so that the customer or commission is identified, e.g., Client Account – Company X AS. Existing account agreements must be amended by 1 July 2015. The firms are not required to send a special notification to the Financial Supervisory Authority regarding this, but will be asked to confirm the content of the account agreement when reporting for the first half of 2015. Anne Merethe Bellamy director for market supervision Anne-Kari Tuv
section chief

Requirements for Providing Security and Content of Client Account Agreement etc.
Finanstilsynet | 3
Contact persons:
Special Advisor Arne Solberg, tel. 22 93 98 05, e-mail: arne.solberg@finanstilsynet.no Special Advisor Geir Haatveit, tel. 22 93 98 03, e-mail: geir.haatveit@finanstilsynet.no Link to the legal amendments on Lovdata:
Regulation 28 November 2014 No. 1484 on amendment to the regulation on real estate brokerage

THE FINANCIAL SUPERVISORY AUTHORITY
P.O. Box 1187 Sentrum
0107 Oslo
POST@FINANSTILSYNET.NO
WWW.FINANSTILSYNET.NO